EXHIBIT 10.7
SUBSIDIARIES' GUARANTEE
SUBSIDIARIES' GUARANTEE, dated as of December 15, 2003, made by each of
the corporations that are signatories hereto (the "Guarantors"), in favor of
JPMORGAN CHASE BANK, as agent (in such capacity, the "Administrative Agent") for
the lenders (the "Lenders") parties to the Credit Agreement, dated as of
December 15, 2003 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Hanover Compressor Company, a Delaware
corporation ("Hanover"), Hanover Compression Limited Partnership, a Delaware
limited partnership (the "HCLP"), the Lenders, Bank One, NA, as syndication
agent, and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to HCLP upon the terms and subject to the conditions set
forth therein, to be evidenced by the Notes issued by HCLP under the Credit
Agreement;
WHEREAS, each Guarantor is a Qualified Subsidiary of HCLP;
WHEREAS, the proceeds of the Loans will be used in part to enable HCLP
to make valuable transfers (as determined as provided herein) to some of the
Guarantors in connection with the operation of their respective businesses;
WHEREAS, it is a condition precedent to the obligation of the Lenders
to amend and restate the Credit Agreement and to make their respective Loans to
HCLP under the Credit Agreement that the Guarantors shall have executed and
delivered this Guarantee to the Administrative Agent for the ratable benefit of
the Lenders.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to amend and restate the Credit Agreement
and to induce the Lenders to make their respective loans to HCLP under the
Credit Agreement, the Guarantors hereby agree with the Administrative Agent, for
the ratable benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.
(b) As used herein, "Obligations" means the collective reference
to the unpaid principal of and interest on any outstanding Loans, Reimbursement
Obligations and all other obligations and liabilities of HCLP to the
Administrative Agent or the Lenders (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement after the
maturity of the Loans and interest accruing at the then applicable rate provided
in the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
HCLP, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Credit Agreement, the Notes, the Letters of
Credit,
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the other Loan Documents or any other document made, delivered or given in
connection therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative Agent or
to the Lenders that are required to be paid by HCLP or the Guarantor pursuant to
the terms of the Credit Agreement or this Agreement or any other Loan Document).
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision of this Guarantee, and section and
paragraph references are to this Guarantee unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) Subject to the provisions of paragraph 2(b),
each of the Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantees to the Administrative Agent, for the ratable benefit of
the Lenders and their respective successors, indorsees, transferees and assigns,
the prompt and complete payment and performance by HCLP when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents 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.
(c) Each Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Administrative Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, such Guarantor under this Guarantee. This
Guarantee shall remain in full force and effect until the Obligations are paid
in full and the Commitments are terminated, notwithstanding that from time to
time prior thereto HCLP may be free from any Obligations.
(d) Each Guarantor agrees that the Obligations may at any time and
from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing this Guarantee or affecting the rights and remedies of the
Administrative Agent or any Lender hereunder.
(e) No payment or payments made by HCLP, any of the Guarantors,
any other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from HCLP, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment or payments other than payments made by
such Guarantor in respect of the Obligations or payments received or collected
from such Guarantor in respect of the Obligations, remain
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liable for the Obligations up to the maximum liability of such Guarantor
hereunder until the Obligations are paid in full and the Commitments are
terminated.
3. 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 5 hereof. The provisions
of this Section shall in no respect limit the obligations and liabilities of any
Guarantor to the Administrative Agent and the Lenders, and each Guarantor shall
remain liable to the Administrative Agent and the Lenders for the full amount
guaranteed by such Guarantor hereunder.
4. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each Guarantor hereby irrevocably
authorizes each Lender at any time and from time to time without notice to such
Guarantor or any other Guarantor, any such notice being expressly waived by each
Guarantor, to set-off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender to or for the credit or the account of such Guarantor, or
any part thereof in such amounts as such Lender may elect, against and on
account of the obligations and liabilities of such Guarantor to such Lender
hereunder and claims of every nature and description of such Lender against such
Guarantor, in any currency, whether arising hereunder, under the Credit
Agreement, any Note, any Letter of Credit or any Loan Document, as such Lender
may elect, whether or not the Administrative Agent or any Lender has made any
demand for payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Administrative Agent and each Lender shall notify
such Guarantor promptly of any such set-off and the application made by the
Administrative Agent or such Lender, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of the Administrative Agent and each Lender under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent or such Lender may have.
