EXHIBIT 4.4
ANNEX A
Rules of Usage and Definitions
Rules of Usage
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The following rules of usage shall apply to this Annex A and the
Operative Agreements (and each appendix, schedule, exhibit and annex to the
foregoing) unless otherwise required by the context or unless otherwise defined
therein:
(a) Except as otherwise expressly provided, any definitions defined
herein or in any other document shall be equally applicable to the singular
and plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any document
to articles, sections, paragraphs, clauses, annexes, appendices, schedules
or exhibits are references to articles, sections, paragraphs, clauses,
annexes, appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any
document are solely for convenience of reference and shall not constitute a
part of any such document nor shall they affect the meaning, construction
or effect of any provision thereof.
(d) References to any Person shall include such Person, its successors
and permitted assigns and transferees.
(e) Except as otherwise expressly provided, reference to any agreement
means such agreement as amended, modified, extended or supplemented from
time to time in accordance with the applicable provisions thereof.
(f) Except as otherwise expressly provided, references to any law
includes any amendment or modification to such law and any rules or
regulations issued thereunder or any law enacted in substitution or
replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the
context clearly indicates to the contrary, refer to the whole of the
applicable document and not to any particular article, section, subsection,
paragraph or clause thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof
the rule of ejusdem generis shall not be applicable to limit a general
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statement, followed by or referable to an enumeration of specific matters,
to matters similar to those specifically mentioned.
(i) Each of the parties to the Operative Agreements and their counsel
have reviewed and revised, or requested revisions to, the Operative
Agreements, and the usual
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rule of construction that any ambiguities are to be resolved against the
drafting party shall be inapplicable in the construing and interpretation of the
Operative Agreements and any amendments or exhibits thereto.
(j) The Rules of Usage and Definitions relate to a number of the
Operative Agreements but for convenience are attached to the Participation
Agreement. Notwithstanding the foregoing, a provision concerning the amendment
to an Operative Agreement shall govern the amendment of this Annex A with
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respect to the definitions used or referenced in such Operative Agreement.
Definitions
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"ABR" shall mean, for any day, a rate per annum (rounded upwards, if
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necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof: "Prime Rate" shall mean the rate of interest per annum publicly
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announced from time to time by Chase as its prime rate in effect at its
principal office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by Chase in connection with extensions of credit
to debtors); "Base CD Rate" shall mean the sum of (a) the product of (i) the
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Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one
and the denominator of which is one minus the C/D Reserve Percentage and (b) the
C/D Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for any day,
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the secondary market rate for three-month certificates of deposit reported as
being in effect on such day (or, if such day shall not be a Business Day, the
next preceding Business Day) by the Board of Governors of the Federal Reserve
System (the "Board") through the public information telephone line of the
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Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 A.M., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Lessor from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it; and "Federal Funds
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Effective Rate" shall mean, for any day, the weighted average of the rates on
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overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Lender of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Lessor from three federal funds
brokers of recognized standing selected by it. If for any reason the Lessor
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Base CD Rate or the Federal Funds
Effective Rate, or both, for any reason, including the inability or failure of
the Lessor to obtain sufficient quotations in accordance with the terms thereof,
the ABR shall be determined without regard to clause (b) or (c), or both, of the
first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the ABR due
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to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
respectively.
"Account" has the meaning set forth in Section 8.4(a) of the
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Indenture.
"Additional Assets" means
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(1) any property or assets (other than Indebtedness and Capital Stock)
to be used by Hanover or a Restricted Subsidiary in a Related Business;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by Hanover or a
Restricted Subsidiary of Hanover; or
(3) Capital Stock constituting a minority interest in any Person that
at such time is a Restricted Subsidiary of Hanover;
provided, however, that, in the case of clauses (2) and (3), such Restricted
Subsidiary is primarily engaged in a Related Business.
"Advance" shall mean an advance of proceeds of the Securities and an
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advance of the Certificate Holder Contribution, in each case pursuant to
Section 5.1 of the Participation Agreement to pay Equipment Costs.
"Affected Equipment" shall have the meaning given to such term in
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Section 16.2 of the Lease.
"Affiliate" of any specified Person means any other Person, directly
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or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing; provided that beneficial ownership of 10% or
more of the Voting Stock of a Person shall be deemed to be control. For the
purposes of the Operative Agreements, the Trust Company and Wilmington
Trust FSB shall not be considered Affiliates of each other or of any other
party to the Participation Agreement.
"After Tax Basis" shall mean, with respect to any payment to be
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received, the amount of such payment increased so that, after deduction of
the amount of all taxes required to be paid by the recipient (less any tax
savings realized and the present value of any tax savings projected to be
realized by the recipient as a result of the payment of the indemnified
amount) with respect to the receipt by the recipient of such amounts, such
increased payment (as so reduced) is equal to the payment otherwise
required to be made.
"Agent Member" has the meaning set forth in Section 2.1(d) of the
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Indenture.
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"Appraisal" shall mean, with respect to the Equipment, an appraisal,
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prepared by a reputable independent appraiser of such Equipment. The
Appraisal shall state an estimate of the value thereof as of the date of
the Appraisal and at the end of the Term and may cover more than one Unit.
"Appraisal Procedure" shall have the meaning given such term in
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Section 21.4 of the Lease.
"Asset Disposition" shall mean any direct or indirect sale, lease
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(other than an operating lease entered into in the ordinary course of
business), transfer, issuance or other disposition, or a series of related
sales, leases, transfers, issuances or dispositions that are part of a
common plan, of shares of Capital Stock of a Subsidiary (other than
directors' qualifying shares), property or other assets (each referred to
for the purposes of this definition as a "disposition") by Hanover or any
of its Restricted Subsidiaries, including any disposition by means of a
merger, consolidation or similar transaction.
Notwithstanding the preceding, the following items shall not be deemed
to be Asset Dispositions:
(1) a disposition by a Restricted Subsidiary to Hanover or by Hanover
or a Restricted Subsidiary to a Restricted Subsidiary in which Hanover will
hold, directly or indirectly, at least the same ownership percentage as it
did prior to such disposition;
(2) the sale of Cash Equivalents in the ordinary course of business;
(3) a disposition of inventory in the ordinary course of business;
(4) a disposition of obsolete or worn out equipment or equipment that
is no longer useful in the conduct of the business of Hanover and its
Restricted Subsidiaries and that is disposed of in each case in the
ordinary course of business;
(5) transactions permitted under Section 9.10 of the Participation
Agreement (other than with respect to any Sale/Leaseback Transaction
involving all or substantially all of the properties and assets of Hanover
or of one or more Subsidiaries of Hanover, which properties and assets, if
held by Hanover instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of Hanover on a consolidated
basis);
(6) an issuance of Capital Stock by a Restricted Subsidiary of Hanover
to Hanover or to a Wholly-Owned Subsidiary (other than a Receivables
Entity);
(7) for purposes of Section 9.6 of the Participation Agreement only,
the making of a Permitted Investment or a disposition subject to Section
9.3 of the Participation Agreement;
(8) sales of accounts receivable and related assets or an interest
therein of the type specified in the definition of "Qualified Receivables
Transaction" to a Receivables Entity;
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(9) dispositions of assets selected by the Board of Directors as not
constituting an Asset Disposition with an aggregate fair market value since
the Issue Date of less than $10 million;
(10) dispositions in connection with Permitted Liens;
(11) Sales of Equipment pursuant to Sale/Leaseback Transactions;
(12) the licensing or sublicensing of intellectual property or other
general intangibles and licenses, leases or subleases of other property in
the ordinary course of business which do not materially interfere with the
business of Hanover and its Restricted Subsidiaries; and
(13) foreclosure on assets.
"Asset Disposition Offer" has the meaning set forth in Section 3.3 of
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the Indenture.
"Asset Disposition Offer Amount" has the meaning set forth in Section
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3.3 of the Indenture.
"Asset Disposition Offer Period" has the meaning set forth in Section
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3.3 of the Indenture.
"Asset Disposition Purchase Date" has the meaning set forth in Section
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3.3 of the Indenture.
"Assignment of Lease" shall mean the Assignment of Lease, Rents and
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Guarantee dated as of the Release Date from the Lessor to the Collateral
Agent for the benefit of the Securityholders and the Certificate Holders,
as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof or of any other Operative Agreement.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
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shall mean, as at the time of determination, the present value (discounted
at the interest rate borne by the notes, compounded semi-annually) of the
total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including
any period for which such lease has been extended).
"Authenticating Agent" has the meaning set forth in Section 2.2 of the
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Indenture.
"Available Excess Proceeds" has the meaning set forth in Section
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3.3(a) of the Indenture.
"Average Life" shall mean, as of the date of determination, with
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respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (1) the sum of the products of the numbers of years from the date
of determination to the dates of each successive scheduled principal
payment of such Indebtedness or redemption or similar
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payment with respect to such Preferred Stock multiplied by the amount of
such payment by (2) the sum of all such payments.
"Bank Indebtedness" shall mean any and all amounts, whether
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outstanding on the Issue Date or Incurred after the Issue Date, payable by
Hanover and/or the Lessee or any Subsidiary of Hanover under or in respect
of the Senior Credit Agreement and any related notes, collateral documents,
letters of credit and Guarantees and any Interest Rate Agreement entered
into in connection with the Senior Credit Agreement, including principal,
premium, if any, interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to
Hanover and/or the Lessee at the rate specified therein whether or not a
claim for post filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, Guarantees and all other
amounts payable thereunder or in respect thereof.
"Bankruptcy Laws" has the meaning set forth in Section 6.1 of the
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Indenture.
"Basic Rent" shall mean the sum of (i) the Debt Basic Rent and (ii)
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the Contribution Basic Rent, calculated as of the applicable date on which
each is due.
"Beneficiary; Beneficiaries" shall have the meaning set forth in the
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Preliminary Statement of the Hanover Guarantee.
"Bill of Sale" shall have the meaning set forth in Section 6.1(r) of
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the Participation Agreement.
"Board of Directors" shall mean, as to any Person, the board of
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directors of such Person or any duly authorized committee thereof.
"Business Day" shall mean any day other than a Saturday, Sunday or
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other day on which the Indenture Trustee or commercial banks in New York
City or Wilmington, Delaware are authorized or required by law to close.
"Capital Stock" of any Person shall mean any and all shares,
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interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities
convertible into such equity.
"Capitalized Lease Obligations" shall mean an obligation that is
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required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation will be the capitalized amount
of such obligation at the time any determination thereof is to be made as
determined in accordance with GAAP, and the Stated Maturity thereof will be
the date of the last payment of rent or any other amount due under such
lease prior to the first date such lease may be terminated without penalty.
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"Cash Equivalents" shall mean:
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(1) securities issued or directly and fully Guaranteed or
insured by the United States Government or any agency
or instrumentality of the United States (provided
that the full faith and credit of the United States
is pledged in support thereof), having maturities of
not more than one year from the date of acquisition;
(2) marketable general obligations issued by any state of
the United States of America or any political
subdivision of any such state or any public
instrumentality thereof maturing within one year from
the date of acquisition of the United States
(provided that the full faith and credit of the
United States is pledged in support thereof) and, at
the time of acquisition, having a credit rating of
"A" or better from either Standard & Poor's Ratings
Services or Moody's Investors Service, Inc.;
(3) certificates of deposit, time deposits, eurodollar
time deposits, overnight bank deposits or bankers'
acceptances having maturities of not more than one
year from the date of acquisition thereof issued by
any commercial bank the long-term debt of which is
rated at the time of acquisition thereof at least "A"
or the equivalent thereof by Standard & Poor's
Ratings Services, or "A" or the equivalent thereof by
Moody's Investors Service, Inc., and having combined
capital and surplus in excess of $500.0 million;
(4) repurchase obligations with a term of not more than
seven days for underlying securities of the types
described in clauses (1), (2) and (3) entered into
with any bank meeting the qualifications specified in
clause (3) above;
(5) commercial paper rated at the time of acquisition
thereof at least "A-2" or the equivalent thereof by
Standard & Poor's Ratings Services or "P-2" or the
equivalent thereof by Moody's Investors Service,
Inc., or carrying an equivalent rating by a
nationally recognized rating agency, if both of the
two named rating agencies cease publishing ratings of
investments, and in any case maturing within one year
after the date of acquisition thereof; and
(6) interests in any investment company or money market fund which
invests solely in instruments of the type specified in clauses
(1) through (5) above.
"Casualty" shall mean any damage or destruction of all or any portion
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of a Unit as a result of fire or other casualty.
"Certificate" shall mean a certificate issued pursuant to the Trust
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Agreement to evidence an investment in the beneficial ownership of the
Trust Estate, and shall include any certificate issued in exchange therefor
or replacement thereof.
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"Certificate Holders" shall mean General Electric Capital Corporation,
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and its permitted successors and assigns.
