EXHIBIT 10.9
EXECUTION COPY
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AMENDED AND RESTATED GUARANTEE
made by
HANOVER COMPRESSOR COMPANY
HANOVER COMPRESSION INC.
and certain of their Subsidiaries
Dated as of March 13, 2000
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TABLE OF CONTENTS
1. Defined Terms ...................................................................... 1
2. Guaranty .............................................................. ............ 2
3. Right of Set-off.................................................................... 3
4. No Subrogation ..................................................................... 3
5. Amendments, etc. with respect to the Guaranteed Obligations; Waiver of Rights ...... 4
6. Guarantee Absolute and Unconditional ............................................... 4
7. Reinstatement ...................................................................... 5
8. Payments ........................................................................... 5
9. Representations, Warranties ........................................................ 5
9.1 Financial Condition ........................................................ 5
9.2 No Change .................................................................. 6
9.3 Corporate Existence; Compliance with Law ................................... 6
9.4 Corporate Power; Authorization; Enforceable Obligations .................... 7
9.5 No Legal Bar ............................................................... 7
9.6 No Material Litigation ..................................................... 7
9.7 No Default ................................................................. 7
9.8 Ownership of Property; Liens; Leases of Equipment .......................... 7
9.9 Intellectual Property ...................................................... 8
9.10 Taxes ...................................................................... 8
9.11 Federal Regulations ........................................................ 8
9.12 ERISA ...................................................................... 8
9.13 Investment Company Act; Other Regulations .................................. 9
9.14 Subsidiaries ............................................................... 9
9.15 Environmental Matters ...................................................... 9
9.16 Accuracy and Completeness of Information ...................................10
9.17 Year 2000 ..................................................................10
9.18 Senior Indebtedness ........................................................10
9.19 Representations and Warranties in Existing Guarantee .......................11
10. Affirmative Covenants of the Guarantor .............................................11
10.1 Financial Statements .......................................................11
10.2 Certificates; Other Information ............................................12
10.3 Payment of Obligations .....................................................13
10.4 Conduct of Business and Maintenance of Existence ...........................13
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10.5 Maintenance of Property; Insurance .........................................13
10.6 Inspection of Property; Books and Records; Discussions .....................13
10.7 Notices ....................................................................13
10.8 Environmental Laws .........................................................14
10.9 Subsequent Guarantees ......................................................15
11. Negative Covenants .................................................................15
11.1 Financial Condition Covenants ..............................................15
11.2 Limitation on Indebtedness .................................................16
11.3 Limitation on Liens ........................................................17
11.4 Limitation on Guarantee Obligations ........................................19
11.5 Limitations on Fundamental Changes .........................................19
11.6 Limitation on Sale or Lease of Assets ......................................20
11.7 Limitation on Leases .......................................................21
11.8 Limitation on Dividends ....................................................21
11.9 Limitation on Derivatives ..................................................22
11.10 Limitation on Investments, Loans and Advances ..............................22
11.11 Limitation on Optional Payments and Modifications of Debt Instruments ......23
11.12 Transactions with Affiliates ...............................................24
11.13 Sale and Leaseback .........................................................24
11.14 Corporate Documents ........................................................24
11.15 Fiscal Year ................................................................24
11.16 Nature of Business .........................................................24
11.17 Unqualified Subsidiaries ...................................................24
12. Notices ............................................................................24
13. Severability .......................................................................25
14. Integration ........................................................................25
15. Amendments in Writing; No Waiver; Cumulative Remedies ..............................25
16. Section Headings ...................................................................25
17. Successors and Assigns .............................................................26
18. SUBMISSION TO JURISDICTION; WAIVERS ................................................26
19. GOVERNING LAW ......................................................................26
20. Survival of Representations, Warranties, etc .......................................26
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21. Authority of Agent..................................................................27
22. Third Party Beneficiaries...........................................................27
23. Right of Contribution...............................................................27
24. WAIVER OF JURY TRIAL................................................................27
Schedules
Schedule 9.2 Material Changes
Schedule 9.4 Required Consents
Schedule 9.14 Subsidiaries
Schedule 9.15 Environmental
Schedule 11.2(c) Existing Indebtedness
Schedule 11.3(1) Existing Liens
Schedule 11.3(n) Additional Existing Liens
Schedule 11.3(t) Additional Liens
Schedule 11.6(i) Lease of Assets
Schedule 11.12 Affiliate Transactions
Schedule 11.13 Sale and Leaseback Transactions
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AMENDED AND RESTATED GUARANTEE
AMENDED AND RESTATED GUARANTEE, dated as of March 13, 2000
(the "Agreement",) made by HANOVER COMPRESSOR COMPANY, a Delaware corporation,
HANOVER COMPRESSION INC., a Delaware corporation, and certain of their
Subsidiaries that are signatories hereto (individually, a "Guarantor",
collectively, the "Guarantors"), in favor of the Beneficiaries (as hereinafter
defined).
