[Execution Copy]
LETTER AMENDMENT NO. 5
to
AMENDED AND RESTATED MASTER SHELF AGREEMENT
November 30, 1995
The Prudential Insurance Company
of America
Pruco Life Insurance Company
c/o Prudential Capital Group
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
We refer to the Amended and Restated Master Shelf Agreement dated as
of December 19, 1991 among the undersigned and The Prudential Insurance Company
of America ("Prudential"), as amended by Letter Amendment No. 1, dated October
22, 1992, Letter Amendment No. 2, dated August 31, 1994, Letter Amendment No. 3,
dated April 1, 1995 and Letter Amendment No. 4, dated July 28, 1995 (such
agreement, as amended, being referred to as the "AGREEMENT"). Unless otherwise
defined herein, the terms defined in the Agreement shall be used herein as
therein defined.
The Company has requested that you amend certain covenants and
definitions in the Agreement in anticipation of the Company entering into a Note
Purchase Agreement (the "1995 Note Purchase Agreement") relating to the issuance
and sale of the Company's 8.02% Senior Notes due November 2005 in an aggregate
principal amount of $42,000,000. In addition, the Company has requested that you
waive compliance with certain provisions of Paragraph 6C(3) and Paragraph 6C(8).
You have indicated your willingness to so amend and waive. Accordingly, it is
hereby agreed by you and us as follows:
I. AMENDMENTS TO THE AGREEMENT. The Agreement is, effective the date
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first above written, hereby amended as follows:
A. Paragraph 5A(v) is hereby deleted in its entirety and replaced, in
lieu thereof with the following:
"(v) prior to April 30 in each year, a projection of the consolidated
cash flows of the Company, its Subsidiaries and the joint ventures in
which the Company or its Subsidiaries has an investment for the
current fiscal year, in the form of EXHIBIT 1 attached to Letter
Amendment No. 5;"
Exhibit 10.48
B. The last paragraph of Paragraph 5A is hereby deleted in its entirety
and replaced, in lieu thereof, with the following:
"The Company also covenants that forthwith upon the chief
executive officer, chief financial officer, Vice President-Finance,
Executive Vice President-General Counsel, Treasurer or President of
the Company obtaining knowledge of an Event of Default or Default, it
will deliver to each holder of any Notes an Officer's Certificate
specifying the nature and period of existence thereof and what action
the Company proposed to take with respect thereto."
C. Paragraph 6A(2) is hereby deleted in its entirety and replaced, in
lieu thereof, with the following:
"6A(2) CURRENT RATIO. The ratio of Consolidated Current Assets to
Consolidated Current Liabilities to be less than 1.0 to 1.0 at any
time. For purpose of determining compliance with this paragraph 6A(2),
(x) "Consolidated Current Liabilities" will be calculated without
including any payments of principal of any Funded Debt of the Company
which are required to be repaid within one year of the date of
calculation and (y) Consolidated Current Assets shall include the
amount of funds that are available to be borrowed under the NCNB
Agreement, where "available" means, as of the date of the
determination, the bank parties to the NCNB Agreement are committed to
advance such funds, no default exists under the NCNB Agreement and all
conditions to such banks advancing such funds would be satisfied.
Prudential acknowledges that the Company currently calculates the
current ratio only as of the end of each calendar month."
D. Paragraph 6A(3) is hereby deleted in its entirety and replaced, in
lieu thereof, with the following:
"6A(3). DEBT MAINTENANCE. Adjusted Consolidated Debt to exceed (i)
from August 31, 1994 through October 31, 1996, 60% of Consolidated Net
Tangible Assets and (ii) at any time after October 31, 1996, 55% of
Consolidated Net Tangible Assets. In any event, for purposes of
determining compliance with this paragraph 6A(3), Adjusted
Consolidated Debt shall include without limitation all indebtedness
included in determining compliance with the similar covenant in the
NCNB Agreement."