"Certificate Holder Contribution" shall mean the investments of funds
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in the Issuer made by the Certificate Holders pursuant to the Trust
Agreement and the Participation Agreement.
"Certificate Holder Yield" shall mean an amount, as of any Certificate
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Holder Yield Payment Date, sufficient to provide the Certificate Holders
with an annual pre-tax yield on the Certificate Holder Contribution equal
to the applicable Yield Rate.
"Certificate Holder Yield Payment Date" shall mean the first day of
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March, June, September and December.
"Change of Control" shall mean:
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(1) any "person" or "group" of related persons (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person or group shall be deemed to have "beneficial
ownership" of all shares that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 51% of the total
voting power of the Voting Stock of Hanover (or its successor by merger,
consolidation or purchase of all or substantially all of its assets) (for
the purposes of this clause, such person or group shall be deemed to
beneficially own any Voting Stock of Hanover held by an entity, if such
person or group "beneficially owns" (as defined above), directly or
indirectly, more than 51% of the voting power of the Voting Stock of such
parent entity);
(2) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Hanover
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders of Hanover was
approved by a vote of at least a majority of the directors of Hanover then
still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors of
Hanover then in office;
(3) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of Hanover and its
Restricted Subsidiaries taken as a whole to any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act); or
(4) the adoption by the stockholders of Hanover of a plan or proposal
for the liquidation or dissolution of Hanover.
"Change of Control Offer" has the meaning set forth in Section 3.4 of
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the Indenture.
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"Change of Control Payment" has the meaning set forth in Section 3.4
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of the Indenture.
"Change of Control Payment Date" has the meaning set forth in Section
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3.4 of the Indenture.
"Chase" shall mean The Chase Manhattan Bank, a New York banking
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corporation.
"Claims" shall mean any and all actions, suits, penalties, claims and
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demands and reasonable out-of-pocket liabilities, losses, costs and
expenses (including, without limitation, reasonable attorney's fees and
expenses) of any nature whatsoever.
"Closing Date" means the date on which the Initial Securities are
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originally issued.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
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time to time, or any successor statute thereto.
"Collateral" shall mean all assets of the Lessor, now owned or
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hereafter acquired, upon which a Lien is purported to be created by the
Security Documents.
"Collateral Agent" means Wilmington Trust FSB, acting in the capacity
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of collateral agent pursuant to the Indenture and certain other of the
Operative Agreements.
"Commonly Controlled Entity" shall mean an entity, whether or not
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incorporated, which is under common control with Hanover within the meaning
of Section 4001(a)(14) of ERISA or is part of a group which includes Lessee
and which is treated as a single employer under Section 414 of the Code.
"Common Stock" shall mean with respect to any Person, any and all
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shares, interest or other participations in, and other equivalents (however
designated and whether voting or nonvoting) of such Person's common stock
whether or not outstanding on the Issue Date, and includes, without
limitation, all series and classes of such common stock.
"Condemnation" shall mean any taking or sale of the use, access, or
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title to any Unit or any part thereof, wholly or partially (temporarily or
permanently), by or on account of any actual eminent domain proceeding or
other taking of action by any Person having the power of eminent domain.
"Consent to Assignment" shall mean the Lessee's Consent to Assignment
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dated as of the Release Date from the Lessee and the Guarantors to the
Collateral Agent with respect to the Assignment of Lease, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof or of any other Operative Agreement.
"Consolidated Coverage Ratio" shall mean as of any date of
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determination, with respect to any Person, the ratio of (x) the aggregate
amount of Consolidated EBITDA of
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such Person for the period of the most recent four consecutive fiscal
quarters ending prior to the date of such determination for which financial
statements are in existence to (y) Consolidated Fixed Charges for such four
fiscal quarters, provided, however, that:
(1) if Hanover or any Restricted Subsidiary:
(a) has Incurred any Indebtedness since the beginning of such
period that remains outstanding on such date of
determination or if the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio
involves an Incurrence of Indebtedness, Consolidated
EBITDA and Consolidated Fixed Charges for such period
will be calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period (except
that in making such computation, the amount of
Indebtedness under any revolving credit facility
outstanding on the date of such calculation will be
computed based on (i) the average daily balance of such
Indebtedness during such four fiscal quarters or such
shorter period for which such facility was outstanding or
(ii) if such facility was created after the end of such
four fiscal quarters, the average daily balance of such
Indebtedness during the period from the date of creation
of such facility to the date of such calculation) and the
discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of
such new Indebtedness as if such discharge had occurred
on the first day of such period; or
(b) has repaid, repurchased, defeased or otherwise discharged
any Indebtedness since the beginning of the period that
is no longer outstanding on such date of determination or
if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio involves a discharge of
Indebtedness (in each case other than Indebtedness
incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and the related
commitment terminated), Consolidated EBITDA and
Consolidated Fixed Charges for such period will be
calculated after giving effect on a pro forma basis to
such discharge of such Indebtedness, including with the
proceeds of such new Indebtedness, as if such discharge
had occurred on the first day of such period;
(2) if since the beginning of such period Hanover or any Restricted
Subsidiary will have made any Asset Disposition or if the
transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Asset Disposition:
(a) the Consolidated EBITDA for such period will be reduced
by an amount equal to the Consolidated EBITDA (if
positive) directly attributable to the assets which are
the subject of such Asset
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Disposition for such period or increased by an amount equal to
the Consolidated EBITDA (if negative) directly attributable
thereto for such period; and
(b) Consolidated Fixed Charges for such period will be reduced by an
amount equal to the Consolidated Fixed Charges directly
attributable to any Indebtedness of Hanover or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged
with respect to Hanover and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is
sold, the Consolidated Fixed Charges for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to
the extent Hanover and its continuing Restricted Subsidiaries are
no longer liable for such Indebtedness after such sale);
(3) if since the beginning of such period Hanover or any Restricted
Subsidiary (by merger or otherwise) will have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted
Subsidiary or is merged with or into Hanover) or an acquisition of
assets, including any acquisition of assets occurring in connection
with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit, division or
line of business, Consolidated EBITDA and Consolidated Fixed Charges
for such period will be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period;
and
(4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into Hanover or
any Restricted Subsidiary since the beginning of such period) will
have made any Asset Disposition or any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (2)
or (3) above if made by Hanover or a Restricted Subsidiary during such
period, Consolidated EBITDA and Consolidated Fixed Charges for such
period will be calculated after giving pro forma effect thereto as if
such Asset Disposition or Investment or acquisition of assets occurred
on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given
to any calculation under this definition, the pro forma calculations will be
determined in good faith by a responsible financial or accounting officer of
Hanover (including pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act). If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness will be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
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period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).
"Consolidated EBITDA" for any period means, without duplication, the
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Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) Consolidated Income Taxes;
(3) consolidated depreciation expense;
(4) consolidated amortization of intangibles;
(5) other non-cash charges reducing Consolidated Net Income (excluding any
such non-cash charge to the extent it represents an accrual of or
reserve for cash charges in any future period or amortization of a
prepaid cash expense that was paid in a prior period not included in
the calculation); and
(6) Consolidated Rental Expense.
Notwithstanding the preceding sentence, clauses (2) through (6) relating to
amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net
Income to compute Consolidated EBITDA of such Person only to the extent (and in
the same proportion) that the net income (loss) of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person and, to
the extent the amounts set forth in clause (1) and clauses (3) through (6) are
in excess of those necessary to offset a net loss of such Restricted Subsidiary
or if such Restricted Subsidiary has net income for such period included in
Consolidated Net Income, only if a corresponding amount would be permitted at
the date of determination to be paid as a dividend to Hanover by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Fixed Charges" means, with respect to any Person for any
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period, the sum, without duplication, of Consolidated Interest Expense and
Consolidated Rental Expense.
"Consolidated Income Taxes" means, with respect to any Person for any
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period, taxes imposed upon such Person or other payments required to be made by
such Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Restricted Subsidiaries (to the extent such income or profits were
included in computing Consolidated Net Income
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for such period), regardless of whether such taxes or payments are required to
be remitted to any governmental authority.
"Consolidated Interest Expense" means, for any period, the total interest
-----------------------------
expense of Hanover and its consolidated Restricted Subsidiaries, whether paid or
accrued, plus, to the extent not included in such interest expense:
(1) interest expense attributable to Capitalized Lease Obligations and the
interest portion of rent expense associated with Attributable
Indebtedness in respect of the relevant lease giving rise thereto to
the extent not already included in Consolidated Rental Expense,
determined as if such lease were a capitalized lease in accordance
with GAAP and the interest component of any deferred payment
obligations;
(2) amortization of debt discount and debt issuance cost;
(3) non-cash interest expense;
(4) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing;
(5) interest actually paid by Hanover or any Restricted Subsidiary under
any Guarantee of Indebtedness or other obligation of any other Person;
(6) net costs associated with Hedging Obligations (including amortization
of fees);
(7) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period;
(8) the product of (a) all dividends paid or payable in cash, Cash
Equivalents or Indebtedness or accrued during such period on any
series of Disqualified Stock of such Person or on Preferred Stock of
its Restricted Subsidiaries payable to a party other than Hanover or a
Wholly-Owned Subsidiary, times (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current
combined federal, state, provincial and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP; and
(9) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than Hanover) in
connection with Indebtedness Incurred by such plan or trust; provided,
however, that there will be excluded therefrom any such interest
expense of any Unrestricted Subsidiary to the extent the related
Indebtedness is not Guaranteed or paid by Hanover or any Restricted
Subsidiary.
14
For purposes of the foregoing, total interest expense will be determined after
giving effect to any net payments made or received by Hanover and its
Subsidiaries with respect to Interest Rate Agreements.
"Consolidated Net Income" means, for any period, the net income (loss) of
-----------------------
Hanover and its Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP; provided, however, that there will not be included in such
Consolidated Net Income:
(1) any net income (loss) of any Person if such Person is not a Restricted
Subsidiary, except that:
(a) subject to the limitations contained in clauses (4), (5) and (6)
below, Hanover's equity in the net income of any such Person for
such period will be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by any
Person during such period to Hanover or a Restricted Subsidiary
as a dividend or other distribution (subject, in the case of a
dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (3) below); and
(b) Hanover's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period will be included in
determining such Consolidated Net Income to the extent such loss
has been funded with cash from Hanover or a Restricted
Subsidiary;
(2) any net income (loss) of any Person acquired by Hanover or a
Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition;
(3) any net income (but not loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to Hanover, except that:
(a) subject to the limitations contained in clauses (4), (5) and (6)
below, Hanover's equity in the net income of any such Restricted
Subsidiary for such period will be included in such Consolidated
Net Income up to the aggregate amount of cash that could have
been distributed by such Restricted Subsidiary during such period
to Hanover or another Restricted Subsidiary as a dividend
(subject, in the case of a dividend to another Restricted
Subsidiary, to the limitation contained in this clause); and
(b) Hanover's equity in a net loss of any such Restricted Subsidiary
for such period will be included in determining such Consolidated
Net Income;
15
(4) any gain (loss) realized upon the sale or other disposition of
any property, plant or equipment of Hanover or its consolidated
Restricted Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which is not sold or otherwise disposed of in the
ordinary course of business and any gain (loss) realized upon the
sale or other disposition of any Capital Stock of any Person;
(5) any extraordinary gain or loss; and
(6) the cumulative effect of a change in accounting principles.
"Consolidated Rental Expense" means, for any period, the aggregate of
---------------------------
the rental expense of Hanover and its Restricted Subsidiaries related to
Operating Lease Facilities of Hanover and its Restricted Subsidiaries for
such period, determined on a consolidated basis.
"Contractual Obligation" shall mean, as to any Person, any provision
----------------------
of any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any of
its property is bound.
"Contribution Basic Rent" shall mean the Certificate Holder Yield due
-----------------------
on the Certificate Holder Contribution on a Scheduled Interest Payment Date
pursuant to the Trust Agreement.
"Contribution Percentage" shall mean three percent (3%).
-----------------------
"Control Purchase" shall have the meaning set forth in Section 20.1(c)
----------------
of the Lease.
"Control Tendered Amount" shall mean the aggregate principal amount of
-----------------------
Securities tendered by the Securityholders and the aggregate pro rata
portion of Certificates redeemed upon the occurrence of a Change of Control
with respect to Hanover, in accordance with the provisions of Section 20.1
of the Lease.
"Corporate Trust Office" has the meaning set forth in Section 3.21 of
----------------------
the Indenture.
"covenant defeasance option" has the meaning set forth in Section
--------------------------
8.1(b) of the Indenture.
"cross acceleration provision" has the meaning set forth in Section
----------------------------
6.1 of the Indenture.
"Currency Agreement" shall mean in respect of a Person any foreign
------------------
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Custodian" has the meaning set forth in Section 6.1 of the Indenture.