W I T N E S S E T H:
WHEREAS, on the Initial Closing Date, Holdings, HCC and
certain Subsidiaries of Holdings entered into a Guarantee, dated as of June 15,
1999 (the "Existing Guarantee"), to induce (i) Hanover Equipment Trust 1999A
(the "Lessor") to enter into the Lease and the other Operative Agreements to
which it is a party; (ii) the Lenders to enter into the Credit Agreement and the
other Operative Agreements to which they are party; and (iii) Societe Generale
Financial Corporation and FBTC Leasing Corp. (the "Investors") to enter into the
Participation Agreement (as hereinafter defined) and the other Operative
Agreements to which they are a party;
WHEREAS, (i) the Lenders have agreed to make, and have made,
loans and (ii) the Investors have agreed to make, and have made, investments to
the Lessor in order for the Lessor to acquire the Equipment and to pay other
Equipment Acquisition Costs;
WHEREAS, HCC has requested that the Investors, Agent and the
Required Lenders (i) amend certain definitions and covenants in the
Participation Agreement and Credit Agreement and (ii) amend and restate the
Existing Guarantee so as to permit HCC to enter into a new equipment lease
transaction; and
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Investors, Agent and the Required Lenders to enter into
the requested amendments, the Guarantors hereby agree for the benefit of the
Lessor, the Agent, for the ratable benefit of the Lenders and the Investors and
their respective successors and assigns (individually a "Beneficiary",
collectively, the "Beneficiaries"), as follows:
1. Defined Terms. (a) Capitalized terms not otherwise
defined herein (including in the Preliminary Statement) shall have the meanings
ascribed to them in Annex A to the Participation Agreement dated as of June
15, 1999 among Hanover Compression Inc. ("HCC"), the Lessor, the Investors, The
Chase Manhattan Bank, as agent (the "Agent") and the several banks and financial
institutions from time to time party thereto (the "Lenders"), as the same may
from time to time be amended, supplemented or otherwise modified (the
"Participation Agreement").
(b) As used herein, the following terms shall have
the following meanings:
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"Agreement" means this Amended and Restated Guarantee,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Contribution Obligations" means the collective
reference to the outstanding amount of the Investor Contributions and the
Investor Yield with respect thereto and all rights of the Investors to receive
distributions under the Trust Agreement and any of the other Operative
Agreements.
"Guaranteed Obligations" means the collective reference
to (i) the Note Obligations, (ii) the Contribution Obligations and (iii) the
Lease Obligations and, with respect to each such obligation, interest accruing
thereon at the applicable rate provided in the Operative Agreements after
maturity and interest accruing at the then applicable rate provided in the
Operative Agreements after the filing of any petition in bankruptcy, or the
commencement of an insolvency, reorganization or like proceeding, whether or not
a claim for post-filing or post-petition interest is allowed in such proceeding
and whether such obligations are direct or indirect, absolute or contingent, due
or to become due, or now existing or hereinafter incurred, which may arise,
under, out of or in connection with any of the Operative Agreements, any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, interest, Investor Contributions or Investor Yield,
reimbursement obligations, fees, indemnities, costs, expenses, or payment
obligations (including, without limitation, all fees and disbursements of
counsel to any of the Beneficiaries that are required to be paid by HCC pursuant
to the terms of the Operative Agreements).
"Lease Obligations" means the collective reference to
the payment obligations and undertakings applicable to HCC contained in or
arising under the Lease or any of the other Operative Agreements to which HCC is
a party, including, but not limited to, the full and punctual payment by HCC,
when due, of any and all Rent, the payments required pursuant to Section 17.2
and 17.3 of the Lease, the Purchase Option Price and the Maximum Residual
Guarantee Amount.
"Note Obligations" means the collective reference to the
unpaid principal of and interest on the Notes and all other payment obligations
and liabilities of the Lessor to the Agent and the Lenders under the Notes, the
Credit Agreement and any of the other Operative Agreements.
2. Guaranty. (a) Subject to the provisions of paragraph
2(b) and (c), the Guarantors hereby, jointly and severally, unconditionally and
irrevocably guaranty to the Beneficiaries and their respective successors,
endorsees, transferees and assigns the prompt and complete payment when due
(whether at the stated maturity, by acceleration or otherwise) of the Guaranteed
Obligations.
(b) Anything to the contrary notwithstanding, the Guarantors
shall not at anytime be required to make any payment with regard to the Tranche
B Loans or with respect to the Contribution Obligations unless at such time a
Lease Event of Default has occurred and is continuing.
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(c) Anything herein or in any other Operative Agreement to
the contrary notwithstanding, the maximum liability of each Guarantor (other
than HCC) hereunder and under the other Operative Agreement shall in no event
exceed the amount which can be guaranteed by such Guarantor under applicable
federal and state laws relating to the insolvency of debtors.