5. No Subrogation. Notwithstanding any payment or payments made
by any of the Guarantors hereunder or any set-off or application of funds of any
of the Guarantors by any Lender, no Guarantor shall be entitled to be subrogated
to any of the rights of the Administrative Agent or any Lender against HCLP or
any other Guarantor or any collateral security or guarantee or right of offset
held by any Lender for the payment of the Obligations, nor shall any Guarantor
seek or be entitled to seek any contribution or reimbursement from HCLP or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by HCLP on account
of the Obligations are paid in full and the Commitments are terminated. If any
amount shall be paid to any Guarantor on account of such subrogation rights at
any time when all of the Obligations shall not have been paid in full, such
amount shall be held by such Guarantor in trust for the Administrative Agent and
the Lenders, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such
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Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as the Administrative Agent may determine.
6. Amendments, etc. with respect to the Obligations; Waiver of
Rights. Each Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, any demand for payment of any of the
Obligations made by the Administrative Agent or any Lender may be rescinded by
such party and any of the Obligations continued, and the 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 Administrative
Agent or any Lender, and the Credit Agreement, the Notes and the other Loan
Documents and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Administrative Agent (or the Required Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any Lender for the
payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative 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 Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against any of the Guarantors, the
Administrative Agent or any Lender may, but shall be under no obligation to,
make a similar demand on HCLP or any other Guarantor or guarantor, and any
failure by the Administrative Agent or any Lender to make any such demand or to
collect any payments from HCLP or any such other Guarantor or guarantor or any
release of HCLP or such other Guarantor or guarantor shall not relieve any of
the Guarantors in respect of which a demand or collection is not made or any of
the Guarantors not so released of their several obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Administrative Agent or any Lender
against any of the Guarantors. For the purposes hereof "demand" shall include
the commencement and continuance of any legal proceedings.
7. Guarantee Absolute and Unconditional. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon this Guarantee or acceptance of this Guarantee, the 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 HCLP and any of the Guarantors, on the one
hand, and the Administrative 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 HCLP or any of the
Guarantors with respect to the Obligations. Each Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of the Credit Agreement, any Note or any other Loan
Document, any of the Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or
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from time to time held by the Administrative 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 HCLP
against the Administrative Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of HCLP or such Guarantor)
which constitutes, or might be construed to constitute, an equitable or legal
discharge of HCLP for the 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 Administrative Agent and any
Lender may, but shall be under no obligation to, pursue such rights and remedies
as it may have against HCLP or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Administrative Agent or any Lender to pursue
such other rights or remedies or to collect any payments from HCLP 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 HCLP 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 Administrative 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 each Guarantor and the
successors and assigns thereof, and shall inure to the benefit of the
Administrative Agent and the Lenders, and their respective successors,
indorsees, transferees and assigns, until all the Obligations and the
obligations of each 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 HCLP may be free from
any Obligations.
8. 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 Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of HCLP or any Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, HCLP or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
9. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in U.S. Dollars at the office of the Administrative Agent located
at 270 Park Avenue, New York, New York 10017.
10. Representations and Warranties. Each Guarantor hereby
represents and warrants that:
(a) it is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the corporate power and authority and the legal right to own and operate its
property, to lease the property it operates and to conduct the business in which
it is currently engaged;
(b) it has the corporate power and authority and the legal right
to execute and deliver, and to perform its obligations under, this Guarantee,
and has taken all necessary corporate action to authorize its execution,
delivery and performance of this Guarantee;
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(c) this Guarantee constitutes a legal, valid and binding
obligation of such Guarantor enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally, general equitable principles and an implied
covenant of good faith and fair dealing;
(d) the execution, delivery and performance of this Guarantee will
not violate any provision of any Requirement of Law or Contractual Obligation of
such Guarantor and will not result in or require the creation or imposition of
any Lien on any of the properties or revenues of such Guarantor pursuant to any
Requirement of Law or Contractual Obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder or creditor of such
Guarantor) is required in connection with the execution, delivery, performance,
validity or enforceability of this Guarantee; and
(f) no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of such
Guarantor, threatened by or against such Guarantor or against any of its
properties or revenues with respect to this Guarantee or any of the transactions
contemplated hereby, which would reasonably be expected to have a material
adverse effect on the business, operations, property or financial or other
condition of such Guarantor.