---------
16
"Debt Basic Rent" shall mean the interest due on the Securities on any
---------------
Scheduled Interest Payment Date pursuant to the Indenture.
"Debt Percentage" shall mean ninety-seven percent (97%).
---------------
"Default" shall mean any event which is, or after notice or passage of
-------
time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning set forth in Section 2.13
------------------
of the Indenture.
"Designated Senior Indebtedness" shall mean (1) the Bank Indebtedness
------------------------------
and the Synthetic Guarantees and (2) any other Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable, which, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to
lend up to, at least $25.0 million and is specifically designated in the
instrument evidencing or governing such Senior Indebtedness or Guarantor
Senior Indebtedness, as applicable, as "Designated Senior Indebtedness" for
purposes of the Participation Agreement.
"Disposition" shall mean with respect to any property, any sale,
-----------
lease, sale and leaseback, assignment, conveyance, transfer or other
disposition thereof. The terms "Dispose" and "Disposed of" shall have
correlative meanings.
"Disposition Tendered Amount" shall mean the aggregate principal
---------------------------
amount of Securities tendered by the Securityholders and the aggregate pro
rata portion of Certificate Holder Contributions repaid pursuant to an
Asset Disposition Offer (as such term is defined in Section 20.1 of the
Indenture).
"Disqualified Stock" means, with respect to any Person, any Capital
------------------
Stock of such Person which by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable) or upon the
happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock (excluding Capital Stock which is convertible or exchangeable solely
at the option of Hanover or a Restricted Subsidiary); or
(3) is redeemable at the option of the holder of the Capital Stock
thereof, in whole or in part,
in each case on or prior to the date that is 91 days after the date (a) on
which the notes mature or (b) on which there are no notes outstanding,
provided that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such date will be
deemed to be Disqualified Stock; provided, further, that
17
any Capital Stock that would constitute Disqualified Stock solely because
the holders thereof have the right to require Hanover to repurchase such
Capital Stock upon the occurrence of a change of control or asset sale
(each defined in a substantially identical manner to the corresponding
definitions in the participation agreement) shall not constitute
Disqualified Stock if the terms of such Capital Stock (and all such
securities into which it is convertible or for which it is ratable or
exchangeable) provide that Hanover may not repurchase or redeem any such
Capital Stock (and all such securities into which it is convertible or for
which it is ratable or exchangeable) pursuant to such provision prior to
compliance by Hanover with the provisions of the Section 9.6 of the
Participation Agreement and such repurchase or redemption complies with
Section 9.3 of Participation Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the United
---------------
States of America.
"Domestic Subsidiary" shall mean any Restricted Subsidiary that is
-------------------
organized under the laws of the United States of America or any state
thereof or the District of Columbia.
"DTC" shall mean The Depository Trust Company, its nominees and their
---
respective successors and assigns, or such other depository institution
hereinafter appointed by the Issuer.
"Environmental Claim" shall mean any claim, notice of claim,
-------------------
complaint, notice of violation, letter, or other assertion or inquiry of
any kind concerning any asserted or actual violation of or liability under
any Environmental Law or any asserted or actual violation or liability
relating to any Hazardous Substance.
"Environmental Law" shall mean any and all Federal, state, local or
-----------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of any Governmental Authority regulating, relating
to or imposing liability or standards of conduct concerning environmental
protection matters, including without limitation, Hazardous Substances, as
now or may at any time hereafter be in effect.
"Environmental Violation" shall mean any activity, occurrence or
-----------------------
condition that violates or results in non-compliance with any applicable
Environmental Laws or results in a written complaint or other written claim
from a Governmental Authority with respect to any Environmental Laws.
"Equipment" means the collective reference to all Units that are then
---------
owned by the Lessor and leased to the Lessee including all Units that are
subsequently conveyed to the Lessor as Replacement Equipment.
"Equipment Cost" shall mean for each Unit, the amount set forth on
--------------
Schedule A to the Lease as the "Equipment Cost" for such Unit.
18
"Equipment Leases" shall mean (i) the Lease dated as of June 15, 1999
----------------
(as amended, supplemented or otherwise modified from time to time), between
Hanover Equipment Trust 1999A, as lessor, and HCI, as lessee, (ii) the Lease
dated as of March 13, 2000 (as amended, supplemented or otherwise modified from
time to time), between Hanover Equipment Trust 2000A, as lessor, and HCI , as
lessee, (iii) the Lease dated as of October 27, 2000 (as amended, supplemented
or otherwise modified from time to time), between Hanover Equipment Trust 2000B,
as lessor, and Lessee, as lessee, (iv) the Lease (as defined in this Annex A)
and (v) any lease, in connection with and dated as of the date of an Additional
Participation Agreement (as amended, supplemented or otherwise modified from
time to time), between a Delaware business trust, as lessor, and HCI or Lessee,
as lessee.
"Equity Proceeds Purchase Price" shall be as defined in Section
------------------------------
20.1(b) of the Lease.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.
"Escrow Agreement" shall mean that certain Escrow Agreement dated as of
----------------
the Closing Date among Lessee, Lessor, the Indenture Trustee and the Certificate
Holders.
"Escrowed Funds" shall have the meaning set forth in Section 1
--------------
of the Escrow Agreement for the term "Escrow Property".
"Eurocurrency Reserve Requirements" shall mean for any day as
---------------------------------
applied to a Certificate Holder Contribution, the aggregate (without
duplication) of the rates (expressed as a decimal) of reserve requirements in
effect on such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member
bank of the Federal Reserve System.
"Eurodollar Base Rate" shall mean, with respect to each day during each
--------------------
Interest Period, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to one month commencing on the first day
of such Interest Period appearing on Page 3750 of the Telerate screen as of
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" shall
--------------------
be determined by reference to such other comparable publicly available service
for displaying eurodollar rates as may be selected by the Lessor, or, in the
absence of such availability, by reference to the rate at which the Lessor is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
one month.
19
"Eurodollar Rate" shall mean with respect to each day during
---------------
each Interest Period, a rate per annum determined for such day in accordance
with the following formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
--------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default" shall mean a Lease Event of Default or an
----------------
Indenture Event of Default.
"Excepted Payments" shall mean:
-----------------
(a) all indemnity payments (including indemnity payments made pursuant
to Section 13 of the Participation Agreement), to which the Lessor, Trust
Company or the Certificate Holders are entitled;
(b) any amounts (other than Basic Rent, Termination Value, or payments
due to the Lessor under Section 20 or 21 of the Lease) payable under any
Operative Agreement to reimburse the Lessor, the Trust Company, the Certificate
Holders, or any of their respective Affiliates (including the reasonable
expenses of the Trust Company and the Certificate Holders incurred in connection
with any such payment) for performing or complying with any of the obligations
of Lessee under and as permitted by any Operative Agreement;
(c) any amount payable to the Certificate Holders by any transferee of
the interest of the Certificate Holders as the purchase price of the Certificate
Holders' interest in the Trust Estate (or a portion thereof);
(d) any insurance proceeds (or payments with respect to risks
self-insured or policy deductibles) under liability policies with respect to the
Equipment other than such proceeds or payments payable to the Lessee or the
Indenture Trustee;
(e) any insurance proceeds under policies maintained by the Lessor,
Trust Company or the Certificate Holders;
(f) Transaction Expenses or other amounts or expenses paid or payable
to or for the benefit of the Trust Company or the Certificate Holders;
(g) all right, title and interest of the Certificate Holders or the
Lessor to any Equipment, any portion thereof or any other property to the extent
any of the foregoing has been released from the Liens of the Security Agreement
and the Assignment of Leases pursuant to the terms thereof and not otherwise
purchased by the Lessee or a third party pursuant to the terms of the Lease;
(h) any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (g) above; and
20
(i) any rights of the Certificate Holders, the Trust Company or the
Lessor to demand, collect, sue for or otherwise receive and enforce payment of
any of the foregoing amounts.
"Excepted Rights" means the rights of Lessor, at all times to the
---------------
exclusion of the Collateral Agent, to retain (A) all rights to Excepted Payments
and to demand, collect or commence an action at law to obtain such payments and
to enforce any judgment with respect thereto, and (B) all of Lessor's rights
under the Participation Agreement and all right, title and interest of the
Lessor in the Shared Rights.
"Excess Proceeds" shall have the meaning set forth in Section 3.3(a) of
---------------
the Indenture.
"Excess Proceeds Purchase" shall have the meaning set forth in Section
------------------------
20.1(d) of the Lease.
"Excess Proceeds Purchase Price" shall have the meaning set forth in
------------------------------
Section 20.1(d) of the Lease.
"Excess Sales Proceeds" shall have the meaning set forth in Section
---------------------
8.4(b)(3) of the Indenture.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
------------
amended.
"Exchange and Registration Rights Agreement" shall mean the Exchange and
------------------------------------------
Registration Rights Agreement dated the Issue Date among the Initial Purchasers,
the Hanover Guarantors and the Issuer.
"Exchange Global Note" shall have the meaning set forth in Section
--------------------
2.1(a) of the Indenture.
"Exchange Securities" shall have the meaning ascribed to it in the
-------------------
second introductory paragraph of the Indenture.
"Exculpated Person" shall have the meaning set forth in Section 9.8 of
-----------------
the Indenture.
"Expiration Date" shall mean September 1, 2011.
---------------
"Expiration Date Election Notice" shall have the meaning set forth in
-------------------------------
Section 20.2 of the Lease.
"Expiration Date Purchase Option" shall mean the Lessee's option to
-------------------------------
purchase all of the Equipment on the Expiration Date in accordance
with Section 20.2 of the Lease.
"Fair Market Sales Value" shall mean the amount, which in any event
-----------------------
shall not be less than zero, that would be paid in cash in an arm's-length
transaction between an
21
informed and willing purchaser and an informed and willing seller, neither of
whom is under any compulsion to purchase or sell, respectively, for the
ownership of any piece of Equipment. Fair Market Sales Value shall be determined
based on the assumption that, except for purposes of Section 21.3 of the Lease,
any Unit is in the condition and state of repair required under Section 10.1 of
the Lease and that the Lessee is in compliance with the other requirements of
the Operative Agreements.
"Fee Letter" shall mean the Fee Letter dated June 28, 2001 from Chase and
----------
JP Morgan Securities Inc. to Lessee.
"Final Rent Payment" for each Unit at any time shall mean an amount equal
------------------
to the product of (x) the Equipment Cost in respect of such Unit at such time
and (y) the Tranche A Percentage, but in no event shall the such amount exceed
what is permitted under Statement of Financial Accounting Standards No. 13.
"Fiscal Year" shall mean the fiscal year of the Issuer ending on December
-----------
31 of each year.
"Foreign Subsidiary" means any Restricted Subsidiary that is not organized
------------------
under the laws of the United States of America or any state thereof or the
District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
----
of America as in effect as of the date of the Participation Agreement, including
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Participation Agreement will be computed in conformity with GAAP.
"Global Securities" shall have the meaning set forth in Section 2.1(a) of
-----------------
the Indenture.
"Governmental Action" shall mean all permits, authorizations,
-------------------
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Legal Requirement, and shall include,
without limitation, all environmental and operating permits and licenses that
are required for the full use and operation of the Equipment.
"Governmental Authority" shall mean any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantee" means any obligation, contingent or otherwise, of any Person
---------
directly or indirectly Guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:
22
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the obligee
of such Indebtedness of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" will not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guaranteed Obligations" shall have the meaning specified in Section 1(b)
----------------------
of the Hanover Guarantee.
"Guarantor Obligation" means as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person (including
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counter indemnity
or similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
-------------------
of any other third Person (the "primary obligor") in any manner, whether
---------------
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(b) to advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, however, that the term Guarantor
-------- -------
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guarantor
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantor Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantor Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantor Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by Lessee, in good faith.
"Guarantor" or "Hanover Guarantor" means each of Hanover Compressor Company
--------- -----------------
and the Subsidiary Guarantors.
23
"Guarantor Senior Indebtedness" means, with respect to a Subsidiary
-----------------------------
Guarantor, the following obligations, whether outstanding on the date of the
Indenture or thereafter issued, created, incurred or assumed, without
duplication:
(1) the Bank Indebtedness, the Synthetic Guarantees and all other
Guarantees, as applicable, by such Subsidiary Guarantor of Senior
Indebtedness of Hanover or Guarantor Senior Indebtedness of any other
Subsidiary Guarantor; and
(2) all obligations consisting of principal of and premium, if any,
accrued and unpaid interest on, and fees and other amounts relating
to, all other Indebtedness of the Subsidiary Guarantor. Guarantor
Senior Indebtedness includes interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the
Subsidiary Guarantor regardless of whether postfiling interest is
allowed in such proceeding.
Notwithstanding anything to the contrary in the preceding paragraph,
Guarantor Senior Indebtedness will not include:
(1) any Indebtedness which, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that
the obligations in respect of such Indebtedness are not superior in
right of, or are subordinate to, payment of the Securities and the
Hanover Guarantee;
(2) any obligations of such Subsidiary Guarantor to another Subsidiary or
Hanover;
(3) any liability for Federal, state, local, foreign or other taxes owed
or owing by such Subsidiary Guarantor;
(4) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities);
(5) any Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor that is expressly subordinate or junior in right of payment
to any other Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor, including, without limitation, any Guarantor Senior
Subordinated Indebtedness and Guarantor Subordinated Obligations of
such Guarantor; or
(6) any Capital Stock.
"Guarantor Senior Subordinated Indebtedness" means, with respect to a
------------------------------------------
Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Hanover Guarantee and the 2001A Guarantee and any other Indebtedness of such
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that specifically provides that such Indebtedness is to rank equally
in right of payment with the
24
obligations of such Subsidiary Guarantor under the Hanover Guarantee and is not
expressly subordinated by its terms in right of payment to any Indebtedness of
such Subsidiary Guarantor which is not Guarantor Senior Indebtedness of such
Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a Subsidiary
---------------------------------
Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on
the Issue Date or thereafter Incurred) which is expressly subordinate in right
of payment to the obligations of such Subsidiary Guarantor under its Hanover
Guarantee pursuant to a written agreement.
"Hanover" shall mean Hanover Compressor Company, a Delaware corporation.
-------
"Hanover Guarantee" shall mean the Guarantee dated as of the Release Date
-----------------
from the Guarantors to the Beneficiaries, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof or of any other Operative Agreement.
"Hazardous Substance" shall mean any hazardous materials, hazardous waste,
-------------------
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such in
or under any Environmental Law, including, without limitation, polychlorinated
biphenyls.
"HCI" shall mean Hanover Compression Inc., a Delaware corporation.
---
"Hedging Obligations" of any Person means the obligations of such Person
-------------------
pursuant to any Interest Rate Agreement or Currency Agreement.
"Highest Lawful Rate" shall have the meaning set forth in Section 14.15 of
-------------------
the Participation Agreement.
"Holder" or "Securityholder" shall mean the Person in whose name a Security
------- --------------
is registered in the Note Register.
"HPL" shall mean Houston Pipe Line Company, a Delaware corporation, and its
---
successors and assigns.
"IAI" shall have the meaning set forth in Section 2.1(a) of the Indenture.
---
"Impositions" shall mean, except to the extent described in the following
-----------
sentence, any and all liabilities, losses, expenses and costs of any kind
whatsoever for fees, taxes, levies, imposts, duties, charges, assessments or
withholdings ("Taxes") (including (i) real and personal property taxes,
-----
including personal property taxes on any property covered by the Lease that is
classified by Governmental Authorities as personal property, and real estate or
ad valorem taxes in the nature of property taxes; (ii) sales taxes, use taxes
and other similar taxes (including rent taxes and intangibles taxes); (iii) any
excise taxes; (iv) real estate transfer taxes, conveyance taxes, stamp taxes and
documentary recording taxes and fees; (v) taxes that are or are in the nature of
franchise,
25
income, value added, privilege and doing business taxes, license and
registration fees; and (vi) assessments on the Equipment), and in each case all
interest, additions to tax and penalties thereon, which at any time prior to,
during or with respect to the Term or in respect of any period for which the
Lessee shall be obligated to pay Supplemental Rent, may be levied, assessed or
imposed by any Federal, state, city, county or local authority upon or with
respect to (a) the Equipment or any part thereof or interest therein; (b) the
purchase, sale, leasing, financing, refinancing, demolition, construction,
renovation, substitution, subleasing, assignment, control, condition, occupancy,
servicing, maintenance, repair, ownership, possession, activity conducted on,
delivery, insuring, use, operation, improvement, transfer of title, return or
other disposition of the Equipment or any part thereof or interest therein; (c)
the Certificates or Securities or other indebtedness with respect to the
Equipment or any part thereof or interest therein; (d) the rentals, receipts or
earnings arising from the Equipment or any part thereof or interest therein; (e)
the Operative Agreements or any payment made or accrued pursuant thereto; (f)
the income or other proceeds received with respect to the Equipment or any part
thereof or interest therein upon the sale or disposition thereof; (g) any
contract relating to the construction or renovation of the Equipment; (h) the
issuance of the Securities; or (i) otherwise in connection with the transactions
contemplated by the Operative Agreements.
Notwithstanding the foregoing, the term "Imposition" shall not mean or
include:
(i) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, value added, transfer or property
taxes) that are imposed on a Tax Indemnitee by the United States federal
government that are based on or measured by the gross or net income
(including taxes based on capital gains and minimum taxes) of such Person;
provided that this clause (i) shall not be interpreted to prevent a payment
from being made on an After Tax Basis if such payment is otherwise required
to be so made;
(ii) Taxes and impositions (other than Taxes that are, or are in
the nature of, sales, use, rental, value added, transfer or property taxes)
that are imposed by any state or local jurisdiction or taxing authority
within any state or local jurisdiction and that are based upon or measured
by the gross or net income or gross or net receipts from rental (including
any minimum taxes, withholding taxes or taxes on or measured by capital,
net worth, excess profits or items of tax preference or taxes that are
capital stock, franchise or doing business taxes) except that this clause
(ii) shall not apply to (and thus shall not exclude) any such Taxes imposed
on a Tax Indemnitee by a state (or any local taxing authority thereof or
therein) where the Equipment is located, possessed or used under the Lease
unless the Tax Indemnitee was subject to such tax in such jurisdiction
without regard to the transaction contemplated by the Operative Agreements;
provided that this clause (ii) shall not be interpreted to prevent a
--------
payment from being made on an After Tax Basis if such payment is
otherwise required to be so made;
26
(iii) any interest or penalties imposed on a Tax Indemnitee as a result
of the failure of such Tax Indemnitee to file any return or report timely and in
the form prescribed by law or to pay any Tax or imposition; provided that this
--------
clause (iii) shall not apply (x) if such interest or penalties arise as a result
of a position taken (or requested to be taken) by the Lessee in a contest
controlled by the Lessee under Section 13.2(g) of the Participation Agreement or
(y) to any such interest or penalties that result from such Tax Indemnitee's
complying with the reporting procedures set forth in Section 13.2(d) of the
Participation Agreement;
(iv) any Taxes or impositions imposed on the Lessor that are a result of
the Lessor not being considered a "United States person" as defined in Section
7701(a) (30) of the Code;
(v) any Taxes which are imposed on a Tax Indemnitee solely as a result
of the gross negligence or willful misconduct of such Tax Indemnitee itself (as
opposed to gross negligence or willful misconduct imputed to such Tax
Indemnitee), but not Taxes imposed as a result of ordinary negligence of such
Tax Indemnitee;
(vi) any Taxes or impositions imposed upon the Lessor with respect to
any voluntary transfer, sale, financing or other voluntary disposition by the
Lessor (other than a transfer contemplated and permitted by the Operative
Agreements, including any transfer in connection with (1) the exercise by the
Lessee of its Purchase Option, (2) the occurrence of a Lease Event of Default or
a Credit Agreement Event of Default, or (3) a Casualty or Condemnation affecting
the Equipment) of any interest in the Equipment or any interest in, or created
pursuant to, the Operative Agreements or any voluntary transfer of any interest
in the Lessor (other than in connection with the existence of a Lease Event of
Default or a Credit Agreement Event of Default) or any involuntary transfer of
any of the foregoing interests resulting from the bankruptcy or insolvency of
the Lessor (other than in connection with the existence of a Lease Event of
Default or a Credit Agreement Event of Default);
(vii) any gift, or inheritance, taxes;
(viii) Taxes imposed on the Tax Indemnitee or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the Code, or
a "party in interest", within the meaning of Section 3(14) of ERISA, by virtue
of such person's relationship to the Tax Indemnitee as the result of any
prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code, involving the exercise of discretion or control by such
Tax Indemnitee; or
(ix) Taxes on, with respect to or measured by any trustee fees for
services rendered as trustee of the Trust.
27
Any Tax or imposition excluded from the defined term "Imposition" in any one of
the foregoing clauses (i) through (vii) shall not be construed as constituting
an Imposition by any provision of any other of the aforementioned clauses.
"Incur" means issue, create, assume, Guarantee, incur or otherwise become
-----
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) will be deemed to be
incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.
"Indebtedness" means, with respect to any Person on any date of
------------
determination (without duplication):
(1) the principal of and premium (if any) in respect of indebtedness of
such Person for borrowed money;
(2) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) the principal component of all obligations of such Person in respect
of letters of credit, bankers' acceptances or other similar
instruments (including reimbursement obligations with respect thereto
except to the extent such reimbursement obligation relates to a trade
payable and such obligation is satisfied within 30 days of
Incurrence);
(4) the principal component of all obligations of such Person to pay the
deferred and unpaid purchase price of property (except trade
payables), which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title
thereto;
(5) Capitalized Lease Obligations and all Attributable Indebtedness of
such Person;
(6) the principal component or liquidation preference of all obligations
of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock or, with respect to any
Subsidiary, any Preferred Stock (but excluding, in each case, any
accrued dividends);
(7) the principal component of all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided, however, that the
amount of such Indebtedness will be the lesser of (a) the fair market
value of such asset at such date of determination and (b) the amount
of such Indebtedness of such other Persons;
(8) the principal component of Indebtedness of other Persons to the
extent Guaranteed by such Person;
28
(9) to the extent not otherwise included in this definition, net
obligations of such Person under Currency Agreements and Interest Rate
Agreements (the amount of any such obligations to be equal at any time
to the termination value of such agreement or arrangement giving rise
to such obligation that would be payable by such Person at such time);
and
(10) the obligation to pay the principal and premium (if any) in respect
of any Operating Lease Facility, in an amount, as determined on the
date of incurrence of such obligation, equal to the purchase price of
the related property or assets.
The amount of Indebtedness of any Person at any date will be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
In addition, "Indebtedness" of any Person shall include Indebtedness
------------
described in the preceding paragraph that would not appear as a liability on the
balance sheet of such Person if:
(1) such Indebtedness is the obligation of a partnership or joint venture
that is not a Restricted Subsidiary (a "Joint Venture");
(2) such Person or a Restricted Subsidiary of such Person is a general
partner of the Joint Venture (a "General Partner"); and
(3) there is recourse, by contract or operation of law, with respect to
the payment of such Indebtedness to property or assets of such Person
or a Restricted Subsidiary of such Person; and then such Indebtedness
shall be included in an amount not to exceed:
(a) the lesser of (i) the net assets of the General Partner and (ii)
the amount of such obligations to the extent that there is
recourse, by contract or operation of law, to the property or
assets of such Person or a Restricted Subsidiary of such Person;
or
(b) if less than the amount determined pursuant to clause (a)
immediately above, the actual amount of such Indebtedness that is
recourse to such Person or a Restricted Subsidiary of such
Person, if the Indebtedness is evidenced by a writing and is for
a determinable amount and the related interest expense shall be
included in Consolidated Interest Expense to the extent actually
paid by Hanover or its Restricted Subsidiaries.
"Indemnified Person" shall mean the Trust Company, in its individual
------------------
capacity and as Trustee, Wilmington Trust FSB, in its individual capacity, as
Indenture Trustee and as Collateral Agent, the Lessor, the Certificate Holders,
the Securityholders, and their
29
respective successors, assigns, directors, shareholders, partners, officers,
employees, agents an Affiliates.
"Indenture" shall mean the Indenture dated as of the Closing Date among the
---------
Lessor, the Hanover Guarantors and the Indenture Trustee, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof or of any other Operative Agreement.
"Indenture Event of Default" shall mean any event or condition which, with
--------------------------
the lapse of time or the giving of notice, or both, would constitute an Event of
Default under Section 5.1 of the Indenture.
"Indenture Trustee" (as used in the Indenture, the "Trustee") means the
-----------------
Person named as the "Trustee" in the first paragraph of the Indenture until a
successor trustee shall have become such pursuant to the applicable provisions
of the Indenture, and thereafter "Indenture Trustee" shall mean or include each
Person who is then a trustee thereunder.
"Initial Purchasers" shall mean J.P. Morgan Securities Inc., Goldman, Sachs
------------------
& Co., Salomon Smith Barney and Credit Suisse First Boston.
"Initial Securities" shall have the meaning ascribed to it in the second
------------------
introductory paragraph of the Indenture.
"Insolvent" shall mean, with respect to any Multiemployer Plan, the
---------
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Institutional Accredited Investor Global Note" shall have the meaning set
---------------------------------------------
forth in Section 2.1(a) of the Indenture.
"Insurance Requirements" shall mean all terms and conditions of any
----------------------
insurance policy required by the Lease to be maintained by the Lessee and all
requirements of the issuer of any such policy.
"Interest Period" shall mean, with respect to the Certificate Holder
---------------
Contribution:
(i) initially, the period commencing on date the Certificate Holder
Contribution is made and ending one month thereafter; and
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to the Certificate Holder
Contribution and ending one month thereafter;
provided that the foregoing provisions relating to Interest Periods are subject
- --------
to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
30
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Expiration Date shall end on the Expiration Date; and
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month.
"Interest Rate Agreement" means with respect to any Person any interest
-----------------------
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" means, with respect to any Person, all investments by such
----------
Person in other Persons (including Affiliates) in the form of any direct or
indirect advance, loan (other than advances to customers in the ordinary course
of business) or other extension of credit (including by way of Guarantee or
similar arrangement, but excluding any debt or extension of credit represented
by a bank deposit other than a time deposit) or capital contribution to (by
means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by, such Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
none of the following will be deemed to be an Investment:
(1) Hedging Obligations entered into in the ordinary course of business
and in compliance with the Participation Agreement;
(2) endorsements of negotiable instruments and documents in the ordinary
course of business; and
(3) an acquisition of assets, Capital Stock or other securities by Hanover
or a Subsidiary for consideration to the extent such consideration
consists exclusively of common equity securities of Hanover.
For purposes of Section 9.3 of the Participation Agreement,
(1) "Investment" will include the portion (proportionate to Hanover's
equity interest in a Restricted Subsidiary to be designated as an
Unrestricted Subsidiary) of the fair market value of the net assets of
such Restricted Subsidiary of Hanover at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, Hanover will
31
be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary in an amount (if positive) equal to (a)
Hanover's "Investment" in such Subsidiary at the time of such
redesignation less (b) the portion (proportionate to Hanover's
equity interest in such Subsidiary) of the fair market value of
the net assets (as conclusively determined by the Board of
Directors of Hanover in good faith) of such Subsidiary at the
time that such Subsidiary is so re-designated a Restricted
Subsidiary; and
(2) any property transferred to or from an Unrestricted Subsidiary
will be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board
of Directors of Hanover.
"Investment Company Act" shall mean the Investment Company Act of
----------------------
1940, as amended, together with the rules and regulations promulgated
thereunder.
"Issue Date" means the date on which the notes are originally issued.
----------
"Issuer" shall refer to the Lessor.
------
"Issuer Obligations" shall have the meaning set forth in Section
------------------
11.1(a) of the Indenture.
"Issuer Order" has the meaning set forth in Section 2.2 of the
------------
Indenture.
"Judgment Default Provision" shall have the meaning set forth in
--------------------------
Section 6.1 of the Indenture.
"Lease" shall mean the lease dated as of the Release Date between the
-----
Lessor and the Lessee, together with any Lease Supplements, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof or of any other Operative Agreement.
"Lease Default" shall mean any event or condition which, with the
-------------
lapse of time or the giving of notice, or both, would constitute a Lease Event
of Default.
"Lease Event of Default" shall have the meaning given to such term in
----------------------
Section 17.1 of the Lease.
"Lease Secured Obligations" shall have the meaning set forth in
-------------------------
Section 28.1 of the Lease.
"Lease Supplement" means each lease supplement substantially in the
----------------
form of Exhibit A to the Lease, together with all attachments and schedules
thereto, as such lease supplement may be supplemented, amended or modified
from time to time.
"Legal Defeasance Option" shall have the meaning set forth in Section
-----------------------
8.1(b) of the Indenture.
32
"Legal Holiday" shall have the meaning ascribed to it in Section 10.8
-------------
of the Indenture.
"Legal Requirements" shall mean all Federal, state, county, municipal
------------------
and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting any Equipment or
the use or alteration thereof, whether now or hereafter enacted and in
force, including any that require repairs, modifications or alterations in
or to any Equipment or in any way limit the use and enjoyment thereof and
any that may relate to Environmental Laws, and all permits, certificates of
occupancy, licenses, authorizations and regulations relating thereto, and
all covenants, agreements, restrictions and encumbrances contained in any
instruments which are either of record or known to the Lessee affecting any
Equipment.
"Lessee" shall mean Hanover Compression Limited Partnership, a
------
Delaware limited partnership and a wholly owned subsidiary of Hanover, or
its assigns or successors.
"Lessee Financing Statements" shall mean UCC financing statements
---------------------------
appropriately completed and executed by the Lessee, as debtor, for filing
in the appropriate state (and, where required by the UCC, county) offices
in order to protect the Lessor's interest under the Lease as a security
agreement, as the same may be supplemented, amended or modified from time
to time, and as the same shall be assigned to the Collateral Agent pursuant
to appropriate UCC financing statements.
"Lessor" shall mean Hanover Equipment Trust 2001B, a Delaware business
------
trust, or its successor and assigns.
"Lessor Financing Statements" shall mean UCC financing statements
---------------------------
appropriately completed and executed by the Lessor, as debtor, for filing
in the appropriate state (and where required by the UCC, county) offices in
order to perfect a security interest in favor of the Collateral Agent in
the collateral covered by the Security Agreement, as the same may be
supplemented, amended or modified from time to time.
"Lessor Lien" shall mean any Lien, true lease or sublease, defect in
-----------
title or disposition of title arising as a result of (a) any claim against
the Lessor, the Collateral Agent, the Trust Company, the Certificate
Holders or any Affiliate of the Lessor, the Collateral Agent, the Trust
Company and/or the Certificate Holders, not resulting from the transactions
contemplated by the Operative Agreements, (b) any act or omission of the
Lessor, the Collateral Agent, the Trust Company, the Certificate Holders or
any Affiliate of the Lessor, the Collateral Agent, the Trust Company and/or
the Certificate Holders, which is not required by the Operative Agreements
or is in violation of any of the terms of the Operative Agreements, (c) any
claim against the Lessor, the Collateral Agent, the Trust Company, the
Certificate Holders or any Affiliate of the Lessor, the Collateral Agent,
the Trust Company and/or the Certificate Holders, with respect to Taxes or
Transaction Expenses against which the Lessee is not required to indemnify
the Lessor, the Collateral Agent, the Trust Company, the Certificate
Holders or any Affiliate of the Lessor, the Collateral Agent, the Trust
Company and/or the Certificate Holders,
33
pursuant to the Participation Agreement or (d) any claim against the Lessor
arising out of any transfer by the Lessor of all or any portion of the interest
of the Lessor in the Equipment, the Trust Estate or the Operative Agreements
other than the transfer of title to or possession of the Equipment by the Lessor
pursuant to and in accordance with the Lease, the Indenture or the Participation
Agreement or pursuant to the exercise of the remedies set forth in Section 17 of
the Lease.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
----
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Limited Deficiency Amount" shall mean, with respect to each Unit, the
-------------------------
amount equal to the sum of the Equipment Cost with respect to such Unit on each
Payment Date less the Final Rent Payment as of such date with respect to such
Unit.
"Limited Recourse Event of Default" shall mean:
---------------------------------
(i) the occurrence of any Lease Event of Default under Sections 17.1(iv)
of the Lease (A) the existence of which is specifically premised on a breach of
a representation, warranty, covenant, term or condition that contains the words
or clauses "material", "immaterial", "in all material respects", or "Material
Adverse Effect", and (B) with respect to which the party enforcing such Lease
Event of Default did not or could not apply commercially reasonable standards in
determining that such Lease Event of Default occurred;
(ii) the occurrence of a Lease Event of Default described in Section
17.1(iv) of the Lease that is the result of a breach of the representation
contained in Section 7.4(z) of the Participation Agreement which results from
the failure of the condition contained in Section 6.1(e) or (j) of the
Participation Agreement, and with respect to which the party enforcing such
Lease Event of Default did not or could not apply commercially reasonable
standards in determining that such Lease Event of Default occurred; and
(iii) the occurrence of a Lease Event of Default described in Section
17.1(iv) of the Lease that is the result of a breach of the representations
contained in Sections 7.4(g), (k), or (l) of the Participation Agreement.
"Marketing Period" shall mean, if the Lessee has not given the Expiration
----------------
Date Election Notice in accordance with Section 20.2 of the Lease, the period
commencing on the date twelve (12) months prior to the Expiration Date and
ending on the Expiration Date.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
-----------------------
business, operations, property or condition (financial or otherwise) of Hanover
and its Subsidiaries taken as a whole, (b) the ability of Hanover or any of the
Subsidiaries of Hanover to perform their respective obligations under the
Operative Agreements to which each is a party, or (c) the validity or
enforceability of any of the Operative Agreements to which each is a party or
the rights or remedies of the Collateral Agent or the Indenture Trustee
thereunder.
34
"Material Subsidiary" means any Restricted Subsidiary of Hanover for which
-------------------
the aggregate fair market value of all assets owned by such Restricted
Subsidiary is greater than $20.0 million as of the date of determination.
"Maximum Purchase Option Amount" shall mean 75% of the highest Termination
------------------------------
Value of all Equipment owned by the Lessor at any one time during the period
from the first anniversary of the Release Date to 12 months prior to the
Expiration Date.
"Modifications" shall have the meaning set forth in Section 11.1(a) of the
-------------
Lease.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
------------------
defined in Section 4001(a)(3) of ERISA.
"Net Available Cash" from an Asset Disposition means cash payments received
------------------
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other non-cash form) therefrom, in each case net of:
(1) all legal, accounting, investment banking, title and recording tax
expenses, commissions and other fees and expenses incurred, and all
Federal, state, provincial, foreign and local taxes required to be
paid or accrued as a liability under GAAP (after taking into account
any available tax credits or deductions and any tax sharing
agreements), as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any
Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable
law be repaid out of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition; and
(4) the deduction of appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and retained by
Hanover or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds" with respect to any issuance or sale of Capital Stock,
-----------------
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale
35
(after taking into account any available tax credit or deductions and any tax
sharing arrangements).
"Net Sale Proceeds" shall have the meaning ascribed to it in Section 8.4(b)
-----------------
of the Indenture.
"Net Sale Proceeds Shortfall" shall mean the amount by which the proceeds
---------------------------
of a sale of a Unit described in Section 21.1 of the Lease (net of all expenses
of sale) are less than the Limited Deficiency Amount for such Equipment.
"Non-Excluded Taxes" shall have the meaning ascribed to it in Section
------------------
2.16(a) of the Indenture.
"Non-Recourse Debt" means Indebtedness:
-----------------
(1) as to which neither Hanover nor any Restricted Subsidiary (a) provides
any Guarantee or credit support of any kind (including any
undertaking, Guarantee, indemnity, agreement or instrument that would
constitute Indebtedness) or (b) is directly or indirectly liable (as a
guarantor or otherwise);
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness of Hanover or any
Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and
(3) the explicit terms of which provide there is no recourse against any
of the assets of Hanover or its Restricted Subsidiaries.
"Non-U.S. Person" shall mean a person who is not a U.S. person, as defined
---------------
in Regulation S.
"Note Register" means the register of Securities, maintained by the
-------------
Indenture Trustee, pursuant to Section 2.3 of the Indenture.
"Officer" means the Chairman of the Board, the President, any Vice
-------
President, the Treasurer or the Secretary of Hanover or the Trustee, as
applicable.
"Officer's Certificate" shall mean a certificate signed by two Officers or
---------------------
by an Officer and either an Assistant Treasurer or an Assistant Secretary of
Hanover or the Trustee, as applicable.
"Operating Lease Facility" shall mean any operating lease transaction
------------------------
entered into by Hanover or any of its Restricted Subsidiaries resulting in the
off-balance sheet financing of any of Hanover's or such Restricted Subsidiary's
property or assets, including its gas compression equipment.
36
"Operative Agreements" shall mean, collectively, the Indenture, the
--------------------
Securities, the Lease, the Participation Agreement, the Hanover Guarantee, the
Assignment of Lease, the Security Agreement, the UCC Financing Statements, the
Trust Agreement, the Consent to Assignment, the Certificates, the Requisition,
the Bills of Sale, and any amendments, supplements or modifications from time to
time of any of the above.
"Opinion of Counsel" means a written opinion from legal counsel who is
------------------
acceptable to the Indenture Trustee. The counsel may be an employee of or
counsel to the Issuer, the Indenture Trustee or Hanover.
"Original Securities" shall mean the Issuer's 8.75% Senior Secured Notes
-------------------
due 2011 originally issued on the Issue Date.
"Overdue Rate" shall mean, at any time, 2% in excess of the Certificate
------------
Holder Yield then in effect.
"Participation Agreement" shall mean the Participation Agreement dated as
-----------------------
of the Release Date among the Lessee, the Lessor, the Certificate Holders, the
Hanover Guarantors, the Indenture Trustee, the Collateral Agent, the Trust
Company and Wilmington Trust FSB, as it may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof or of
any other Operative Agreement.
"Paying Agent" shall have the meaning ascribed to it in Section 2.3 of the
------------
Indenture.