(d) The Guarantors further agree, jointly and severally, to
pay any and all costs, expenses (including all fees and disbursements of
counsel) and damages which may be paid or incurred in enforcing, or obtaining
advice of counsel in respect of, any rights with respect to, or collecting from
the Guarantors, any or all of the Guaranteed Obligations and/or enforcing any
rights with respect to, or collecting against, the Guarantors under this
Guarantee.
3. Right of Set-off. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
an Event of Default, each of the Investors, Agent and each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower, the Guarantors or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Investor, Agent or such Lender
(including, without limitation, by branches and agencies of such Investor, Agent
or such Lender wherever located) to or for the credit or the account of the
Guarantors against and on account of the obligations and liabilities of the
Guarantors hereunder or under any of the other Operative Agreements, and all
other claims of any nature or description arising out of or connected with this
Guarantee or any other Operative Agreement, irrespective of whether such
Investor, Agent or such Lender shall have made any demand hereunder and although
said obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. Each of the Investors, Agent and each Lender shall notify such
Guarantor promptly of any such set-off and the application made by such
Investor, Agent or such Lender; provided, that the failure to give such notice
shall not affect the validity of such set-off and application.
4. No Subrogation. Notwithstanding any payment or payments
made by the Guarantors hereunder or any set-off or application of funds of the
Guarantors by any Lender, the Guarantors shall not be entitled to exercise or
enforce any subrogation rights of the Investors, Agent or any Lender against the
Borrower or any other Person or any collateral security or guarantee or right of
offset held by the Investors, Agent or any Lender for the payment of the
Guaranteed Obligations, nor shall the Guarantors seek or be entitled to seek any
contribution or reimbursement from the Borrower or any other Person in respect
of payments made by the Guarantors hereunder, until all amounts owing to the
Investors, Agent and the Lenders by the Borrower on account of the Guaranteed
Obligations and all amounts owing hereunder are paid in full and the Commitments
are terminated. If any amount shall be paid to the Guarantors on account of such
subrogation rights at any time when all of the Guaranteed Obligations and all
amounts owing hereunder shall not have been paid in full or the Commitments
shall not have been terminated, such amount shall be held by the Guarantors in
trust for the Investors, Agent and the Lenders, segregated from other funds of
the Guarantors, and shall, forthwith upon receipt by the Guarantors, be turned
over to the Agent in the exact form received by the Guarantors (duly
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indorsed by the Guarantors to the Agent, if required), to be applied against the
Guaranteed Obligations, whether matured or unmatured, in such order as the Agent
may determine.
5. Amendments, etc. with respect to the Guaranteed
Obligations; Waiver of Rights. The Guarantors shall remain obligated hereunder
notwithstanding that, without any reservation of rights against the Guarantors
and without notice to or further assent by the Guarantors, any demand for
payment of any of the Guaranteed Obligations made by the Investors, Agent or any
Lender may be rescinded by such party and any of the Guaranteed Obligations
continued, and the Guaranteed Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Investors, Agent or any Lender, and the Credit
Agreement, the Participation Agreement and the other Operative Agreements may be
amended, modified, supplemented or terminated, in whole or in part, as the Agent
(or the Required Lenders, as the case may be) may deem advisable from time to
time in accordance with the terms thereof, and any collateral security,
guarantee or right of offset at any time held by the Investors, Agent or any
Lender for the payment of the Guaranteed Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Investors, Agent nor any Lender
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Guaranteed Obligations or for this Guarantee
or any property subject thereto. When making any demand hereunder against the
Guarantors, the Investors, Agent or any Lender may, but shall be under no
obligation to, make a similar demand on the Borrower or any other guarantor, and
any failure by the Investors, Agent or any Lender to make any such demand or to
collect any payments from the Borrower or any other guarantor or any release of
the Borrower or such other guarantor shall not relieve the Guarantors from their
obligations under this Guarantee, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of the Investors, Agent or
any Lender against the Guarantors. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.