11. Authority of Administrative Agent. Each Guarantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Guarantee with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative 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 Administrative 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
Administrative Agent and such Guarantor, the Administrative 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.
12. Notices. All notices, requests and demands to or upon the
Administrative Agent, any Lender or any Guarantor to be effective shall be in
writing (or by telex, fax or similar electronic transfer confirmed in writing)
and shall be deemed to have been duly given or made when delivered by hand or if
by overnight courier service, when received or if given by mail, when deposited
in the mails by certified mail, return receipt requested, or if by telex, fax or
similar electronic transfer, when sent and receipt has been confirmed, addressed
as follows:
(a) if to the Administrative Agent or any Lender, at its address
or transmission number for notices provided in subsection 11.2 of the Credit
Agreement; and
(b) if to any Guarantor, at its address or transmission number for
notices set forth under its signature below.
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The Administrative Agent, each Lender and each Guarantor may change its
address and transmission numbers for notices by notice in the manner provided in
this Section.
13. Counterparts. This Guarantee may be executed by one or more of
the Guarantors on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Guarantee signed by all the
Guarantors shall be lodged with the Administrative Agent.
14. 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.
15. Integration. This Guarantee represents the agreement of each
Guarantor with respect to the subject matter hereof and there are no promises or
representations by the Administrative Agent or any Lender relative to the
subject matter hereof not reflected herein.
16. 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 by a written instrument executed by
each Guarantor and the Administrative Agent, provided that any provision of this
Guarantee may be waived by the Administrative Agent and the Lenders in a letter
or agreement executed by the Administrative Agent or by telex or facsimile
transmission from the Administrative Agent.
(b) Neither the Administrative Agent nor any Lender shall by any
act (except by a written instrument pursuant to paragraph 16(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 Administrative 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 the Administrative 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 Administrative 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.
17. 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.
18. Successors and Assigns. This Guarantee shall be binding upon
the successors and assigns of each Guarantor and shall inure to the benefit of
the Administrative Agent and the Lenders and their successors and assigns.
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19. Governing Law. This Guarantee shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York.
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IN WITNESS WHEREOF, each of 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.
ENERGY TRANSFER -- HANOVER VENTURES L.P.
GULF COAST DISMANTLING, INC.
HANOVER ASIA, INC.
HANOVER AUSTRALIA, L.L.C.
HANOVER COLOMBIA LEASING LLC
HANOVER COMPRESSED NATURAL GAS SERVICES, LLC
HANOVER COMPRESSOR NIGERIA, INC.
HANOVER COMPRESSION GENERAL HOLDINGS, LLC
HANOVER ECUADOR L.L.C.
HANOVER GENERAL ENERGY TRANSFER, LLC
HANOVER IDR, INC.
HANOVER LIMITED ENERGY TRANSFER, LLC
HANOVER MEASUREMENT, LLC
HANOVER PARTNERS NIGERIA LLC
HANOVER POWER, LLC
HANOVER POWER (GATES), LLC
HANOVER SPE, L.L.C.
HANOVER/TRINIDAD, L.L.C.
HC CAYMAN LLC
HC LEASING, INC.
HCC HOLDINGS, INC.
HCL COLOMBIA, INC.
KOG, INC.
NIGERIAN LEASING, LLC
SOUTHWEST INDUSTRIES, INC.
By: /s/ John E. Jackson
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Name: John E. Jackson
Title: Vice President and Treasurer
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HANOVER HL HOLDINGS, LLC
HANOVER HL, LLC
By: /s/ Victoria L. Garrett
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Name: Victoria L. Garrett
Title: Manager