"Payment Date" shall mean each date on which a payment is otherwise due
------------
under the terms of the Indenture or the Trust Agreement.
"Payment Default" shall have the meaning ascribed to it in Section 6.1 of
---------------
the Indenture.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Exceptions" shall mean (i) the respective rights and interests
--------------------
of the parties to the Operative Agreements as provided in the Operative
Agreements; (ii) the rights of any sublessee or assignee under a sublease or an
assignment or a compressor management agreement expressly permitted by the terms
of the Lease; (iii) Liens arising by operation of law, materialmen's,
mechanics', workmen's, repairmen's, employees', warehousemen's and other like
Liens in connection with any Modifications or arising in the ordinary course of
business for amounts that either are not more than 30 days past due or are being
diligently contested in good faith by appropriate proceedings, so long as such
proceedings satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.2(g) of the Participation Agreement; (iv)
Liens of any of the types referred to in clause (iii) above that have been
bonded for not less than the full amount in dispute (or as to which other
security arrangements satisfactory to the Lessor have been made), which bonding
(or arrangements) shall comply with applicable Legal Requirements, and shall
have effectively stayed any execution or enforcement of such
37
Liens; (v) Liens for Taxes not yet due, (vi) Lessor Liens and (vii) all
non-monetary encumbrances, exceptions, restrictions, easements, rights of way,
servitudes, encroachments and irregularities in title, other than Liens which
materially impair the use of the Equipment for its intended purpose.
"Permitted Investment" means an Investment by Hanover or any Restricted
--------------------
Subsidiary in:
(1) Hanover, a Restricted Subsidiary (other than a Receivables Entity) or
a Person which will, upon the making of such Investment, become a
Restricted Subsidiary (other than a Receivables Entity); provided,
however, that the primary business of such Restricted Subsidiary is a
Related Business;
(2) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, Hanover or a Restricted Subsidiary
(other than a Receivables Entity); provided, however, that such
Person's primary business is a Related Business;
(3) cash and Cash Equivalents;
(4) receivables owing to Hanover or any Restricted Subsidiary created or
acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade
terms as Hanover or any such Restricted Subsidiary deems reasonable
under the circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(6) loans or advances to employees made in the ordinary course of business
consistent with past practices of Hanover or such Restricted
Subsidiary;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to Hanover or any
Restricted Subsidiary or in satisfaction of judgments or pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy
or insolvency of a debtor;
(8) Investments made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with
Section 9.6 of the Participation Agreement;
(9) Investments in existence on the Issue Date including those made
through the acquisition of Production Operators Corporation and
related assets from Schlumberger Technology Corporation on the Issue
Date;
38
(10) Currency Agreements, Interest Rate Agreements and related Hedging
Obligations, which transactions or obligations are Incurred in
compliance with Section 9.1 of the Participation Agreement;
(11) Investments by Hanover or any of its Restricted Subsidiaries,
together with all other Investments pursuant to this clause (11),
in an aggregate amount at the time of such Investment not to
exceed $25.0 million outstanding at any one time;
(12) Investments made in connection with the performance of
obligations of Hanover or any of its Restricted Subsidiaries
under the terms of any joint venture agreement to which Hanover
or any of its Restricted Subsidiaries is a party on the Issue
Date and identified on a schedule to the Participation Agreement
on the Issue Date, as these agreements may be amended, modified
or supplemented from time to time; provided, however, that no
future amendment, modification or supplement will increase the
amount of the Investment in a joint venture that is a Permitted
Investment pursuant to this clause (12) beyond the amount that
would have been a Permitted Investment pursuant to this clause
(12) under the terms of the agreements in effect on the Issue
Date, and provided, further, that no such Investments shall
exceed $30.0 million in the aggregate;
(13) Guarantees issued in accordance with Section 9.1 of the
Participation Agreement; and
(14) Investments by Hanover or a Restricted Subsidiary in a
Receivables Entity or any Investment by a Receivables Entity in
any other Person, in each case, in connection with a Qualified
Receivables Transaction, provided, however, that any Investment
in any such Person is in the form of a Purchase Money Note, or
any equity interest or interests in accounts receivable and
related assets generated by Hanover or a Restricted Subsidiary
and transferred to any Person in connection with a Qualified
Receivables Transaction or any such Person owning such accounts
receivable.
"Permitted Liens" means, with respect to any Person:
---------------
(1) Liens securing Indebtedness and other obligations of Hanover
and/or the Lessee under the Senior Credit Agreement and related
Interest Rate Agreements and other Senior Indebtedness and liens
on assets of Restricted Subsidiaries securing Guarantees of
Indebtedness and other obligations of Hanover and/or the Lessee
under the Senior Credit Agreement and other Guarantor Senior
Indebtedness permitted to be incurred under the Participation
Agreement;
(2) pledges or deposits by such Person under workmen's compensation
laws, unemployment insurance laws or similar legislation, or good
faith deposits
39
in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a
party, or deposits to secure public or statutory obligations of
such Person or deposits or cash or United States government bonds
to secure surety or appeal bonds to which such Person is a party,
or deposits as security for contested taxes or import or customs
duties or for the payment of rent, in each case Incurred in the
ordinary course of business;
(3) Liens imposed by law, including carriers', warehousemen's and
mechanics', Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings if a reserve
or other appropriate provisions, if any, as shall be required by
GAAP shall have been made in respect thereof;
(4) Liens for taxes, assessments or other governmental charges not
yet subject to penalties for non-payment or which are being
contested in good faith by appropriate proceedings provided
appropriate reserves required pursuant to GAAP have been made in
respect thereof;
(5) Liens in favor of issuers of surety or performance bonds or
letters of credit or bankers' acceptances issued pursuant to the
request of and for the account of such Person in the ordinary
course of its business; provided, however, that such letters of
credit do not constitute Indebtedness;
(6) encumbrances, easements or reservations of, or rights of others
for, licenses, rights of way, sewers, electric lines, telegraph
and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of real properties or liens
incidental to the conduct of the business of such Person or to
the ownership of its properties which do not in the aggregate
materially adversely affect the value of said properties or
materially impair their use in the operation of the business of
such Person;
(7) Liens securing Hedging Obligations so long as the related
Indebtedness is, and is permitted to be under the Indenture or
the Participation Agreement, as applicable, secured by a Lien on
the same property securing such Hedging Obligation;
(8) leases and subleases of real property which do not materially
interfere with the ordinary conduct of the business of Hanover or
any of its Restricted Subsidiaries;
(9) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of
such judgment have not been finally terminated or the period
within which such proceedings may be initiated has not expired;
40
(10) Liens for the purpose of securing the payment of all or a part of
the purchase price of, or Capitalized Lease Obligations with
respect to, assets or property acquired or constructed in the
ordinary course of business, provided that:
(a) the aggregate principal amount of Indebtedness secured by
such Liens is otherwise permitted to be Incurred under the
Indenture or the Participation Agreement, as applicable, and
does not exceed the cost of the assets or property so
acquired or constructed; and
(b) such Liens are created within 180 days of construction or
acquisition of such assets or property and do not encumber
any other assets or property of Hanover or any Restricted
Subsidiary other than such assets or property and assets
affixed or appurtenant thereto;
(11) Liens arising solely by virtue of any statutory or common law
provisions relating to banker's Liens, rights of set-off or
similar rights and remedies as to deposit accounts or other funds
maintained with a depositary institution; provided that:
(a) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by
Hanover or the Lessee in excess of those set forth by
regulations promulgated by the Federal Reserve Board; and
(b) such deposit account is not intended by Hanover or any
Restricted Subsidiary to provide collateral to the
depository institution;
(12) Liens arising from Uniform Commercial Code financing statement
filings regarding operating leases entered into by Hanover and
its Restricted Subsidiaries in the ordinary course of business;
(13) Liens existing on the Issue Date;
(14) Liens on property or shares of stock of a Person at the time such
Person becomes a Restricted Subsidiary; provided, however, that
such Liens are not created, incurred or assumed in connection
with, or in contemplation of, such other Person becoming a
Restricted Subsidiary; provided further, however, that any such
Lien may not extend to any other property owned by Hanover or any
Restricted Subsidiary;
(15) Liens on property at the time Hanover or a Restricted Subsidiary
acquired the property, including any acquisition by means of a
merger or consolidation with or into Hanover or any Restricted
Subsidiary; provided, however, that such Liens are not created,
Incurred or assumed in connection with, or in contemplation of,
such acquisition; provided
41
further, however, that such Liens may not extend to any other
property owned by Hanover or any Restricted Subsidiary;
(16) Liens securing Indebtedness or other obligations of a Restricted
Subsidiary owing to Hanover or a Wholly-Owned Subsidiary (other
than a Receivables Entity);
(17) Liens securing the Securities and the Hanover Guarantees;
(18) Liens securing Refinancing Indebtedness incurred to refinance
Indebtedness that was previously so secured, provided that any
such Lien is limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends or
distributions in respect thereof) that secured (or, under the
written arrangements under which the original Lien arose, could
secure) the Indebtedness being refinanced or is in respect of
property that is the security for a Permitted Lien hereunder;
(19) Liens on assets transferred to a Receivables Entity or on assets
of a Receivables Entity, in either case incurred in connection
with a Qualified Receivables Transaction;
(20) Liens securing Operating Lease Facilities Incurred in compliance
with Section 9.1 of the Participation Agreement;
"Permitted Transferee" shall have the meaning set forth in Section
--------------------
12.1 of the Participation Agreement.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, government or any agency or political subdivision
hereof or any other entity.
"Plan" shall mean at a particular time, any employee benefit plan
----
which is covered by ERISA and in respect of which Lessee, or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Preferred Stock" as applied to the Capital Stock of any corporation,
---------------
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Private Placement Legend" shall have the meaning ascribed to it in
------------------------
Section 2.1(c) of the Indenture.
"Public Equity Offering" means an offering for cash by Hanover of its
----------------------
common stock, or options, warrants or rights with respect to its common stock
pursuant to a
42
registration statement that has been declared effective by the Securities and
Exchange Commission (other than on Form S-4 or S-8).
"Purchase Agreement" shall mean the Purchase Agreement dated August
------------------
16, 2001 among the Issuer, the Initial Purchasers and the Guarantors.
"Purchase Money Note" means a promissory note of a Receivables Entity
-------------------
evidencing a line of credit, which may be irrevocable, from Hanover or any
Restricted Subsidiary of Hanover in connection with a Qualified Receivables
Transaction to a Receivables Entity, which note is repayable from cash
available to the Receivables Entity, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts owing to such investors and amounts paid in connection with the
purchase of newly generated accounts receivable.
"Purchase Notice" shall have the meaning set forth in Section 20.1 of
---------------
the Lease.
"Purchase Option" shall have the meaning set forth in Section 20.1 of
---------------
the Lease.
"Purchase Option Price" shall have the meaning set forth in Section
---------------------
20.1 of the Lease.
"QIB" shall have the meaning ascribed to it in Section 2.1 of the
---
Indenture.
"Qualified Receivables Transaction" means any transaction or series of
---------------------------------
transactions that may be entered into by Hanover or any of its Restricted
Subsidiaries pursuant to which Hanover or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (1) a Receivables Entity (in the
case of a transfer by Hanover or any of its Restricted Subsidiaries) and (2)
any other Person (in the case of a transfer by a Receivables Entity), or may
grant a security interest in, any accounts receivable (whether now existing or
arising in the future) of Hanover or any of its Restricted Subsidiaries, and any
assets related thereto including, without limitation, all collateral securing
such accounts receivable, all contracts and all guarantees or other obligations
in respect of such accounts receivable, the proceeds of such receivables and
other assets which are customarily transferred, or in respect of which security
interests are customarily granted in connection with asset securitization
involving accounts receivable.
"Receivables Entity" means a Wholly-Owned Subsidiary of Hanover (or
------------------
another Person in which Hanover or any Restricted Subsidiary of Hanover makes an
Investment and to which Hanover or any Restricted Subsidiary of Hanover
transfers accounts receivable and related assets) which engages in no activities
other than in connection with the financing of accounts receivable and which is
designated by the Board of Directors of Hanover (as provided below) as a
Receivables Entity:
(1) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which:
43
(a) is guaranteed by Hanover or any Restricted Subsidiary of
Hanover (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness) pursuant to
Standard Securitization Undertakings);
(b) is recourse to or obligates Hanover or any Restricted
Subsidiary of Hanover in any way other than pursuant to
Standard Securitization Undertakings; or
(c) subjects any property or asset of Hanover or any Restricted
Subsidiary of Hanover, directly or indirectly, contingently
or otherwise, to the satisfaction thereof, other than
pursuant to Standard Securitization Undertakings;
(2) with which neither Hanover nor any Restricted Subsidiary of
Hanover has any material contract, agreement, arrangement or
understanding (except in connection with a Purchase Money Note or
Qualified Receivables Transaction) other than on terms no less
favorable to Hanover or such Restricted Subsidiary than those
that might be obtained at the time from Persons that are not
Affiliates of Hanover, other than fees payable in the ordinary
course of business in connection with servicing accounts
receivable; and
(3) to which neither Hanover nor any Restricted Subsidiary of Hanover
has any obligation to maintain or preserve such entity's
financial condition or cause such entity to achieve certain
levels of operating results.
Any such designation by the Board of Directors of Hanover shall be
evidenced to the Indenture Trustee by filing with the Indenture Trustee a
certified copy of the resolution of the Board of Directors of Hanover giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions.
"Redemption Date" shall mean, with respect to any redemption of
---------------
Securities, the date of redemption with respect thereto.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
------------------------
refund, refinance, replace, exchange, renew, repay or extend (including pursuant
to any defeasance or discharge mechanism) (collectively, "refinance,"
"refinances," and "refinanced" shall have a correlative meaning) any
Indebtedness existing on the date of the Participation Agreement or Incurred in
compliance with the Participation Agreement (including Indebtedness of Hanover
that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of
any Restricted Subsidiary that refinances Indebtedness of another Restricted
Subsidiary) including Indebtedness that refinances Refinancing Indebtedness,
provided, however, that:
(1) (a) if the Stated Maturity of the Indebtedness being refinanced
is earlier than the Stated Maturity of the notes, the Refinancing
Indebtedness has a
44
Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced or (b) if the Stated Maturity
of the Indebtedness being refinanced is later than the
Stated Maturity of the Securities, the Refinancing
Indebtedness has a Stated Maturity at least 91 days later
than the Stated Maturity of the Securities;
(2) the Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is Incurred that is equal to
or greater than the Average Life of the Indebtedness being
refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount,
an aggregate issue price) that is equal to or less than the
sum of the aggregate principal amount (or if issued with
original issue discount, the aggregate accreted value) then
outstanding of Indebtedness being refinanced (plus, without
duplication, any additional Indebtedness Incurred to pay
interest or premiums required by the instruments governing
such existing Indebtedness and fees incurred in connection
therewith); and
(4) if the Indebtedness being refinanced is subordinated in
right of payment to the notes or the Hanover Guarantee, such
Refinancing Indebtedness is subordinated in right of payment
to the notes or the Hanover Guarantee on terms at least as
favorable to the Securityholders as those contained in the
documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Register" shall have the meaning set forth in Section 32.3 of
--------
the Lease.
"Registered Exchange Offer" shall have the meaning set forth in
-------------------------
the Exchange and Registration Rights Agreement.
"Registrar" shall have the meaning ascribed to it in Section 2.3
---------
of the Indenture.
"Regulation S" shall have the meaning ascribed to it in Section
------------
2.1(a) of the Indenture.
"Regulation S Global Note" shall have the meaning ascribed to it
------------------------
in Section 2.1(a) of the Indenture.
"Regulation S Legend" shall have the meaning ascribed to it in
-------------------
Section 2.1(c) of the Indenture.
"Regulation S Note" shall have the meaning ascribed to it in
-----------------
Section 2.1(a) of the Indenture.
"Related Business" means any business which is the same as or
----------------
related, ancillary or complementary to any of the businesses of Hanover and its
Restricted Subsidiaries on the date of the Participation Agreement.
45
"Release" shall mean any release, pumping, pouring, emptying,
-------
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.
"Release Date" means the Closing Date unless the Escrow Agreement is
------------
executed and delivered by the parties thereto, in which case it shall mean the
date the Escrowed Funds are released pursuant to the Escrow Agreement.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental
----
Rent.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
--------------
the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Replacement Equipment" shall have the meaning set forth in Section 30
---------------------
of the Lease.
"Replacement Equipment Closing Date" shall mean each date on which the
----------------------------------
Lessee substitutes Equipment with Replacement Equipment pursuant to Section 30
of the Lease.
"Reportable Event" shall mean any of the events set forth in Section
----------------
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived by the PBGC.
"Representative" means any trustee, agent or representative (if any)
--------------
of an issue of Senior Indebtedness or Guarantor Senior Indebtedness, as the case
may be; provided that when used in connection with the Senior Credit Agreement,
the term "Representative" shall refer to the administrative agent under the
Senior Credit Agreement.
"Required Certificate Holders" shall mean, at any time, Certificate
----------------------------
Holders who hold in the aggregate Certificates that represent 51% or more of the
Certificate Holder Contributions.
"Required Holders" shall mean, at any time, Securityholders who hold
----------------
in the aggregate 51% or more of the principal amount of the outstanding
Securities.
"Requirement of Law" shall mean, as to any Person, the Certificate of
------------------
Incorporation, By-Laws, Articles of Association or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Requisition" shall have the meaning set forth in Section 5.2 of the
-----------
Participation Agreement.
46
"Resale Restriction Termination Date" shall have the meaning ascribed
-----------------------------------
to it in Section 2.6 of the Indenture.
"Responsible Officer" shall mean, (i) other than with respect to the
-------------------
Trust Company, Wilmington Trust FSB, Lessor and Indenture Trustee, the chief
executive officer, president, the executive vice president, treasurer or
secretary of any Person, or, with respect to financial matters, the chief
financial officer or treasurer of the applicable Person, and (ii) with respect
to the Trust Company, Wilmington Trust FSB, Lessor and Indenture Trustee, a
Trust Officer.
"Restricted Investment" shall mean any Investment other than a
---------------------
Permitted Investment.
"Restricted Period" shall mean the 40 consecutive days beginning on
-----------------
and including the later of (A) the day on which the Initial Securities are
offered to persons other than distributors (as defined in Regulation S under
the Securities Act) and (B) the Issue Date.
"Restricted Securities Legend" shall mean the Private Placement Legend
----------------------------
set forth in clause (A) of Section 2.1(c) of the Indenture or the Regulation S
Legend set forth in clause (B) of Section 2.1(c), as applicable.
"Restricted Subsidiary" shall mean any Subsidiary of Hanover other
---------------------
than an Unrestricted Subsidiary.
"Rule 144A" shall have the meaning ascribed to it in Section 2.1(a) of
---------
the Indenture.
"Rule 144A Global Note" shall have the meaning ascribed to it in
---------------------
Section 2.1(a) of the Indenture.
"Rule 144A Note" shall have the meaning ascribed to it in Section
--------------
2.1(a) of the Indenture.
"Sale/Leaseback Transaction" shall mean an arrangement relating to
--------------------------
property now owned or hereafter acquired whereby Hanover or a Restricted
Subsidiary transfers such property to a Person and Hanover or a Restricted
Subsidiary leases it from such Person.
"Scheduled Interest Payment Date" shall mean (a) with respect to the
-------------------------------
Securities, the last day of each March and September to occur while any
Securities are outstanding, and the Stated Maturity, and (b) with respect to the
Certificates, each Certificate Holder Yield Payment Date.
"SEC" shall mean the Securities and Exchange Commission.
---
"Securities" shall mean the Initial Securities and Exchange
----------
Securities.
47
"Securities Act" shall mean the Securities Act of 1933, as amended,
--------------
together with the rules and regulations promulgated thereunder.
"Securities Custodian" shall mean the custodian with respect to the
--------------------
Global Security (as appointed by DTC), or any successor Person thereto and shall
initially be the Indenture Trustee.
"Security Agreement" shall mean that certain Security Agreement dated
------------------
as of the Release Date, made by the Lessor in favor of the Collateral Agent,
together with any Security Agreement Supplement, as amended, supplemented or
otherwise modified from time to time.
"Security Agreement Supplement" shall mean each Security Agreement
-----------------------------
Supplement substantially in the form of Exhibit A to the Security Agreement
together with all attachments and schedules thereto, as such Security Agreement
Supplement may be supplemented, amended or modified from time to time.
"Security Documents" shall mean the collective reference to the
------------------
Indenture, the Lease, the Assignment of Lease, the Security Agreement, the UCC
Financing Statements and all other security documents hereafter delivered to the
Trustee or the Collateral Agent granting a Lien on any asset or assets of any
Person to secure the obligations and liabilities of the Lessor under the
Indenture and/or under any of the other Operative Documents or to secure any
guarantee of any such obligations and liabilities.
"Securityholders" shall mean the collective reference to the holders
---------------
of the Securities.
"Senior Credit Agreement" means, with respect to Hanover and/or the
-----------------------
Lessee, one or more debt facilities (including, without limitation, the Amended
and Restated Senior Credit Agreement, dated March 13, 2000, among Hanover, the
Lessee, The Chase Manhattan Bank, as Administrative Agent, and the lenders
parties thereto, as the same may be, and may have been, amended, supplemented or
otherwise modified from time to time) or commercial paper facilities with banks
or other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time
(and whether or not with the original administrative agent and lenders or
another administrative agent or agents or other lenders and whether provided
under the original Senior Credit Agreement or any other credit or other
agreement or indenture).
"Senior Indebtedness" means, whether outstanding on the Issue Date or
-------------------
thereafter issued, created, Incurred or assumed, the Bank Indebtedness, the
Synthetic Guarantees, Indebtedness related to Hanover's 4.75% Convertible Senior
Notes Due March 15, 2008 and all other Indebtedness of Hanover, including
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to Holdings at the
rate specified in the documentation with respect thereto
48
whether or not a claim for post filing interest is allowed in such proceeding)
and fees relating thereto; provided, however, that Senior Indebtedness will not
include:
(1) any Indebtedness which, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is
provided that the obligations in respect of such Indebtedness are
not superior in right of, or are subordinate to, payment of the
Securities and the Hanover Guarantees;
(2) any obligation of Hanover to any Subsidiary;
(3) any liability for Federal, state, foreign, local or other taxes
owed or owing by Hanover;
(4) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities);
(5) any Indebtedness, Guarantee or obligation of Hanover that is
expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of Hanover, including,
without limitation, any Senior Subordinated Indebtedness and any
Subordinated Obligations; or
(6) any Capital Stock.
"Senior Subordinated Indebtedness" means the obligations of Hanover
--------------------------------
under the Hanover Guarantee, the 2001A Guarantee and any other Indebtedness of
Hanover that specifically provides that such Indebtedness is to rank equally in
right of payment with the obligations of Hanover under the Hanover Guarantee and
is not expressly subordinated by its terms in right of payment to any
Indebtedness or other obligation of Hanover which is not Senior Indebtedness.
"Shared Rights" means the rights retained by the Lessor, but not to
-------------
the exclusion of the Collateral Agent, pursuant to Section 6.13 of the
Indenture.
"Significant Casualty" shall mean a Casualty that in the reasonable,
--------------------
good faith judgment of the Lessee (as evidenced by an Officer's Certificate)
either (a) renders the related Equipment unsuitable for continued use for its
intended purpose immediately prior to such Casualty or (b) is so substantial in
nature that restoration of such Equipment to substantially its condition as
existed immediately prior to such Casualty would be impracticable or impossible.
"Significant Condemnation" shall mean a Condemnation that in the
------------------------
reasonable, good faith judgment of the Lessee (as evidenced by an Officer's
Certificate) either (a) renders the Equipment unsuitable for continued use for
its intended purpose immediately prior to such Condemnation or (b) is such that
restoration of such Equipment to substantially its condition as existed
immediately prior to such Condemnation would be impracticable or impossible.
49
"Significant Subsidiary" means any Restricted Subsidiary that would be
----------------------
a "Significant Subsidiary" of Hanover within the meaning of Rule 102 under
Regulation S-X promulgated by the SEC.
"Special Interest Payment Date" shall have the meaning ascribed to it
-----------------------------
in Section 2.13 of the Indenture.
"Special Record Date" shall have the meaning ascribed to it in Section
-------------------
2.13 of the Indenture.
"Standard Securitization Undertakings" means representations,
------------------------------------
warranties, covenants and indemnities entered into by Hanover or any Restricted
Subsidiary of Hanover which are reasonably customary in securitization of
accounts receivable transactions.
"Stated Maturity" means, with respect to any security, the date
---------------
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision, but shall not include any contingent obligations to repay,
redeem or repurchase any such principal prior to the date originally scheduled
for the payment thereof.
"Subordinated Acquisition Note" means the $150.0 million subordinated
-----------------------------
promissory note between Hanover and Camco International, Inc., maturing on
December 15, 2005.
"Subordinated Guarantee Obligation" shall mean, as to any Person, any
---------------------------------
unsecured Guarantee Obligation the terms of which provide that such Guarantee
Obligation is subordinate and junior in right to the payment of all the
obligations and liabilities of such Person to the Indenture Trustee and the
Securityholders.
"Subordinated Obligation" means any Indebtedness of Hanover (whether
-----------------------
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the notes pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association,
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partnership, joint venture, limited liability company or other business entity
of which more than 50% of the total voting power of shares of Capital Stock or
other interests (including partnership and joint venture interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
Unless otherwise specified herein, each reference to a Subsidiary will refer to
a Subsidiary of Hanover, including without limitation the Lessee.
"Subsidiary Guarantor" means each of (i) the Lessee, Hanover
--------------------
Compressor Limited Holdings, LLC, Hanover Land Limited Partnership, Hanover
Maintech Limited Partnership, Hanover/Smith Limited Partnership, Hanover
Acquisition Limited Partnership, Applied Process Solutions, Inc., OEC
Compression Corporation, Eureka
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Energy Limited Partnership, Production Operators Corporation and Production
Operators, Inc., (ii) each other Subsidiary of Hanover in existence on the Issue
Date that is a guarantor under the Senior Credit Agreement and (iii) each
Restricted Subsidiary (other than a Foreign Subsidiary or a Receivables Entity)
that (A) becomes, or upon its creation or acquisition by Hanover or one or more
of its Restricted Subsidiaries is, a Material Subsidiary and (B) becomes a
guarantor under the Senior Credit Agreement.
"Supplemental Rent" shall mean (i) all amounts, liabilities and
-----------------
obligations which Lessee assumes or agrees to pay to Lessor or any other Person
under the Lease or under any of the other Operative Agreements, (ii) all
amounts, liabilities and obligations which Lessor agrees to pay to the
Certificate Holders pursuant to the Lease, Section 2 of the Participation
Agreement or the Trust Agreement and (iii) all amounts, liabilities and
obligations which Lessor agrees to pay to the Securityholders pursuant to the
Securities and the Indenture; provided, however, specifically excluding Basic
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Rent and the payment of Certificate Holder Contributions and principal on the
Securities except to the extent that the same are paid from payments made
pursuant to clause (i) hereof.
"Synthetic Guarantees" means, collectively, (i) the Guarantee, dated
--------------------
as of October 27, 2000 (as the same may be, and may have been amended,
supplemented or otherwise modified from time to time), among the Lessee, Hanover
Equipment Trust 2000B, Bank Hapoalim B.M. and FBTC Leasing Corp., as investors,
the lenders parties thereto and the administrative agent named therein; (ii) the
Guarantee, dated as of March 13, 2000 (as the same may be, and may have been
amended, supplemented or otherwise modified from time to time), among the
Lessee, Hanover Equipment Trust 2000A, First Union National Bank and Scotiabanc
Inc., as investors, the lenders parties thereto and the Administrative Agent;
and (iii) the Guarantee, dated as of June 15, 1999 (as the same may be, and may
have been amended, supplemented or otherwise modified from time to time), among
the Lessee, Hanover Equipment Trust 1999A, Societe Generale Financial
Corporation and FBTC Leasing Corp., as investors, the lenders parties thereto
and the Administrative Agent;.
"Tax Indemnitee" shall mean the Lessor, the Certificate Holders, the
--------------
Trust Company, the Indenture Trustee, each Securityholder and their Affiliates,
successors, assignees and assigns.
"Taxes" shall have the meaning set forth in the definition of
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Impositions.
"Term" shall mean the period commencing on the Release Date and ending
----
on the Expiration Date.
"Termination Date" shall have the meaning set forth in Section 16.2(a)
----------------
of the Lease.
"Termination Notice" shall have the meaning set forth in Section
------------------
16.1(a) of the Lease.
"Termination Value" shall mean with respect to all of the Equipment,
-----------------
as of any determination date, an amount equal to the sum of (i) the aggregate
outstanding principal
51
amount of the Securities, accrued and unpaid interest thereon, the applicable
premium, if any, and any other amounts due under the Indenture, plus (ii) the
aggregate outstanding amount of the Certificate Holder Contribution and all
unpaid Certificate Holder Yield thereon, the applicable premium, if any, plus
(iii) all other amounts due and owing to the Certificate Holders, Indenture
Trustee or Securityholders under any Operative Agreements. Termination Value
will only include amounts in excess of the aggregate outstanding principal
amount of the Securities and the aggregate outstanding amount of the Certificate
Holder Contribution if such amounts have not been paid as Supplemental Rent as
required by the Lease (after giving effect to any concurrent payment of
Supplemental Rent). If it is necessary to calculate Termination Value for a
particular Unit, the total Termination Value will be allocated among the
Equipment based upon the relative cost of each Unit.
"TIDES Trust" shall mean Hanover Compressor Capital Trust, a Delaware
-----------
business trust, and its successors and assigns.
"Total Condemnation" shall mean a Condemnation that involves a taking
------------------
of Lessor's entire title to a Unit.
"Tranche A Percentage" shall mean 67.90%.
--------------------
"Transaction Expenses" shall mean
--------------------
(a) the reasonable out-of-pocket expenses, disbursements and costs of
the Indenture Trustee and the Certificate Holders, including, without
limitation, reasonable attorneys fees and expenses, incurred in connection with
the consummation of the transactions contemplated by the Operative Agreements;
(b) the reasonable fees and reasonable out-of-pocket expenses of the
Trust Company in connection with the transactions contemplated by the Operative
Agreements, including, without limitation, the initial and annual Trust
Company's fee and all reasonable fees and reasonable out-of pocket expenses of
the Trust Company and any necessary co-trustees (including reasonable counsel
fees and expenses) or any successor trustee, for acting as trustee under the
Trust Agreement;
(c) any and all Taxes (to the extent provided in Section 13.2 of the
Participation Agreement) and fees incurred in recording or filing any Operative
Agreement or any other transaction document, any bill of sale, security
agreement, notice or financing statement with any public office, registry or
governmental agency in connection with the transactions contemplated by the
Operative Agreements;
(d) any brokers' fees (with respect to brokers retained by or with the
prior consent of Lessee) and any and all stamp, transfer and other similar
taxes, fees and excises, if any, including any interest and penalties, which are
payable in connection with the acquisition of any Unit;
(e) all reasonable out-of-pocket costs and expenses incurred in
connection with the enforcement or preservation of any rights under the
Operative Agreements,
52
including, without limitation, the reasonable fees and disbursements of counsel
to the Indenture Trustee, the Securityholders and the Certificate Holders;
(f) all reasonable out-of-pocket costs and expenses incurred in
connection with any amendment, supplement or modification to the Operative
Agreements requested by the Lessee or any Guarantors and any other
documents prepared in connection therewith, and the consummation and
administration of the transactions contemplated thereby, including, without
limitation, the reasonable fees and disbursements of counsel to the
Indenture Trustee, Securityholders and Certificate Holders; and
(g) all reasonable out-of-pocket costs and expenses incurred by the
Lessor, the Lessee, the Certificate Holders or the Indenture Trustee in
connection with any purchase of any Equipment by the Lessee pursuant to the
Lease.
"Trust" shall mean the Lessor.
-----
"Trust Agreement" shall mean the Amended and Restated Trust Agreement
---------------
dated as of the Closing Date between the Certificate Holders and the Trust
Company, as amended, supplemented and otherwise modified from time to time in
accordance with the terms thereof and of any other Operative Agreement.
"Trust Company" shall mean Wilmington Trust Company, in its individual
-------------
capacity, and any successor trustee under the Trust Agreement in its individual
capacity.
"Trust Estate" shall have the meaning set forth in the Trust
------------
Agreement.
"Trust Officer" shall mean, when used with respect to the Trust
-------------
Company and Wilmington Trust FSB, any officer within the Corporate Trust
Administration department of the Trust Company, including any vice president,
assistant vice president, assistant secretary, assistant treasurer, trust
officer or any other officer of the Trust Company who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject matter and who shall have direct responsibility for the administration
of the transactions contemplated by the Operative Agreements.
"Trustee" shall mean the Trust Company, not in its individual
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capacity, but solely as trustee under the Trust Agreement.
"2001B Escrow" shall mean the escrow established pursuant to the
------------
Escrow Agreement.
"2001A Equipment" shall mean the equipment owned by the 2001A Lessor
---------------
and leased to Lessee under the 2001A Lease.
"2001A Guarantee" shall mean the Guarantee dated as of August 31, 2001
---------------
from the Hanover Guarantors in connection with the 2001A Lease.
53
"2001A Indenture" shall mean the Indenture dated as of August 31, 2001
---------------
between the 2001A Lessor, the 2001A Indenture Trustee and the Hanover
Guarantors.
"2001A Indenture Trustee" shall mean Wilmington Trust FSB, in its
-----------------------
capacity as Indenture Trustee under the 2001A Indenture.
"2001A Lease" shall mean that Lease dated as of August 31, 2001
-----------
between the 2001A Lessor and Lessee.
"2001A Lessor" shall mean Hanover Equipment Trust 2001A, a Delaware
------------
business trust.
"2001A Operative Agreements" shall mean the Operative Agreements
--------------------------
defined in the 2001A Participation Agreement.
"2001A Participation Agreement" shall mean the Participation Agreement
-----------------------------
dated as of August 31, 2001 among Lessee, the 2001 A Lessor, the Certificate
Holders, the 2001A Indenture Trustee, the Hanover Guarantors, the Trust Company
and Wilmington Trust FSB.
"2001A Termination Value" shall have the meaning set forth in the
-----------------------
2001A Participation Agreement.
"UCC Financing Statements" shall mean collectively the Lessee
------------------------
Financing Statements and the Lessor Financing Statements.
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial
----------------------- ---
Code as in effect in any applicable jurisdiction.
"Unit" means each piece of Equipment as specifically scheduled and
----
described on Schedule A of the Lease and any piece of Replacement Equipment.
"Unqualified Subsidiary" shall mean any Subsidiary of the Lessee other
----------------------
than Qualified Subsidiaries.
"Unrestricted Subsidiary" means:
-----------------------
(1) any Subsidiary of Hanover that at the time of determination shall
be designated an Unrestricted Subsidiary by the Board of
Directors of Hanover in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of Hanover may designate any Subsidiary of
Hanover (including any newly acquired or newly formed Subsidiary or a Person
becoming a Subsidiary through merger or consolidation or Investment therein) to
be an Unrestricted Subsidiary only if:
54
(1) such Subsidiary or any of its Subsidiaries does not own any
Capital Stock or Indebtedness of or have any Investment in, or
own or hold any Lien on any property of, any other Subsidiary of
Hanover which is not a Subsidiary of the Subsidiary to be so
designated or otherwise an Unrestricted Subsidiary;
(2) all the Indebtedness of such Subsidiary and its Subsidiaries
shall, at the date of designation, and will at all times
thereafter, consist of Non-Recourse Debt;
(3) such designation and the Investment of Hanover in such Subsidiary
complies with Section 9.3 of the Participation Agreement;
(4) such Subsidiary, either alone or in the aggregate with all other
Unrestricted Subsidiaries, does not operate, directly or
indirectly, all or substantially all of the business of Hanover
and its Subsidiaries;
(5) such Subsidiary is a Person with respect to which neither Hanover
nor any of its Restricted Subsidiaries has any direct or indirect
obligation:
(a) to subscribe for additional Capital Stock of such Person; or
(b) to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of
operating results; and
(6) on the date such Subsidiary is designated an Unrestricted
Subsidiary, such Subsidiary is not a party to any agreement,
contract, arrangement or understanding with Hanover or any
Restricted Subsidiary with terms substantially less favorable to
Hanover than those that might have been obtained from Persons who
are not Affiliates of Hanover.
Any such designation by the Board of Directors of Hanover shall be
evidenced to the Indenture Trustee by filing with the Indenture Trustee a
resolution of the Board of Directors of Hanover giving effect to such
designation and an Officers' Certificate certifying that such designation
complies with the foregoing conditions. If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Participation Agreement and any Indebtedness of such Subsidiary
shall be deemed to be Incurred as of such date.
The Board of Directors of Hanover may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof and Hanover could
incur at least $1.00 of additional Indebtedness under Section 9.1 of the
Participation Agreement on a pro forma basis taking into account such
designation.
55
"U.S. Government Obligations" means securities that are (a) direct
---------------------------
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligations or a specific payment of principal or interest on any
such U.S. Government Obligations held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligations or the specific payment
of principal of or interest on the U.S. Government Obligations evidenced by such
depository receipt.
"Voting Stock" of a corporation means all classes of Capital Stock of
------------
such corporation then outstanding and normally entitled to vote in the election
of directors.
"Wear and Tear Payment" shall have the meaning set forth in Section
---------------------
8.8(a) of the Indenture.
"Wilmington Trust FSB" means Wilmington Trust FSB, a federal savings
--------------------
bank, in its individual capacity.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of Hanover,
-----------------------
all of the Capital Stock of which (other than directors' qualifying shares) is
owned by Hanover or another Wholly-Owned Subsidiary.
"Yield Rate" shall mean (i) 837.5 basis points in excess of the
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Eurodollar Rate or (ii) 837.5 basis points in excess of ABR, as applicable.