6. Guarantee Absolute and Unconditional. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Guaranteed Obligations and notice of or proof of reliance by the
Investors, Agent or any Lender upon this Guarantee or acceptance of this
Guarantee, the Guaranteed Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this Guarantee; and all dealings between the
Borrower and such Guarantor, on the one hand, and the Agent and the Lenders, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or such Guarantor with respect to the Guaranteed
Obligations. Each Guarantor understands and agrees that this Guarantee shall be
construed as a continuing, absolute and unconditional guarantee and surety of
payment without regard to (a) the validity, regularity or enforceability of the
Credit Agreement or any other Operative Agreement, any of the Guaranteed
Obligations or any other collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time held by the
Investors, Agent or any Lender, (b) any defense, set-off or counterclaim (other
than a defense of payment or performance) which may at any time be available to
or be asserted by the Borrower or such Guarantor against the
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Investors, Agent or any Lender, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Guaranteed Obligations, or of such Guarantor
under this Guarantee, in bankruptcy or in any other instance. When pursuing its
rights and remedies hereunder against any Guarantor, the Investors, the Agent
and any Lender may, but shall be under no obligation to, pursue such rights and
remedies as it may have against the Borrower or any other Person or against any
collateral security or guarantee for the Guaranteed Obligations or any right of
offset with respect thereto, and any failure by the Investors, Agent or any
Lender to pursue such other rights or remedies or to collect any payments from
the Borrower or any such other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
the Borrower or any such other Person or any such collateral security, guarantee
or right of offset, shall not relieve such Guarantor of any liability hereunder,
and shall not impair or affect the rights and remedies, whether express, implied
or available as a matter of law, of the Investors, the Agent and the Lenders
against such Guarantor. This Guarantee shall remain in full force and effect and
be binding in accordance with and to the extent of its terms upon such Guarantor
and the successors and assigns thereof, and shall inure to the benefit of the
Investors, the Lessor, the Agent and the Lenders, and their respective
successors, indorsees, transferees and assigns, until all the Guaranteed
Obligations and the obligations of such Guarantor under this Guarantee shall
have been satisfied by payment in full and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from any Guaranteed Obligations.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the Investors, Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or the Guarantors, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or the Guarantors or any substantial part of its property, or
otherwise, all as though such payments had not been made.
8. Payments. The Guarantors hereby guarantee that payments
hereunder will be paid to the Agent without set-off or counterclaim in Dollars
at the office of the Agent located at 270 Park Avenue, New York, New York 10017.
9. Representations, Warranties. In order to induce the
Lenders to enter into the Credit Agreement and to make the Loans, the Investors
to enter into the Participation Agreement and make the Investor Contribution and
the Lessor to enter into the Lease, Holdings and HCC hereby jointly and
severally represent and warrant to the Beneficiaries as follows, all of which
shall survive the execution and delivery of this Guarantee and the Credit
Agreement and the making of the Loans:
9.1 Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of HCC and its consolidated Subsidiaries as at
September 30, 1999 (including the notes thereto) (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
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consummation of the TIDES issuance. The Pro Forma Balance Sheet has been
prepared based on the best information available to Holdings and HCC as of the
date of delivery thereof, and presents fairly in all material respects on a
pro forma basis the estimated financial position of HCC and its consolidated
Subsidiaries as at September 30, 1999, assuming that the events specified in the
preceding sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of HCC as at
December 31, 1997 and December 31, 1998, 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 condition of
HCC as at such date, and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of HCC as at March 31, 1999 and June 30,
1999, and the related unaudited consolidated statements of income and cash flows
for the three and six-month periods ended on such date, present fairly in all
material respects the consolidated financial condition of HCC as at such date,
and the consolidated results of its operations and its consolidated cash flows
for the three and six-month periods then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, 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, 1999 to and including the date hereof there has been no
Disposition by Holdings or any of its Subsidiairies, as applicable, of any
material part of their business or property (other than to Holdings or any of
its Subsidiaries).
9.2 No Change. Since September 30, 1999 (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 9.2 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.
9.3 Corporate Existence; Compliance with Law. Each Guarantor
(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.
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9.4 Corporate Power; Authorization; Enforceable Obligations.
Each Guarantor has the corporate power and authority, and the legal right, to
make, deliver and perform the Operative Agreements to which it is a party. HCC
has the corporate power and authority, and the legal right, to perform the
Operative Agreements and has taken all necessary corporate action to authorize
the performing under the Operative Agreements on the terms and conditions of the
Operative Agreements. Each Guarantor has taken all necessary corporate action to
authorize the execution, delivery and performance of this Guarantee. 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 that have been
obtained and 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 Loans or with the execution, delivery, performance,
validity or enforceability of this Guarantee or any of the other Operative
Agreements, except consents, authorizations, filings and notices described in
Schedule 9.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect. This Guarantee has been duly
executed and delivered on behalf of the Guarantors party hereto. This Guarantee
constitutes, each Operative Agreement when executed and delivered will
constitute, a legal, valid and binding obligation of the Guarantors party
thereto enforceable against such Guarantors 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).
9.5 No Legal Bar. The execution, delivery and performance of
this Guarantee and the other Operative Agreements, the Loans and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of any Guarantor 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.
9.6 No Material Litigation. Except as set forth in HCC's
Form 10-Q, filed with respect to the period ending September 30, 1999, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of HCC, threatened by or
against any Guarantor or against any of their respective properties or revenues
(a) with respect to this Guarantee or the other Operative Agreements or any of
the transactions contemplated hereby, or (b) which would reasonably be expected
to have a Material Adverse Effect.