E. Paragraph 6C(3) is hereby deleted in its entirety and replaced, in
lieu thereof, with the following::
"6C(3) LIMITATION ON INVESTMENTS AND NEW BUSINESSES. (i) Make any
expenditure or commitment or incur any obligation or enter into or
engage in any transaction except in the ordinary course of business
(which shall be deemed to include expenditures, commitments,
obligations and transactions permitted by
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clause (iii) or clause (iv) of this paragraph 6C(3)); (ii) engage
directly or indirectly in any business or conduct any operations
except in connection with or incidental to its present businesses and
operations (which shall be deemed to include electric power generation
and marketing and expenditures, commitments, obligations and
transactions permitted by clause (iii) or clause (iv) of this
paragraph 6C(3)); (iii) make any acquisitions of, capital
contributions to, or other investments in, any Persons which exceed in
the aggregate $500,000 other than (a) capital contributions to and
investments in any joint venture described in EXHIBIT 2 to Letter
Amendment No. 5 or in the Wholly Owned Subsidiaries, (b) acquisitions
of equity in corporations or partnerships having as their primary
business gas processing, transmission and gathering, oil and gas
production and storage or gas marketing and related activities or
electric power generation and marketing which do not exceed in the
aggregate 10% of Consolidated Net Tangible Assets and (c) deposits
with, investments in, obligations of and time deposits in any domestic
bank or domestic branches of foreign banks which, at the time such
deposit or investment is made, are rated A or better by Standard &
Poor's Rating Group or Xxxxx'x Investors Service, Inc. or B or better
by Xxxxxxxx Bank Watch and investments maturing within one year from
the date of acquisition in direct obligations of or obligations
supported by, the full faith and credit of, the United States of
America; or (iv) make any acquisition or investment in any properties
other than gas processing, transmission and gathering facilities,
domestic oil and gas properties, gas storage facilities, gas inventory
and electric power generation facilities which exceeds $5,000,000;
PROVIDED, however, that the loans referred to in paragraph 6C(7) may
be outstanding."
F. Paragraph 6C(5)(iv) is hereby deleted in its entirety and replaced, in
lieu thereof, with the following:
"(iv) any non Wholly Owned Subsidiary may merge or consolidate
with any other corporation, provided that immediately after giving effect
to such merger or consolidation (a) the continuing or surviving corporation
of such merger or consolidation shall constitute a Subsidiary, and (b) no
Event of Default or Default shall exist."
G. The dollar amount "$2,000,000" set forth in Paragraph 6C(6) shall be
deleted and replaced, in lieu thereof with "$4,000,000".
H. Paragraph 6C(8) is hereby deleted in its entirety and replaced, in
lieu thereof, with the following:
"6C(8) CONTRACTS; TAKE-OR-PAY AGREEMENTS. Enter into any
"take-or-pay" contract or other contract which requires it to pay for
oil, gas, other hydrocarbons or other minerals prior to taking
delivery thereof, PROVIDED that the Company may enter into such
contracts so long as the aggregate maximum
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direct and contingent liability of the Company under such contracts
does not exceed $500,000 at any one time, and PROVIDED FURTHER that
the Company may enter into contracts with gas producers requiring the
Company to make payments if the Company has not connected the
producer's well to the Company's gathering system within a specified
period of time, so long as the maximum direct or contingent liability
of the Company under such contract does not exceed $500,000. The
Company and its Subsidiaries may enter into: (a) Short Hedge Futures
to sell natural gas or liquid hydrocarbons or to offset a Long Hedge
Future; and (b) Long Hedge Futures to purchase natural gas or liquid
hydrocarbons or to offset a Short Hedge Future; PROVIDED, however,
that at the time of entering into a Short Hedge Future, the Company
shall own and have available to it sufficient amounts of natural gas
or liquid hydrocarbons, as the case may be, or shall own pursuant to
firm contracts to deliver natural gas or liquid hydrocarbons, as the
case may be, pursuant to such Short Hedge Future; PROVIDED, further,
that at the time of entering into a Long Hedge Future, the Company
shall have sufficient agreements from Counterparties to purchase
natural gas or liquid hydrocarbons, as the case may be, from the
Company so that the Company can resell natural gas or liquid
hydrocarbons, as the case may be, delivered pursuant to such Long
Hedge Future."
I. Paragraph 6F shall be deleted in its entirety and replaced, in lieu
thereof, with the following:
"6F. Other Agreements. Without the prior written consent of the
Required Holder(s) of the Notes of each Series, the Company will
not amend, modify or waive (i) any provision of the Term Loan
Agreement which would shorten the maturity or average life of any
loan thereunder, (ii) any provision of the Revolving Loan
Agreement which would shorten any commitment thereunder, or (iii)
any provision of the 1993 Note Purchase Agreement or the 1995
Note Purchase Agreement which would shorten the maturity or
average life of any note issued thereunder."
J. The definition of "Reinvestment Yield" set forth in paragraph 10A is
hereby amended by amending the last sentence thereof in its entirety to read as
follows:
"Such implied yield shall be determined, (i) if necessary, by (x)
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converting U.S. Treasury xxxx quotations to bond-equivalent
yields in accordance with accepted financial practice and (y)
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interpolating linearly between yields reported for various
maturities and, (ii) if interest on such Notes is paid quarterly,
by converting all such implied yields to a quarterly payment
basis in accordance with accepted financial practice."
K. The definition of "Adjusted Consolidated Debt" set forth in Paragraph
10B is hereby deleted in its entirety and replaced, in lieu thereof, with the
following:
"`ADJUSTED CONSOLIDATED DEBT' shall mean Consolidated Debt
(excluding Debt in the amount of the Receivables Investment
relating to the Permitted Securitization Program) PLUS Excess
Working Capital Deficit."
L. The definition of "Consolidated Current Liabilities" set forth in
Paragraph 10B is hereby deleted in its entirety and replaced, in lieu thereof,
with the following:
"`CONSOLIDATED CURRENT LIABILITIES' shall mean the consolidated
current liabilities (including, without limitation, the Debt in
respect of the Permitted Securitization Program) of the Company and
its Subsidiaries, as determined in
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accordance with generally accepted accounting principles."
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M. The definition of "Consolidated Net Tangible Assets" set forth in
Paragraph 10B is hereby amended by adding the following clause:
"`CONSOLIDATED NET TANGIBLE ASSETS' shall mean the consolidated
assets of the Company and its Subsidiaries, LESS, without duplication
(i) Consolidated Current Liabilities MINUS Excess Working Capital
Deficit, (ii) asset, liability, contingency and other reserves of the
Company and its Subsidiaries, including reserves for depreciation and
for deferred income taxes, (iii) all other liabilities of the Company
and its Subsidiaries, except liabilities for Funded Debt of the types
described in clauses (i), (ii) and (iii) of the definition of Debt,
and (iv) treasury stock, unamortized debt discount and expense,
goodwill, trademarks, brand names, patents, organizational expenses
and any other intangible assets of the Company and its Subsidiaries,
and any write-up of the values of any assets after June 30, 1991, all
as determined in accordance with generally accepted accounting
principles; PROVIDED, HOWEVER, that the term "Consolidated Net
Tangible Assets" shall include the book value of long-term gas
contracts with producers that the Company assumes in connection with
acquisitions and that are reflected on the books of the Company as
assets."
N. The following definition is hereby added to Paragraph 10B:
"`COUNTERPARTY' shall mean (i) any Person described in EXHIBIT 3 to
the Letter Amendment No. 5, (ii) any Person that is not an Affiliate
of the Company and that has senior debt securities rated at least A by
Standard & Poor's Rating Group or Xxxxx'x Investors Service, Inc. or
whose obligations in respect of agreements described in the final
proviso to paragraph 6C(8) or in the definition of Long Hedge Future
or Short Hedge Future, as the case may be, are fully guaranteed by an
affiliate of such Person whose senior debt securities are so rated,
and (iii) any other Person that is not an Affiliate of the Company
and with whom the Company has agreements of the nature described in
the final proviso to paragraph 6C(8) or in the definition of Long
Hedge Future or Short Hedge Future, so long as (a) the aggregate
amount of all such agreements with such Person outstanding at any time
shall not exceed $1,000,000 and (b) the Company has such agreements
outstanding with no more than nine other such Persons at any time."