9.7 No Default. None of the Guarantors 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.
9.8 Ownership of Property; Liens; Leases of Equipment. Each
of the Guarantors 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
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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 Section 11.3. None of the Equipment or
Inventory (as defined in the Uniform Commercial Code) owned by any Guarantor has
been leased by such Guarantor as lessor, except pursuant to operating leases
(which do not constitute Financing Leases). As used herein, Equipment or
Inventory leased by a Guarantor under a Financing Lease shall be deemed "owned"
by such Guarantor.
9.9 Intellectual Property. Each Guarantor 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 each Guarantor, 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 each Guarantor 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 Guarantors 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.
9.10 Taxes. Each of the Guarantors has filed or caused to be
filed all tax returns which, to the knowledge of each Guarantor, 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
Guarantors, as the case may be); no tax Lien has been filed against the
property of any Guarantor, and, to the knowledge of each Guarantor, no claim is
being asserted, with respect to any such tax, fee or other charge.
9.11 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 Agent,
HCC will furnish to the 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.
9.12 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
9
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 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.
9.13 Investment Company Act; Other Regulations. None of the
Guarantors 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 Guarantors 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 Guarantors 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.
9.14 Subsidiaries. As of the Initial Closing Date, Holdings
has no Subsidiaries other than as set forth on Schedule 9.14. Except if a
Guarantor, other than cash or Cash Equivalents located in bank accounts at the
Agent, 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.
9.15 Environmental Matters. Each of the representations and
warranties set forth in paragraphs (a) through (e) of this subsection is true
and correct with respect to each parcel of real property owned or operated by
any of the Guarantors (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 9.15, the Properties do
not contain, and have not previously contained, in, on, or under,
including, without limitation, the soil and groundwater thereunder, any
Hazardous Substances in concentrations which violate Environmental Laws.
(b) Except as set forth on Schedule 9.15, the Properties and
all operations and facilities at the Properties are in compliance with
all Environmental Laws, and there is no Hazardous Substances
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.
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(c) Except as set forth on Schedule 9.15, none of the
Guarantors 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 Guarantor any such notice.
(d) Hazardous Substances 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
Substances 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 Guarantor.
(e) There are no governmental, administrative actions or
judicial proceedings pending or contemplated under any Environmental
Laws to which any Guarantor 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.
9.16 Accuracy and Completeness of Information. The factual
statements contained in the Operative Agreements and each other agreement,
instrument, certificate and document related thereto and any other certificates
or documents furnished or to be furnished to the Investors, the Agent or the
Lenders by any Guarantor from time to time in connection with this Guarantee (in
any case excluding any of the financial statements referred to in Section 9.l(a)
and 10.1 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 or therein.
9.17 Year 2000. The Year 2000 date change has not resulted in
disruption of Holdings' and its Subsidiaries' computer hardware, software,
databases, systems and other equipment containing embedded microchips (including
systems and equipment supplied by others or with which Holdings' or its
Subsidiaries' systems interface), or to Holdings' or its Subsidiaries'
operations or business systems, or to the best of Holdings' and its
Subsidiaries' knowledge, to the operations or business systems of Holdings'
major vendors, customers, suppliers and counterparties. Holdings has no reason
to believe that liabilities and expenditures related to the Year 2000
date-change (including, without limitation, costs caused by reprogramming
errors, the failure of others' systems or equipment, and the potential
liability, if any, of Holdings or its Subsidiaries for Year 2000 related costs
incurred or disruption experienced by others) will result in a Default or a
Material Adverse Effect.
9.18 Senior Indebtedness. The Guaranteed Obligations
constitute "Senior Indebtedness" of HCC under and as defined in the Shareholder
Subordinated Loan Agreement.
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The obligations of the Guarantors under the Agreement constitute "Senior
Indebtedness" of such applicable Guarantors under and as defined in the
Shareholder Subordinated Loan Agreement.
9.19 Representations and Warranties in Existing Guarantee.
The representations and warranties contained in Section 9 of the Existing
Guarantee 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 Guarantee.
10. Affirmative Covenants of the Guarantor. Each Guarantor
hereby covenants and agrees that so long as this Guarantee is in effect and
until the Commitments have terminated and the Guaranteed Obligations and all
amounts owing hereunder are paid in full such Guarantor will:
10.1 Financial Statements. Furnish to each Lender and each of
the Investors:
(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 LLP 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;
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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).
10.2 Certificates; Other Information. Furnish to each Lender
and each of the Investors:
(a) concurrently with the delivery of the financial
statements referred to in subsection 10.1(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;
(b) concurrently with the delivery of the financial
statements referred to in subsections 10.1(a) and 10.1(c), a certificate
of a Responsible Officer stating that, to the best of such Responsible
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 Guarantee and the other Operative
Agreements to which it is a party to be observed, performed or satisfied
by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate;
(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 Holding'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 Holdings 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 10.1(b) and (c), a management
summary describing and analyzing the performance of Holdings and its
Subsidiaries during the periods covered by such financial statements;
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(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
(g) promptly, such additional financial and other
information as any Lender or either of the Investors may from time to
time reasonably request.
10.3 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 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.
10.4 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 Section 11.5; 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.
10.5 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.
10.6 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 either of the Investors or 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 such
Investor, 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 10.6.
10.7 Notices. Promptly give notice to the Investors, Agent
and each Lender of:
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(a) the occurrence of any Default or Event of Default of
which any Guarantor has actual knowledge;
(b) any (i) default or event of default by any Guarantor 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 to
Guarantor's knowledge any default or event of default by any third party
under or with respect to any Contractual Obligation of said third party
with any Guarantor or any of its Subsidiaries in a respect which, if not
cured, would reasonably be expected to have a Material Adverse Effect or
(ii) litigation, investigation or proceeding of which any Guarantor has
actual knowledge which may exist at any time between any Guarantor or
any Subsidiary of such Guarantor 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 any Guarantor or
any Subsidiary of such Guarantor of which such Guarantor 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 any Guarantor 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 such Guarantor, 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 the applicable Guarantor proposes to take with respect
thereto.
10.8 Environmental Laws.
(a) 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;
15
(b) 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; and
(c) Defend, indemnify and hold harmless the Investors, the
Lessor, the 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 any Guarantor or any Subsidiary of such
Guarantor, 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.
(d) 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 any Guarantor or
any of its Qualified Subsidiaries.
10.9 Subsequent Guarantees. Each Guarantor shall cause each
Qualified Subsidiary (other than the TIDES Trust, HMS, MAC and Collicut) of such
Guarantor 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
this Guarantee, substantially in the form of Exhibit A hereto within one-year
after the later of (i) the date on which such Qualified Subsidiary becomes a
Subsidiary of such Guarantor 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 this Guarantee.
11. Negative Covenants. Each Guarantor hereby agrees that so
long as this Guarantee is in effect and until the Commitments have terminated
and the Guaranteed Obligations and all amounts owing hereunder are paid in full,
the Guarantor shall not, directly or indirectly:
11.1 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.
16
(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 Indebtedness to Consolidated Adjusted
EBITDA. Permit the ratio of Consolidated Indebtedness of Holdings to
Consolidated Adjusted EBITDA for the four consecutive fiscal quarters of
Holdings most recently ended to be greater than 5.25 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.
(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 Indebtedness Ratio") to be greater than 4.0 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.
11.2 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 Guarantors under the Corporate Credit Agreement and
the other Loan Document as defined in the Corporate Credit Agreement;
(b) Indebtedness of HCC to any of its Subsidiaries and of
any such Subsidiary which is a Guarantor to HCC or any other Subsidiary
of HCC;
(c) Indebtedness outstanding on the Initial Closing Date and
listed on, Schedule 11.2 and all extensions, renewals, replacements,
refinancings and modifications thereof permitted hereunder;
(d) Indebtedness of Holdings and any of its Subsidiaries in
an aggregate amount not to exceed $10,000,000 at any time outstanding
which is recourse only to the assets of HCC or any Subsidiaries acquired
or financed with the proceeds of such Indebtedness;
(e) Indebtedness in respect of Financing Leases provided
that, after giving effect thereto, subsection 11.7 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 Investors and all
17
extensions, renewals, replacements, refinancings and modifications
thereof permitted hereunder;
(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; and
(j) Indebtedness not contemplated by clauses (a)-(i) above
not exceeding $5,000,000 in the aggregate at any time outstanding.
11.3 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;
(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;
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(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 the Corporate Credit 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 11.2(e);
(l) Liens in existence on the Initial Closing Date listed
on, Schedule 11.3(l), securing Indebtedness permitted by subsection
11.2(c), provided that no such Lien is spread to cover any additional
property after the Initial 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
(other than the Equipment), 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 11.2(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 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 the Guarantors listed on Schedule
11.3(n), provided that no such Lien is spread to cover any additional
property after the Initial 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 11.2(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 11.2(d) so long as such Liens
attach only to the assets acquired or financed pursuant to such
subsection;
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(r) Liens on the property or assets of a Person which
becomes a Subsidiary after the date hereof securing Indebtedness
permitted by subsection 11.2(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 11.3(t); and
(u) Liens not otherwise permitted in clauses (a)-(t) above
securing Indebtedness not exceeding $2,500,000 in the aggregate.
11.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except:
(a) the Corporate 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 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 the Corporate Credit Agreement;
(f) Guarantee Obligations of Holdings and any of its
Subsidiaries arising pursuant to the Equipment Lease Transactions;
(g) the Guarantee 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; and
(h) the Subordinated Guarantee Obligations of Holdings
arising under the TIDES Guarantees.
11.5 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
20
property, business or assets, or make any material change in its present method
of conducting business, except:
(a) any Qualified Subsidiary may be merged or consolidated
with or into any other 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 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;
(c) any Qualified Subsidiary may sell, lease, assign,
transfer or otherwise dispose of any or all of its assets to Holdings or
any Qualified Subsidiary;
(d) any Unqualified Subsidiary may be merged or consolidated
with or into any other Person and/or may sell, lease, assign, transfer
or otherwise dispose of any of its assets (upon voluntary liquidation or
otherwise) to any other Person 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;
(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; and
(h) HCC may merge with another Subsidiary of Holdings in
connection with the Restructuring.
11.6 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
$5,000,000 during any fiscal year of Holdings;
21
(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 11.5;
(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 of natural gas compressors to the Lessor in
connection with the Equipment Lease Transactions; and
(i) the lease of assets as listed on Schedule 11.6(i).
11.7 Limitation on Leases. Permit Consolidated Lease Expense
for any fiscal year of Holdings to exceed $10,000,000.
11.8 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, except that if no Default or Event of
22
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 $25,000,000, (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, and (v) Holdings may declare or
pay dividends on shares of Holdings common stock, provided that the aggregate
amount of such declarations or payments pursuant to this clause (v) above 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 Closing Date to the end of Holdings' most recently ended
fiscal quarter for which financial statements have been delivered to the Agent
and the Lenders pursuant to subsection 10.1 at or prior to the time of such
declaration or payment.
11.9 Limitation on Derivatives. Enter into or assume any
obligations with respect to any Derivatives except for 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 the Corporate Credit Agreement or the Equipment
Lease Transactions; provided, that the aggregate notional amounts of such
Derivatives shall not exceed the aggregate amount of loans outstanding under the
Corporate Credit Agreement and the Equipment Lease Transactions.
11.10 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;
(d) Investments by Holdings in its Subsidiaries which are or
become Guarantors and investments by such Subsidiaries which are or
become Guarantors in Holdings and in other Subsidiaries of Holdings
which are or become Guarantors;
23
(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 $20,000,000 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 and the Loans, and
the loans to be made and the Letters of Credit to be issued in
connection with the Corporate Credit Agreement, the sum of (i) the cash
and Cash Equivalents then held by Holdings and (ii) an amount equal to
the difference between (A) the aggregate Commitments under the Corporate
Credit Agreement, the aggregate Commitments and the aggregate Investor
Commitments under the Equipment Lease Participation Agreements in effect
at such time and (B) the Aggregate Outstanding Extensions of Credit
under the Corporate Credit Agreement, the Available Commitments and the
Available Investor Commitments 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 $25,000,000 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; and
(j) the purchase by the TIDES Trust of the TIDES Debentures,
as contemplated under the TIDES Declaration of Trust.
11.11 Limitation on Optional Payments and Modifications of
Debt Instruments. (i) Make any optional payment or prepayment on or redemption,
purchase or defeasance of any portion of the Shareholder Subordinated Debt, (ii)
make any optional payment or prepayment in excess of $10,000,000 during any
calendar year on or redemption of any Indebtedness other than (a) 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 (b) any optional payment, prepayment or redemption of any Indebtedness
pursuant to the Corporate Credit Agreement, the Equipment Lease Credit
Agreements or (iii) amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms of any Indebtedness other
than (a) any Indebtedness pursuant to the Corporate Credit Agreement, the
Equipment Lease Credit Agreements 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 less restrictive.
24
11.12 Transactions with Affiliates. Except for transactions of
a type set forth on Schedule 11.12, 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.
11.13 Sale and Leaseback. Except for the transactions of a
type set forth on Schedule 11.13, enter into any arrangement with any Person
where Holdings or any of the Subsidiaries of Holdings is the lessee 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 11.2 is not
contravened and (ii) HCC may enter into Sale and Leaseback Transactions as
lessee for natural gas compressors in connection with the Equipment Lease
Transactions.
11.14 Corporate Documents. Amend its Certificate of
Incorporation in any way adverse to the interests of the Agent and the Lenders.
11.15 Fiscal Year. Permit the fiscal year of Holdings to end
on a day other than December 31.
11.16 Nature of Business. 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, and (f) any
activities related thereto which are consistent with past practice and conducted
in the ordinary course of business.
11.17 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.
12. Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) when delivered by hand, (b) one
Business Day after delivery to a nationally recognized courier service
specifying overnight delivery, (c) three Business Days after being deposited in
the mail, certified or registered, postage prepaid, or (d) in the case of
facsimile notice, when sent and receipt has been confirmed, addressed as
follows:
25
(a) if to the Agent or any Lender, at its address or
transmission number for notices provided in Section 9.2 of the Credit
Agreement; and
(b) if to any Guarantor, at its address or transmission
number for notices set forth on the signature page below.
(c) if to the Investors, at their address or transmission
number for notices provided in Section 13.3 of the Participation
Agreement.
The Investors, Agent, each Lender and each Guarantor may
change its address and transmission numbers for notices by notice in the manner
provided in this Section 12.
13. Severability. Any provision of this Guarantee 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.
14. Integration. This Guarantee and the other Operative
Agreements represents the agreement of the Guarantors with respect to the
subject matter hereof and there are no promises or representations by the
Investors, Agent, any Lender or any Guarantor relative to the subject matter
hereof not reflected herein or in the other Operative Agreements.
15. Amendments in Writing: No Waiver: Cumulative Remedies
(a) None of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except as provided in Section 9.1 of the
Credit Agreement.
(b) Neither the Investors, Agent nor any Lender shall not by
any act (except by a written instrument pursuant to Section 15(a) hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Investors, Agent or any Lender,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by both Investors, Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Investors, Agent or such Lender would
otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
16. Section Headings. The section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
26
17. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of the Guarantors and shall inure to the benefit
of the Investors, Agent and the Lenders and their successors and assigns.
18. SUBMISSION TO JURISDICTION; WAIVERS. (a) EACH GUARANTOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND THE OTHER OPERATIVE
AGREEMENTS 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;
(ii) 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;
(iii) 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
SECTION 12 OR AT SUCH OTHER ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO;
(iv) 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 SUE IN ANY OTHER JURISDICTION; AND
(v) 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 SUBSECTION ANY SPECIAL, EXEMPLARY,
PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES.
19. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
20. Survival of Representations, Warranties, etc. All
representations, warranties, covenants and agreements made herein and in
statements or certificates delivered
27
pursuant hereto shall survive any investigation or inspection made by or on
behalf of the Lessor and shall continue in full force and effect until all of
the obligations of the Guarantors under this Guaranty shall be fully performed
in accordance with the terms hereof, and until the payment in full of all the
Guaranteed Obligations, and until performance in full of all obligations of HCC
in accordance with the terms and provisions of such agreements.
21. Authority of Agent. Each Guarantor acknowledges that the
rights and responsibilities of the Agent under this Guarantee with respect to
any action taken by the Agent or the exercise or non-exercise by the Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Guarantee shall, as between the
Investors, Agent and the Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Agent and each Guarantor, the Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and no Guarantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
22. Third Party Beneficiaries. Each Guarantor expressly
acknowledges and agrees that each Indemnified Person shall be a third party
beneficiary of this Guaranty.
23. Right of Contribution. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate share
of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder who has not
paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Section 4 hereof.
The provisions of this Section shall in no respect limit the obligations and
liabilities of any Guarantor to Beneficiaries and each Guarantor shall remain
liable to the Beneficiaries for the full amount guaranteed by such Guarantor
hereunder.
24. WAIVER OF JURY TRIAL. THE GUARANTORS EACH HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS GUARANTY AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
HANOVER COMPRESSOR COMPANY
By: /s/ [ILLEGIBLE]
----------------------------
Name: [ILLEGIBLE]
Title: Treasurer
HANOVER COMPRESSION INC.
By: /s/ [ILLEGIBLE]
----------------------------
Name: [ILLEGIBLE]
Title: Treasurer
HANOVER COMPRESSOR LIMITED
HOLDINGS, LLC
by Hanover General Holdings, Inc.,
as sole member
By: /s/ [ILLEGIBLE]
----------------------------
Name: [ILLEGIBLE]
Title: Treasurer
HANOVER MAINTECH LIMITED
PARTNERSHIP
by Hanover General Holdings, Inc.,
as general partner
By: /s/ [ILLEGIBLE]
----------------------------
Name: [ILLEGIBLE]
Title: Treasurer
HANOVER/SMITH LIMITED
PARTNERSHIP
by Hanover General Holdings, Inc.,
as general partner
By: /s/ [ILLEGIBLE]
----------------------------
Name: [ILLEGIBLE]
Title: Treasurer
HANOVER LAND LIMITED
PARTNERSHIP
by Hanover General Holdings, Inc.,
general partner
By: /s/ [ILLEGIBLE]
----------------------------
Name: [ILLEGIBLE]
Title: Treasurer
Address for Notices for all Guarantors:
12001 North Houston Rosslyn
Houston, Texas 77806
Attention: Chief Financial Officer
Telecopy: 281-477-0821
with a copy to:
Latham & Watkins
Sears Tower, Suite 5800
233 South Wacker Drive
Chicago, Illinois 60602
Attention: Richard S. Meller and Michael A. Pucker
Telecopy: 312-993-9767