O. The definition of "Long Hedge Future" set forth in Paragraph 10B is
hereby deleted in its entirety and replaced, in lieu thereof, with the
following:
"`LONG HEDGE FUTURE' shall mean an agreement, purchased on a
commodities exchange or entered into with a Counterparty, that obligates
the Company to purchase natural gas or liquid hydrocarbons, as the case may
be, at a pre-determined price at a pre-determined time."
P. The definition of "NCNB Agreement" set forth in Paragraph 10B is
hereby deleted in its entirety and replaced, in lieu thereof, with the
following:
"`NCNB AGREEMENT' shall mean (i) from the date hereof to August 31,
1993, the First Restated Loan Agreement, dated as of October 31, 1991,
between the Company and NCNB, as Agent and NCNB and Bankers Trust
Company as Co-Managers of the Acquisition Loan and Certain Banks as
Lenders, and (ii) from and after August 31, 1993, Term Loan Agreement
and the Revolving Loan Agreement."
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Q. The definition of "Short Hedge Future" set forth in Paragraph 10B is
hereby deleted in its entirety and replaced, in lieu thereof, with the
following:
"`SHORT HEDGE FUTURE' shall mean an agreement, purchased on a
commodities exchange or entered into with a Counterparty, that
obligates the Company to sell natural gas or liquid hydrocarbons, as
the case may be, at a pre-determined price at a pre-determined time."
R. Paragraph 10B is hereby amended by adding the following new
definitions in alphabetical order:
"`REVOLVING LOAN AGREEMENT' shall mean the Loan Agreement (Revolver)
dated August 31, 1993 between the Company and NationsBank of Texas,
N.A. (formerly known as NCNB Texas National Bank), as the provisions
thereof have been or may be from time to time amended or waived in
compliance with paragraph 6F.
`TERM LOAN AGREEMENT' shall mean the Third Restated Loan Agreement
(Term) dated August 31, 1993 between the Company and NationsBank of
Texas, N.A. (formerly known as NCNB Texas National Bank), as Agent and
Certain Banks as Lenders.
`1993 NOTE PURCHASE AGREEMENT' shall mean, collectively, those certain
separate Note Purchase Agreements each dated as of April 1, 1993,
between the Company and each of the purchasers listed on Annex 1
thereto, respectively, as the provisions thereof have heretofore been
amended or waived or may be from time to time amended or waived in
compliance with paragraph 6F.
`1995 NOTE PURCHASE AGREEMENT' shall mean, the Note Purchase Agreement
dated as of November 29, 1995 between the Company and the Purchasers
listed on the signature page thereto, as the provisions thereof have
heretofore been amended or waived or may be from time to time amended
or waived in compliance with paragraph 6F."
II. WAIVERS; COMPLIANCE WITH PARAGRAPH 6(G).
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A. Prior to the date hereof, the Company has entered into certain
futures transactions outside of a commodities exchange (the "OTC Transactions")
relating to the sale or purchase of natural gas or liquid hydrocarbons.
Prudential, as the Required Holder of the Notes, hereby waives any and all
violations of Paragraph 6C(8) of the Agreement resulting from OTC Transactions
which have been entered into prior to the effective date of this Letter
Amendment No. 5.
B. Prior to the date hereof, the Company has made certain capital
contributions to the joint ventures described in EXHIBIT 2 to Letter Amendment
No. 5 (the "Contributions"). Prudential, as the Required Holder of the Notes,
hereby waives any and all violations of Paragraph 6C(3) resulting from the
Contributions which have been made prior to the effective date of this Letter
Amendment No. 5.
C. Prudential hereby acknowledges that the Company has, in compliance
with Paragraph 6G of the Agreement, offered to amend this Agreement so as to
provide the holders of the Notes with the benefits of certain financial
covenants set forth in the 1995 Note Purchase Agreement which are more
restrictive than the covenants set forth in the Agreement. The Company hereby
agrees that it will, on or before January 31, 1996, execute and deliver an
amendment to this Agreement providing for such more restrictive covenants.
III. MISCELLANEOUS; EFFECTIVENESS.
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A. On and after the effective date of this letter amendment, each
reference in the Agreement to "this Agreement", "hereunder", "hereof", or words
of like import referring to the Agreement, and each reference in the Notes to
"the Agreement", "thereunder", "thereof", or words of like import referring to
the Agreement, shall mean the Agreement as amended by this letter amendment.
The Agreement, as amended by this letter amendment, is and shall continue to be
in full force and effect and is hereby in all respects ratified and confirmed.
The execution, delivery and effectiveness of this letter amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy under the Agreement nor constitute a waiver of any provision of the
Agreement.
B. This letter amendment may be executed in any number of counterparts
and by any combination of the parties hereto in separate counterparts, each of
which counterparts shall be an original and all of which taken together shall
constitute one and the same letter
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amendment.
C. If you agree to the terms and provisions hereof, please evidence your
agreement by executing and returning at least a counterpart of this letter
amendment to the Company at its address at 00000 X. Xxxxx Xxxxxx, Xxxxxx, XX
00000, Attention: Vice President-General Counsel. This letter amendment shall
become effective as of the date first above written when and if (i) counterparts
of this letter amendment shall have been executed by us and you, and (ii) the
consent attached hereto shall have been executed by each Guarantor.
Very truly yours,
WESTERN GAS RESOURCES, INC.
By: /s/ XXXX X. XXXXXX
---------------------------------
Title: Executive Vice President
Agreed as of the date
first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
-----------------------------------------------
Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ PRUCO LIFE INSURANCE COMPANY
--------------------------------
Vice President
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CONSENT TO AMENDMENT
Each of the undersigned is a Guarantor ("GUARANTOR" and, collectively,
"GUARANTORS") under separate guaranties (each being a "GUARANTY") dated as of
October 27, 1992 or August 31, 1993 in favor of The Prudential Insurance Company
of America ("PRUDENTIAL"), for itself and on behalf of affiliates of Prudential
with respect to the obligations of Western Gas Resources, Inc. (the "COMPANY")
under a Master Shelf Agreement dated as of December 19, 1991, as amended (the
"ORIGINAL AGREEMENT"). The terms used herein have the meaning specified in each
Guaranty unless otherwise defined herein. Prudential and the Company entered
into an Amended and Restated Master Shelf Agreement dated as of December 19,
1991 (as subsequently amended, the "AMENDED AGREEMENT") which amended the
Original Agreement. Prudential and the Company are entering into a Letter
Amendment No. 5 to Amended and Restated Master Shelf Agreement dated November
30, 1995 to which this consent is attached (the "LETTER AMENDMENT"). Each of the
undersigned hereby consents to the Letter Amendment and each hereby confirms and
agrees that its Guaranty is, and shall continue to be, in full force and effect
and is hereby confirmed and ratified in all respects except that, upon the
effectiveness of, and on and after the date of this consent, all references in
the Guaranty of the undersigned to the "Shelf Agreement", "thereunder",
"thereof" or words of like import referring to the Shelf Agreement shall mean
the Amended Agreement as amended by the Letter Amendment.
Dated as of November 30, 1995.
MGTC, INC.
WESTERN GAS RESOURCES STORAGE, INC.
MOUNTAIN GAS RESOURCES, INC.
WESTERN GAS RESOURCES - TEXAS, INC.
WESTERN GAS RESOURCES OKLAHOMA, INC.
MIGC, INC.
By: /s/ XXXX X. XXXXXX
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Title:
