EXHIBIT 10.22
[Execution Copy]
LETTER AMENDMENT NO. 2 TO
SECOND AMENDED AND RESTATED MASTER SHELF AGREEMENT
March 31, 1999
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Capital Group
0000 Xxxx Xxxxxx, Xxxxx 0000X
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
We refer to the Second Amended and Restated Master Shelf Agreement
dated as of December 19, 1991 (effective as of January 31, 1996) as amended by
Letter Amendment No. 1 dated November 21, 1997 (as amended, the "Agreement") by
and among the undersigned, Western Gas Resources, Inc. (the "Company"), and The
Prudential Insurance Company of America and Pruco Life Insurance Company
(together, "Prudential"). Unless otherwise defined herein, the terms defined in
the Agreement shall be used herein as therein defined.
The Company has asked Prudential to amend certain covenants
contained in the Agreement to permit it to remain in compliance with the terms
of the Agreement. You have indicated your willingness to so amend the Agreement
provided the Company undertake certain actions, including the prepayment of
Indebtedness and raising additional capital. Accordingly, it is hereby agreed by
the parties hereto as follows:
I. Amendments to the Agreement. The Agreement is, effective the date first above
written, hereby amended as follows:
A. Paragraph 4B. Optional Prepayments With Yield-Maintenance Amount.
Paragraph 4B of the Agreement is amended by deleting the phrase "plus interest"
and substituting therefor the phrase "plus interest and the Credit Fees".
B. Paragraph 4C. Notice of Optional Prepayment. Xxxxxxxxx 0X of the
Agreement is amended by deleting the phrase "together with interest" and
substituting therefor the phrase "together with interest and the Credit Fees".
C. Paragraph 5M. Guaranties. Paragraph 5M of the Agreement is amended in
full to read as follows:
"5M. Guaranties. The Company will require each Subsidiary, and each
entity that would constitute a Subsidiary but for its being organized
under the laws of a jurisdiction outside the United States of America,
that guarantees any obligations of the Company under the NCNB Agreement,
the Bridge Facility or the 1995 Note Purchase Agreement, or under any
replacement or refinancing thereof, immediately to execute and deliver a
Guaranty to the holder of each Note. The Company will cause each such
Subsidiary or other entity to deliver to the holder of each Note,
simultaneously with its delivery of such Guaranty, written evidence
satisfactory to the Required Holder(s) and their counsel that such
Subsidiary or other entity has taken all corporate or similar action
necessary to duly approve and authorize its execution, delivery and
performance of such Guaranty and other documents which it is required to
execute."
D. Paragraph 5. Affirmative Covenants. Paragraph 5 of the Agreement is
amended by adding at the end thereof the following paragraphs 5N, 5O, 5P and 5Q:
"5N. Pledge of Subsidiary Stock. On or before April 30, 1999, the
Company will grant a security interest in the stock of all of its
Subsidiaries who are Guarantors (other than Western Gas Resources Storage,
Inc.) to Prudential, as collateral agent for the holders of the Notes, to
the holders of the notes issued pursuant to the 1995 Note Purchase
Agreement and to NCNB, as agent for the Banks parties to the NCNB
Agreement and the lender under the Bridge Facility. The Company shall on
the earlier of January 3, 2000, if the stock of WGRS has not been sold by
December 31, 1999, and the date that is ten days after the day on which
the agreement for the sale of stock in WGRS is terminated, pledge under
the Company Pledge Agreement all of the issued and outstanding capital
stock in WGRS and cause WGRS to execute and deliver a Guaranty to the
holder of each Note. The holders and the Company agree that all stock and
other securities pledged pursuant to the Pledge Agreements, including the
stock of WGRS if pledged pursuant to the preceding sentence, will remain
subject to the Pledge Agreements until (i) in the case of all such stock
and other securities, the Company achieves the Minimum Rating and NCNB, as
agent for the lenders under the NCNB Agreement, the lender under the
Bridge Facility and the holders of the notes under the 1995 Note Purchase
Agreement have released their security interests in all of such pledged
stock and other securities and, provided that no Default or Event of
Default exists or would result therefrom, or, in the case only of the
stock of WGRS, until (ii) the Company shall deliver to each holder of the
Notes a certificate of an Authorized Officer certifying that the Company
has sold, at Fair Market Value for cash, all of the stock in WGRS to a
Person that is not an Affiliate or a Subsidiary and that no Default or
Event of Default exists immediately prior to or after giving effect to
such sale. If, however, after any release described in the preceding
sentence the Company is downgraded below the Minimum Rating, the Company
shall immediately pledge, and cause its Subsidiaries to pledge, all stock
or other equity interests in all Guarantors to the holders of the Notes
under one or more Pledge Agreements.
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5O. Credit Fees. (i) First Credit Fee. The Company shall pay the
holder of each Note a credit fee equal to 0.50% per annum of the principal
amount of such Note during the period beginning January 1, 1999 (with such
credit fee accruing as if it had been in effect, continuously, beginning
January 1, 1999), through the day on which the Company provides to such
holder satisfactory evidence that the Company has received the Minimum
Rating. If the Company is downgraded below the Minimum Rating after having
received the Minimum Rating, the Company shall pay the holder of each Note
a credit fee equal to 0.50% per annum of the outstanding principal amount
of such Note, in respect to such principal amount, during the period
beginning the day after the Company loses the Minimum Rating and ending on
the day the Company again provides satisfactory evidence to the holder of
such Note that the Company has received the Minimum Rating (the credit
fees applicable pursuant to the preceding two sentences are referred to
herein as the "First Credit Fee"). The First Credit Fee shall be payable
quarterly in arrears on the last day of March, June, September and
December of each year commencing March 31, 1999 (provided that the First
Credit Fee that has accrued from January 1, 1999 through April 30, 1999
shall be paid on the Effective Date), and on the day on which the Company
achieves the Minimum Rating.
(ii) Second Credit Fee. If the 1999 Action Plan is not completed by
June 30, 1999, the Company shall pay the holder of each Note a credit fee
equal to 1.50% per annum of the principal amount of such Note during the
period beginning July 1, 1999 and ending on the day the Company delivers
to the holders of the Notes evidence satisfactory to the Required Holders
that the 1999 Action Plan has been completed (such credit fee being
referred to herein as the "Second Credit Fee") . The Second Credit Fee
shall be payable quarterly in arrears on the last day of March, June,
September and December of each year, commencing September 30, 1999 and on
the day the Company delivers to the holders of the Notes evidence
satisfactory to the Required Holders that the 1999 Action Plan has been
completed. For clarity, if the Minimum Rating has not been achieved and
the 1999 Action Plan is not complete, the cumulative credit fee for each
Note shall be 2.00% per annum.
5P. Purchase Offer Fees. If the Company, directly or indirectly,
pays or causes to be paid any remuneration, whether by supplemental or
additional interest, premium, fee or otherwise, to any Person
participating in the Offer to Acquire Notes or the Purchase Offers, other
than the payments of principal at par described therein, the Company shall
pay, ratably according to the respective principal amounts of the Notes
outstanding as of April 30, 1999, the same such remuneration to the holder
of each Note and upon the same terms and conditions.
5Q. Year 2000. The Company will promptly notify the holder of each
Note in the event that the Company discovers or determines that any
computer application (including those of its suppliers or vendors) that is
material to any of the Company's or any of its Subsidiaries' business and
operations will not properly function, in and following the year 2000 on a
timely basis, except to the extent such failure would not present a
material probability of having a material adverse effect on the business,
property or assets, financial condition or results of operations of the
Company or any of its Subsidiaries."
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E. Paragraph 6A. Financial Covenants. Paragraph 6A of the Agreement is
amended in full to read as follows:
"6A(1). Consolidated Tangible Net Worth. Consolidated Tangible Net
Worth at any time from and after January 1, 1999, to be less than the sum
of (i) $300,000,000 plus (ii) an amount equal to 50% of Consolidated Net
Earnings earned from January 1, 1999 (to the extent such amount is a
positive number) plus (iii) an amount equal to 75% of the net proceeds of
any equity offerings after January 1, 1999.
6A(2). Current Ratio. The ratio of Consolidated Current Assets to
Consolidated Current Liabilities to be less than 0.90 to 1.0 at any time.
For the purposes 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 from the time 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 banks 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.
6A(3). Total Debt Maintenance. Adjusted Consolidated Debt at any
time to exceed (i) from October 1, 1998 through December 31, 2001, 60% of
Consolidated Net Tangible Assets and (ii) from and after January 1, 2002,
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.
6A(4). Senior Debt Maintenance. Adjusted Consolidated Senior Debt at
any time to exceed (i) from January 1, 1999 until the completion of the
1999 Action Plan, 60% of Consolidated Net Tangible Assets, (ii) from and
after completion of the 1999 Action Plan through March 31, 2002, 40% of
Consolidated Net Tangible Assets and (iii) from and after April 1, 2002,
35% of Consolidated Net Tangible Assets. In any event, for purposes of
determining compliance with this paragraph 6A(4), Adjusted Consolidated
Senior Debt shall include without limitation all indebtedness included in
determining compliance with the similar covenant in the NCNB Agreement.
6A(5). Total Fixed Charge Coverage Ratio. For each fiscal quarter of
the Company, the ratio of (i) the sum of (a) the Consolidated Net Earnings
of the Company for the four immediately preceding fiscal quarters of the
Company plus (b) the Company's consolidated interest expense, excluding
any prepayment premiums paid with respect to Funded Debt of the Company
prepaid in calendar years 1999 and 2000, and provision for income taxes,
depreciation and amortization for the four immediately preceding fiscal
quarters of the Company that were taken into account in determining
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such Consolidated Net Earnings to (ii) the Company's consolidated accrued
interest expense excluding any prepayment premiums paid with respect to
Funded Debt of the Company prepaid in calendar years 1999 and 2000, for
the four immediately preceding fiscal quarters to be less than the Total
Fixed Charge Coverage Ratio set forth in the table below for the periods
opposite such ratio:
Total Fixed Charge
------------------
Period Coverage Ratio
------ --------------
October 1, 1998 through December 31, 1998 2.80 to 1.00
January 1, 1999 through March 31, 1999 1.75 to 1.00
April 1, 1999 through June 30, 1999 1.75 to 1.00
July 1, 1999 through September 30, 1999 1.75 to 1.00
October 1, 1999 through December 31, 1999 2.00 to 1.00
January 1, 2000 through March 31, 2000 2.25 to 1.00
April 1, 2000 through June 30, 2000 2.25 to 1.00
July 1, 2000 through September 30, 2000 2.50 to 1.00
October 1, 2000 through December 31, 2000 2.50 to 1.00
January 1, 2001 through March 31, 2001 2.75 to 1.00
April 1, 2001 through June 30, 2001 3.00 to 1.00
July 1, 2001 through September 30, 2001 3.25 to 1.00
October 1, 2001 through December 31, 2001 3.50 to 1.00
January 1, 2002 and thereafter 3.75 to 1.00
6A(6). Senior Fixed Charge Coverage Ratio. For each fiscal quarter
of the Company, the ratio of (i) the sum of (a) the Consolidated Net
Earnings of the Company for the four immediately preceding fiscal quarters
of the Company plus (b) the Company's consolidated interest expense,
excluding any prepayment premiums paid with respect to Funded Debt of the
Company prepaid in calendar years 1999 and 2000, and provision for income
taxes, depreciation and amortization for the four immediately preceding
fiscal quarters of the Company that were taken into account in determining
such consolidated earnings to (ii) the Company's consolidated accrued
interest expense, excluding any prepayment premiums paid with respect to
Funded Debt of the Company prepaid in calendar years 1999 and 2000, for
Senior Debt for the four immediately preceding fiscal quarters to be less
than the Senior Fixed Charge Coverage Ratio set forth in the table below
for the periods opposite such ratio:
Senior Fixed Charge
-------------------
Period Coverage Ratio
------ --------------
September 30, 1998 through December 31, 1998 2.80 to 1.00
January 1, 1999 through March 31, 1999 1.75 to 1.00
April 1, 1999 through June 30, 1999 1.75 to 1.00
July 1, 1999 through September 30, 1999 1.75 to 1.00
October 1, 1999 through December 31, 1999 2.25 to 1.00
January 1, 2000 through March 31, 2000 2.25 to 1.00
April 1, 2000 through June 30, 2000 3.00 to 1.00
July 1, 2000 through September 30, 2000 3.50 to 1.00
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October 1, 2000 through December 31, 2000 4.00 to 1.00
January 1, 2001 through March 31, 2001 4.50 to 1.00
April 1, 2001 through June 30, 2001 4.75 to 1.00
July 1, 2001 through September 30, 2001 5.00 to 1.00
October 1, 2001 through December 31, 2001 5.25 to 1.00
January 1, 2002 and thereafter 5.50 to 1.00
6A(7). Senior Debt to EBITDA . As of any date of determination (i)
from the date on which the 1999 Action Plan is completed through December
31, 1999, the ratio of Senior Debt to EBITDA for the period of four fiscal
quarters most recently ended to be greater than 4.50 to 1.00 and (ii) from
and after January 1, 2000, the ratio of Senior Debt to EBITDA for the
period of four fiscal quarters most recently ended to be greater than 4.00
to 1.00."
F. Paragraph 6B. Dividend Limitation. Paragraph 6B of the Agreement is
amended in full to read as follows:
"6B. Dividend Limitation. The Company will not make any Restricted
Payment except out of Consolidated Net Earnings Available for Restricted
Payments and unless no Default or Event of Default exists before such
Restricted Payment is made and no Default or Event of Default would exist
immediately after such Restricted Payment is made. In addition, the
Company will not make any Restricted Payment with respect to its common
stock after June 30, 1999 if the 1999 Action Plan has not been completed
on or before June 30, 1999. If the Company is required to cease making
Restricted Payments with respect to its common stock because of the
previous sentence and completes the 1999 Action Plan after June 30, 1999,
the Company can thereafter resume making Restricted Payments to the extent
it complies with the first sentence of this paragraph 6B."
G. Paragraph 6C(1). Liens. Paragraph 6C(1) of the Agreement is amended (I)
by amending clause (viii) in its entirety to read as follows:
"(viii) Liens created by the Pledge Agreement and the pledge
agreements in favor of NCNB as collateral agent for the Lenders under the
NCNB Agreement, the Lender under the Bridge Facility and the holders of
the notes issued pursuant to the 1995 Note Purchase Agreement so long as
the Intercreditor Agreement is in effect."
and (II) by deleting the phrase "(viii) (to the extent of the
Over-Collateralization Amount)" in the proviso following clause (ix) thereof.
H. Paragraph 6C(2). Debt. Clauses (v) and (vi) of paragraph 6C(2) of the
Agreement is amended in full to read as follows:
"(v) other Debt of the Company not prohibited by paragraph 6A(3) or
6A(4), and
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(vi) Debt of the Guarantors represented by the Bank Guaranties, the
Guaranties, the guaranties of the notes issued pursuant to the 1995 Note
Purchase Agreement and Subordinated Debt Guaranties."
I. Paragraph 6C(4). Sale of Stock and Debt Subsidiaries. Paragraph 6C(4)
of the Agreement is amended in full to read as follows:
"6C(4) Sale of Stock and Debt of Subsidiaries. Sell or otherwise
dispose of, or part with control of, any shares of stock or Debt of any
Subsidiary except to the Company or another Wholly Owned Subsidiary
(except that the Company may sell the stock of WGRS if and only if,
notwithstanding any other provision of this Agreement, such sale is made
on or prior to December 31, 1999, the Company receives a Net Proceeds
Amount of not less than $86,000,000, and no Default or Event of Default
shall have occurred and be continuing at the time of such sale or after
giving effect thereto), and except that all shares of stock and Debt of
any Subsidiary (other than WGRS) at the time owned by or owed to the
Company and all Subsidiaries may be sold as an entirety for a cash
consideration which represents the fair value (as determined in good faith
by the Board of Directors of the Company) at the time of sale of the
shares of stock and Debt so sold, provided that, at the time of such sale,
such Subsidiary shall not own, directly or indirectly, any shares of stock
or Debt of, or any other continuing investment in, any other Subsidiary
(unless all of the shares of stock and Debt of such other Subsidiary
owned, directly or indirectly, by the Company and all Subsidiaries are
simultaneously being sold as permitted by this paragraph 6C(4)), or any
shares of stock or Debt of the Company, and provided further that (i) the
assets of such Subsidiary together with (ii) the assets of all other
Subsidiaries the stock or Debt of which was sold or otherwise disposed of
in the preceding 12-month period (including the assets of WGRS, if the
stock of WGRS is sold) and (iii) the assets (including the Edgewood
Facility and the Xxxxxxxx Facility, if the Xxxxxxxx Facility is sold) of
the Company and its Subsidiaries sold, leased, transferred or otherwise
disposed of pursuant to clause (v) of paragraph 6C(5) in the preceding
12-month period (in each transaction measured by the greater of book value
or Fair Market Value), do not represent more than 15% of Consolidated Net
Tangible Assets as reflected on the most recent annual or quarterly
consolidated balance sheet, or, as of each date of determination during
the 12-month period ended 12 months after the later of the date of the
sale of WGRS and the date of the sale of the Xxxxxxxx Facility for so long
as such assets do represent more than 15% of such Consolidated Net
Tangible Assets, such assets, in the case of the Company and the other
Related Persons, consist solely of the shares of WGRS, the Xxxxxxxx
Facility, the Edgewood Facility, equipment that is worthless or obsolete
or that is replaced by equipment of equal suitability and value, inventory
that is sold in the ordinary course of business and other assets or
property that is sold in arm's-length transactions to third parties that
are not Affiliates and are sold for fair consideration not in the
aggregate in excess of $20,000,000 during any fiscal year of the Company."
J. Paragraph 6C(5). Merger and Sale of Assets. Paragraph 6C(5) of the
Agreement is amended in full to read as follows:
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"6C(5) Merger and Sale of Assets. Merge or consolidate with or into
any other Person or sell, convey, lease, transfer or otherwise dispose of
all or any part of its assets, except that:
(i) (a) any Subsidiary may merge with the Company (provided, that
the Company shall be the continuing or surviving corporation) and (b) any
Subsidiary may merge with a Wholly Owned Subsidiary (provided that the
Wholly Owned Subsidiary shall be the continuing or surviving corporation),
(ii) any Subsidiary may sell, lease, transfer or otherwise dispose
of any of its assets to the Company or to a Wholly Owned Subsidiary,
(iii) the Company may merge with any other corporation, provided
that (a) the Company shall be the continuing or surviving corporation, and
(b) immediately after giving effect to such merger no Event of Default or
Default shall exist,
(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,
(v) the Company or any Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to any Person, provided, that (a)
such assets together with (b) all other assets of the Company and its
Subsidiaries sold, leased, transferred or otherwise disposed of during the
preceding 12 month period (including the Edgewood Facility and the
Xxxxxxxx Facility if the Xxxxxxxx Facility is sold), and (c) the assets of
all Subsidiaries (including the assets of WGRS if the stock of WGRS is
sold) the stock or Debt of which has been sold or otherwise disposed of
during the preceding 12-month period pursuant to the second proviso of
paragraph 6C(4) (in each transaction measured by the greater of book value
or Fair Market Value), do not represent more that 15% of Consolidated Net
Tangible Assets as reflected on the most recent annual or quarterly
consolidated balance sheet, as of each date of determination during the
12-month period ended 12 months after the later of the date of the sale of
WGRS and the date of the sale of the Xxxxxxxx Facility or for so long as
such assets do represent more than 15% of such Consolidated Net Tangible
Assets, such assets, in the case of the Company and the other Related
Persons, consist solely of the shares of WGRS, the Xxxxxxxx Facility, the
Edgewood Facility, equipment that is worthless or obsolete or that is
replaced by equipment of equal suitability and value, inventory that is
sold in the ordinary course of business and other assets or property that
is sold in arm's-length transactions to third parties that are not
Affiliates and are sold for fair consideration not in the aggregate in
excess of $20,000,000 during any fiscal year of the Company,
(vi) the Company may merge into or consolidate with any solvent
corporation if (x) the surviving corporation is a corporation organized
under the laws of any State of the United States of America, (y) such
corporation shall expressly assume by an agreement satisfactory in
substance and form to the Required Holder(s) (which
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agreement may require the delivery in connection with such assumption of
such opinions of counsel as the Required Holder(s) may reasonably
require), all of the obligations of the Company under this Agreement and
the Notes, including all covenants herein and therein contained, and such
successor or acquiring corporation shall succeed to and be substituted for
the Company with the same effect as if it had been named herein as a party
hereto (it being agreed that such assumption shall, upon the request of
the holder of any outstanding Note and at the expense of such successor
corporation, be evidenced by the exchange of such Note for another Note
executed by such successor corporation, with such changes in phraseology
and form as may be appropriate but in substance of like terms as the Note
surrendered for such exchange and of like unpaid principal amount, and
that each Note executed pursuant to paragraph 11D after such assumption
shall be executed by and in the name of such successor corporation) and
(z) after giving effect to such merger or consolidation no Event of
Default or Default shall exist,
(vii) the Company and any Subsidiary may sell or otherwise dispose
of inventory in the ordinary course of business, and
(viii) the Company may sell the Xxxxxxxx Facility, if and only if,
notwithstanding any other provision of this Agreement, such sale is
consummated on or before December 31, 1999 for a Net Proceeds Amount of
not less than $30,000,000 and no Default or Event of Default shall have
occurred and be continuing at the time of such sale or after giving effect
thereto."
K. Paragraph 6C(7). Limitation on Credit Extensions. Clause (ii) of
Paragraph 6C(7) of the Agreement is amended in full to read as follows:
"(ii) loans from Wholly Owned Subsidiaries to the Company, and loans
from Wholly Owned Subsidiaries or the Company to any Subsidiary, in each
case made in the ordinary course of business and, in the case of loans
from Wholly Owned Subsidiaries that have not executed a Guaranty which are
made to the Company or to a Subsidiary that has executed a Guaranty,
subordinated to the principal of, interest on, Credit Fees and
Yield-Maintenance Amount, if any, with respect to the Notes, and"
L. Paragraph 6C(9). Sale or Discount of Receivables. Paragraph 6C(9) of
the Agreement is amended in full to read as follows:
"6C(9) Sale or Discount of Receivables. Sell with recourse, or
discount (other than to the extent of finance and interest charges
included therein) or otherwise sell for less than face value thereof, any
of its notes or accounts receivable except notes or accounts receivable
the collection of which is doubtful in accordance with generally accepted
accounting principles."
M. Paragraph 6C(10). Guaranties. The proviso at the end of paragraph
6C(10) of the Agreement is amended by adding at the end thereof before the
period the phrase "and 6A(4)".
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N. Paragraph 6C. Lien, Debt, and Other Restrictions.
Xxxxxxxxx 0X of the Agreement is amended by adding at the end thereof
the following paragraph 6C(13):
"6C(13) Certain Matters Relating to Subordinated Debt. (i) Make any
payment in respect of principal of, or purchase, redeem or otherwise
retire, any Subordinated Debt (including, without limitation, by the
making of payments by Subsidiaries under Subordinated Guaranties) if a
Default or an Event of Default at the time exists or would result
therefrom or (ii) issue, create or incur any Subordinated Debt if a
"Default" (as such term is defined in the NCNB Agreement) at the time
exists or would result therefrom."
O. 6E. Other Agreements. Paragraph 6E of the Agreement is amended in full
to read as follows:
"6E. Other Agreements.
6E(1) Modifications. The Company will not amend or modify any term
or provision of the 1995 Note Purchase Agreement, the NCNB Agreement or
the Bridge Facility, including but not limited to, an amendment or
modification so as to change to an earlier date the date on which any
payment of principal is to be made thereunder, (ii) any provision of the
NCNB Agreement so as to shorten the duration or increase the amount of any
commitment thereunder, or (iii) any provision of the 1995 Note Purchase
Agreement so as to increase the principal amount outstanding thereunder or
to change to an earlier date the date on which any payment of principal is
to be made thereunder; provided, that the Company may increase the
interest rate or fees payable under or with respect to the 1995 Note
Purchase Agreement, the Bridge Facility or the NCNB Agreement if the
Company complies with the other provisions of this Agreement, including,
without limitation, paragraph 6E(3).
6E(2) Conflicting Provisions. The Company will not and will not
permit any of its Subsidiaries to enter into or permit to exist any
agreement to which any such entity is a party or by which any such entity
is bound (i) which would cause a Default or Event of Default hereunder,
(ii) which contains any provision which would be violated or breached by
the performance of the obligations of the Company and its Subsidiaries
under this Agreement, any Guaranty, any Pledge Agreement or any other
agreement, document, instrument or writing executed in connection
therewith or (iii) which contains any provision that attempts to modify,
amend or restrict any of the rights or remedies of the holders of the
Notes hereunder or under the Intercreditor Agreement, the Notes, the
Guaranties or the Pledge Agreements. The Company will not and will not
permit any of its Subsidiaries to enter into or suffer to exist any
contractual obligation, other than this Agreement, the Guaranties and the
Pledge Agreements, which restricts the ability (i) of the Company to make
any prepayments of the Notes required under this Agreement, (ii) of the
Company to make any payments required under this Agreement or of any
Subsidiary to make any payments required under any Guaranty, (iii) of any
Subsidiary to make any dividends or distributions to the Company or a
Wholly Owned Subsidiary, (iv) of any Subsidiary to otherwise transfer any
of its property or assets to the Company or a Wholly Owned Subsidiary,
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(v) of any Subsidiary to make any payments in respect of Debt owed by a
Subsidiary to the Company or a Wholly Owned Subsidiary, or (vi) of any
Subsidiary to make any loan, advance or extension of credit to the Company
or a Wholly Owned Subsidiary.
6E(3) Most Favored Lender. For so long as any notes issued pursuant
to the 1995 Note Purchase Agreement are outstanding, the Company will not
and will not permit any Subsidiary to:
(i) enter into any indenture, agreement or other instrument under
which the Company could issue or permit to remain outstanding Debt, other
than Subordinated Debt, in an aggregate principal amount greater than
$10,000,000 (a "Restricted Agreement"), or
(ii) agree to any amendment, waiver, consent, modification,
refunding, refinancing or replacement of the 1995 Note Purchase Agreement,
the NCNB Agreement, the Bridge Facility or any other Restricted Agreement,
in either case with terms the effect of which is to
(a) include a Financial Covenant which is not contained in
this Agreement, or
(b) revise or alter any Financial Covenant contained therein
the effect of which is to increase or expand the restriction on any
Company or any Subsidiary,
unless the Company concurrently incorporates herein such additional,
altered or revised Financial Covenant. The incorporation of each such
additional Financial Covenant is hereby deemed to occur automatically and
concurrently by reason of the execution of this Agreement without any
further action or the execution of any additional document by any of the
parties to this Agreement. Without limiting the foregoing and in addition
thereto, neither any Company nor any Subsidiary nor any Affiliate,
directly or indirectly, will offer any economic inducement to the holder
of any note under the 1995 Note Purchase Agreement, to any lenders party
to the NCNB Agreement, to NCNB as lender under the Bridge Facility or to
any other Person who is a party to any other Restricted Agreement for the
purpose of inducing such holder, lender or other Person to enter into any
waiver of any event of default under the 1995 Note Purchase Agreement, the
NCNB Agreement, the Bridge Facility or such other Restricted Agreement or
any event which with the lapse of time or the giving of notice, or both,
would constitute such an event of default, unless the same such economic
inducement has been concurrently offered and (unless such waiver required
hereunder is not granted hereunder) paid on a pro-rata basis to all of the
holders of the Notes if a similar waiver is required hereunder or if such
waiver is sought in connection with an issue as to which no waiver is
required hereunder because the applicable provisions of this Agreement, on
the one hand, and those of the 1995 Note Purchase Agreement, the Bridge
Facility or the NCNB Agreement, as the case may be, on the other hand,
differ as of the Effective Date (it being understood and agreed that the
offering of such economic inducement to the holders of the Notes shall not
be deemed or construed to
11
obligate any such holder to enter into any waiver of any Default or Event
of Default hereunder or to conform any of the provisions hereof to those
of such other agreement).
In addition, neither the Company nor any Subsidiary will enter into
any agreement or instrument that evidences Debt of the type permitted by
clause (v) of Section 6.2(a) of the NCNB Agreement unless: (A) such Debt
shall have no scheduled principal payments due prior to December 1, 2005,
(B) at the time that the Company incurs such Debt, no Default or Event of
Default shall have occurred and be continuing hereunder and (C) if such
Debt is to be guaranteed by any Affiliate of the Company, then such third
party lender(s) must enter into an intercreditor agreement with the
holders of the Notes, in form, scope and substance satisfactory to the
Required Holder(s), as evidenced by their written consent."
P. Paragraph 7A. Acceleration. Paragraph 7A of the Agreement is amended by
(I) amending clauses (ii) and (iv) of paragraph 7A of the Agreement in full to
read as follows:
"(ii) the Company defaults in the payment of any interest or Credit
Fees on any Note for more than 10 Business Days after the date due; or"
"(iv) any representation or warranty made by the Company herein or
in the Company Pledge Agreement, by any Guarantor in a Guaranty, or a
Pledge Agreement, or by the Company, any Guarantor or any of their
respective officers in any writing furnished in connection with or
pursuant to this Agreement shall be false in any material respect on the
date as of which made; or"
(II) adding the word "or" at the end of clause (xvi) and by adding at the end
thereof the following new clauses (xvii) and (xviii):
"(xvii) any Guaranty, for any reason, ceases to be in full force and
effect or is declared null and void, or the validity or enforceability
thereof is contested or the Guarantor denies that it has any further
liability under the Guaranty, or the Guarantor shall default in the
performance or observance of any of its obligations under the Guaranty,
and such default shall not have been remedied within 30 days; or
(xviii) any Pledge Agreement, for any reason other than as specified
therein, ceases to be in full force and effect or is declared null and
void or shall cease to create a valid and perfected first priority
security interest in any of the collateral purported to be covered
thereby, or the validity or enforceability thereof is contested or the
Company denies that it has any further liability under any Pledge
Agreement, or the Company shall default in the performance or observance
of any of its obligations under the Pledge Agreement, and such default
shall not have been remedied within 30 days;"
(III) amending the last paragraph of 7A of the Agreement by deleting the phrase
"with interest" each time it appears therein and substituting therefor the
phrase "with interest and Credit Fees".
12
Q. Paragraph 7B. Rescission of Acceleration. Paragraph 7B of the Agreement
is amended in full to read as follows:
"7B. Rescission of Acceleration. At any time after any or all of the
Notes of any Series are declared immediately due and payable and have not
been paid in full, the Required Holder(s) of such Series of Notes may, by
notice in writing to the Company, rescind and annul such declaration and
its consequences if (i) the Company has paid all overdue interest and
Credit Fees on the Notes, the principal of and Yield Maintenance Amount,
if any, payable with respect to any Notes which have become due otherwise
than by reason of such declaration, and interest (at the rate specified in
the Notes) and Credit Fees on such overdue interest and Credit Fees and
overdue principal and Yield-Maintenance Amount at the rate specified in
the Notes, (ii) all Events of Default and Defaults, other than non-payment
of amounts which have become due solely by reason of such declaration have
been cured or waived pursuant to paragraph 11C, and (iii) no judgment or
decree has been entered for the payment of any monies due pursuant to the
Notes or this Agreement. No such rescission or annulment shall extend to
or affect any subsequent Event of Default or Default or impair any right
arising therefrom."
R. Paragraph 8. Representations, Covenants and Warranties. Paragraph 8 of
the Agreement is amended by adding at the end thereof the following paragraphs
8Q, 8R, 8S and 8T:
"8Q. Receivables Purchase Agreement. The Receivable Purchase
Agreement has been terminated.
8R. 1993 Note Purchase Agreement. The 1993 Note Purchase Agreement
has been terminated and all 1993 Notes have been paid in full.
8S. Existing Guaranties. No Subsidiary, and no entity that would
constitute a Subsidiary but for its being organized under the laws of the
jurisdiction outside the United States of America, has executed and
delivered an Existing Guaranty except Subsidiaries that have executed and
delivered Guaranties to the holders of the Notes.
8T. MONY Notes. All 1995 Notes held by MONY have been paid in full
and retired pursuant to the Offer to Acquire Notes."
S. Paragraph 10B. Other Terms. Paragraph 10B of the Agreement is amended
by (I) amending the following definitions in full to read as follows:
"'Asset Sale' shall mean any sale, conveyance, lease, transfer or
other disposition of all or any part of the assets of any Related Person
made in compliance with paragraph 6C(5) or any sale or other disposal of,
or any parting with control of, any shares of stock or Debt of any
Subsidiary made in compliance with paragraph 6C(4) for which, in any case,
the Gross Proceeds Amount is $1,000,000 or more.
13
'Bridge Facility' shall mean the Loan Agreement dated as of February
17, 1999 with NCNB as the provisions thereof have heretofore been amended
or waived or may be from time to time amended or waived in compliance with
this Agreement.
'Company Pledge Agreement' shall mean the Pledge Agreement, dated as
of the Effective Date, by the Company in favor of Prudential, as
collateral agent for the holders of the Notes, in the form attached hereto
or Exhibit H, as the provisions thereof may be from time to time amended
or waived in compliance with the terms thereof.
'Consolidated Net Earnings' shall mean consolidated gross revenues
of the Company and its Subsidiaries excluding gains resulting from the
sale, conversion or other disposition of capital assets (including capital
stock of Subsidiaries and other assets not constituting current assets),
less all operating and non-operating expenses of the Company and its
Subsidiaries (other than losses resulting from the sale, conversion or
other disposition of capital assets, including capital stock of
Subsidiaries and other assets not constituting current assets) and all
charges of a proper character (including current and deferred taxes on
income, provision for taxes on unremitted foreign earnings that are
included in gross revenues, and current additions to reserves), but not
including in gross revenues any gains resulting from the write-up of
assets, any equity of the Company or any Subsidiary in the unremitted
earnings of any Person that is not a Subsidiary, any earnings of any
Person acquired by the Company or any Subsidiary through purchase, merger
or consolidation or otherwise for any period prior to the time of
acquisition, or any deferred credit representing the excess of equity in
any Subsidiary at the date of acquisition over the cost of the investment
in such Subsidiary, all determined in accordance with generally accepted
accounting principles.
'Consolidated Net Earnings Available For Restricted Payments' shall
mean an amount equal to (1) the sum of $50,000,000 plus (2) 50% (or minus
100% in case of a deficit) of Consolidated Net Earnings for the period
commencing on July 1, 1995 and terminating at the end of the last fiscal
quarter preceding the date of any proposed Restricted Payment (taken as
one accounting period), less (3) the sum of all Restricted Payments made
or declared after July 1, 1995, plus (4) the aggregate amount received by
the Company after July 1, 1995, as the net cash proceeds of the sale of
any shares of its stock. There shall not be included in Restricted
Payments or in any computation of Consolidated Net Earnings Available for
Restricted Payments (x) dividends paid, or distributions made, in stock of
the Company or (y) exchanges of stock of one or more classes of the
Company, except to the extent that cash or other value is involved in such
exchange. The term "stock" as used in this definition and in the
definition of "Restricted Payments" shall include warrants or options to
purchase stock.
'Guarantor' shall mean each of Western Gas Resources Texas, Inc., a
Texas corporation; Western Gas Resources - Oklahoma, Inc., a Delaware
corporation; Mountain Gas Resources, Inc., a Delaware corporation; MGTC;
MIGC; Pinnacle Gas Treating, Inc., a Texas corporation; WGR Canada, Inc.,
a New Brunswick corporation; Xxxxx Oil & Gas Company, Inc., a Delaware
corporation and Western Gas Wyoming, L.L.C., a Wyoming limited liability
company and each other Subsidiary of the Company that issues a Guaranty to
all of the holders of Notes.
14
'Intercreditor Agreement' shall mean that certain Intercreditor
Agreement dated as of the Effective Date among NCNB, as agent for the
lenders parties to the NCNB Agreement, such lenders, NCNB as lender under
the Bridge Facility, The Prudential Insurance Company of America, Pruco
Life Insurance Company and the holders of the 1995 Notes, as the
provisions thereof may be from time to time amended or waived in
compliance with the terms thereof.
'NCNB' shall mean NationsBank, N.A., and its successors and assigns.
'NCNB Agreement' shall mean that certain Loan Agreement dated as of
the Effective Date among the Company, NationsBank, as agent, and the
lenders parties thereto as the provisions thereof have been or may be from
time to time amended or waived in compliance with paragraph 6E.
'Subsidiary' shall mean any corporation, association, partnership,
joint venture, limited liability company or other business or corporate
entity, enterprise or organization organized under the laws of any state
of the United States of America, Canada, or any province of Canada, which
conducts the major portion of its business in and makes the major portion
of its sales to Persons located in the United States of America or Canada,
and at least a majority of the combined voting power of all classes of
Voting Stock of which shall, at the time as of which any determination is
being made, be owned by the Company either directly or through
Subsidiaries, provided that associations, joint ventures or other
relationships (a) which are established pursuant to a standard form
operating agreement or similar agreement or which are partnerships for
purposes of federal income taxation only, (b) which are not corporations
or partnerships (or subject to the Uniform Partnership Act) under
applicable state law, and (c) whose businesses are limited to the
exploration, development and operation of oil, gas, mineral, gas gathering
or gas processing properties and interests owned directly by the parties
in such associations, joint ventures or relationships, shall not be deemed
to be "Subsidiaries". A "Wholly Owned Subsidiary" shall be a Subsidiary
all of the stock of other form of equity interest of every class of which,
except directors' qualifying shares, shall, at the time at which any
determination is being made, be owned by the Company either directly or
through wholly owned subsidiaries."
(II) inserting the following defined terms in the appropriate alphabetical
order:
"'Adjusted Consolidated Senior Debt' shall mean Adjusted
Consolidated Debt less all Subordinated Debt.
'Credit Fees' shall mean the First Credit Fee and the Second Credit
Fee.
'Debt Offering' shall mean the issuance or incurrence by the Company
or any other Related Person of any Debt in the amount of at least
$1,000,000, except that any incurrence of Debt under the NCNB Agreement or
in the form of a Capitalized Lease Obligation shall not be considered a
Debt Offering.
15
'EBITDA' shall mean, for any period, the sum of Consolidated Net
Earnings, plus, to the extent deducted in the determination of
Consolidated Net Earnings, (i) all provisions for federal, state and other
income tax, (ii) the Company's consolidated interest expense and (iii)
provisions for depreciation and amortization, less , in the case of items
(i) through (iii), deductions for amounts attributable to minority
interests in Subsidiaries.
'Edgewood Facility' shall mean that certain gas processing plant and
related production located primarily in Van Zandt County, Texas and sold
by the Company on October 29, 1998 for a Gross Proceeds Amount of
approximately $56,000,000.
'Effective Date' shall mean the date the Letter Amendment No. 2 to
this Agreement is effective.
'Equity Offering' shall mean the issuance of any common or preferred
stock by the Company or any other Related Person.
'Existing Guaranty' shall mean each guaranty of a Guarantor in favor
of NCNB as agent for the lenders parties to the NCNB Agreement, NCNB as
lender under the Bridge Facility or the holders of the Notes issued
pursuant to the 1995 Note Purchase Agreement, in each case, for which a
similar guaranty shall have been issued to each holder of Notes.
'Financial Covenant' shall mean, with respect to any agreement or
instrument representing or governing Debt, any covenant (whether expressed
as a covenant, an event of default or a condition to a borrowing)
contained therein expressed in terms of (i) a minimum or maximum amount in
or derived from the Company's or any Subsidiary's financial statements,
(ii) a minimum or maximum ratio between any such amounts described in
clause (i) above or (iii) any other financial or finance related test as
the same may relate to the consolidated or individual assets, liabilities,
revenues or expenses of the Company or any of its Subsidiaries.
'First Credit Fee' shall have the meaning specified in paragraph
5N(1).
'Xxxxxxxx Facility' shall mean those certain gas gathering
facilities of the Company located in Lee, Burleson, Washington, Bastrop,
Fayette and Lavaca Counties, Texas.
'Gross Proceeds Amount' shall mean (i) with respect to any Asset
Sale by the Company or any other Related Person, the aggregate amount of
the consideration (valued at the Fair Market Value of such consideration
at the time of the consummation of such Asset Sale) payable to such Person
in respect of such Asset Sale, and (ii) with respect to any Equity
Offering or Debt Offering by the Company or any other Related Person, the
gross cash proceeds received by the Company or such Related Person at the
time of the consummation of such Equity Offering or Debt Offering.
16
'MIGC Pledge Agreement' shall mean that certain Pledge Agreement,
dated as of the Effective Date, by MIGC in favor of the holders of the
Notes, in the form attached hereto as Exhibit I, as the provisions thereof
may be from time to time amended or waived in compliance with the terms
thereof.
'Minimum Rating' shall mean a rating for the senior unsecured Debt
of the Company similar to the Notes (if unsecured) of at least BBB- from
Standard & Poor's Rating Group, a division of The McGraw Hill Companies
and Baa3 from Xxxxx'x Investors Services, Inc. (if no notes issued under
the 1995 Note Purchase Agreement are outstanding, such rating from either
Standard & Poor's Rating Group or Xxxxx'x Investors Services, Inc. will
suffice).
'MONY' shall mean Mutual Life Insurance Company of New York.
'Net Proceeds Amount' shall mean, (i) with respect to any Debt
Offering or Equity Offering, the Net Proceeds of Debt/Equity and (ii) with
respect to any Asset Sale, an amount equal to the difference of
(a) the Gross Proceeds Amount, minus
(b) all ordinary and reasonable out-of-pocket expenses actually
incurred by such Person in connection with such Asset Sale and any
associated cash taxes.
'Net Proceeds of Debt/Equity' shall mean, with respect to any Debt
Offering or Equity Offering, cash proceeds (net of all costs and
out-of-pocket expenses in connection therewith, including, without
limitation, placement, underwriting and brokerage fees and expenses),
received by the Company or another Related Person, from the issuance or
incurrence of its Debt or the sale of its common stock with respect to
such Debt Offering or Equity Offering, including in such net proceeds:
(a) the net amount paid upon issuance and exercise during such
period of any right to acquire any common stock, or paid during such
period to convert a convertible debt security to common stock (but
excluding any amount paid to the Company upon issuance of such convertible
debt security); and
(b) any amount paid to the Company upon issuance of any convertible
debt security issued after January 14, 1996 and thereafter converted to
common stock during such period.
'1999 Action Plan' shall mean (i) the sale by the Company of assets
after January 1, 1999, the Net Sales Proceeds Amount of which exceed
$50,000,000; (ii) completion of a public offering of Subordinated Debt
yielding Gross Proceeds Amount of $150,000,000; (iii) the prepayment of
the notes outstanding under the 1993 Note Purchase Agreement; (iv) the
prepayment of the $25,000,000 6.77% Senior Note due 2003 and the
prepayment of the final installment of $8,333,334 principal installment of
the 7.51% Senior Notes due 2000 that would otherwise be due on October 27,
2000; and (v) the offer to prepay, or post letters of credit with respect
to an aggregate
17
Secured Amount (as defined in the 1995 Note Purchase Agreement) of, at
least $10,000,000 aggregate principal amount of the notes pursuant to
paragraph 4E(4) or paragraph 4F(1) of the 1995 Note Purchase Agreement,
respectively.
'Offer to Acquire Notes' shall mean that certain Offer to Acquire
Notes, dated February 12, 1999, by the Company and accepted by MONY.
'Pledge Agreement' shall mean the Company Pledge Agreement, the MIGC
Pledge Agreement and each other Pledge Agreement, substantially in the
form of the MIGC Pledge Agreement, delivered from time to time by a
Subsidiary to the holders of the Notes pursuant to paragraph 5N, in each
case as the provisions thereof may be from time to time amended or waived
in compliance with the terms thereof.
'Purchase Offers' shall mean those certain Offers to Acquire Notes,
dated February 12, 1999, by the Company and accepted by the holders of the
1993 Notes.
'Related Person' shall mean any of the Company, each Guarantor and
each Subsidiary with the exception of Westana, a general partnership,
Williston Gas Company and Sandia Energy Resources Joint Venture.
'Second Credit Fee' shall have the meaning specified in paragraph
5O.
'Senior Debt' shall mean all Debt other than Subordinated Debt.
'Subordinated Debt' shall mean unsecured Debt of the Company for
borrowed money that has no scheduled payment of principal, that may not be
prepaid, redeemed or purchased earlier than January 31, 2008 and that is
subordinated in right of payment to the payment of the Notes on terms
typical for publicly held subordinated debt and in a manner satisfactory
to the Required Holder(s).
'Subordinated Debt Guaranties' shall mean guaranties by Subsidiaries
that are Guarantors in respect of Subordinated Debt, which guaranties are
subordinate in right of payment to the Guaranties on terms typical for
guaranties of publicly held subordinated debt and in a manner satisfactory
to the Required Holder(s).
'WGRS' shall mean Western Gas Resources Storage, Inc., a Texas
corporation."
II. Miscellaneous; Effectiveness.
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 emended by this Letter Amendment No.
2. The Agreement, as amended by this letter agreement, is and shall continue to
be in full force and effect and is hereby in all respects ratified and
confirmed.
18
The execution, delivery and effectiveness of this letter amendment shall note
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 No. 2 may be executed in any number of
counterparts, and by any combination of the parties hereto in separate
counterparts, each of which counterpart shall be an original and all of which
taken together shall constitute one and the same letter 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 No. 2 to the Company at its address at 00000 X. Xxxxx Xxxxxx, Xxxxxx,
XX 00000, Attention: Vice President-Finance.
D. This Letter Amendment No. 2 shall become effective as of the date (the
"Effective Date") when:
(i) counterparts of this letter amendment shall have been executed by us
and you;
(ii) the consent attached hereto shall have been executed by each
Guarantor;
(iii) the Company shall have executed and delivered the Company Pledge
Agreement and MIGC shall have executed and delivered the MIGC Pledge Agreement;
(iv) the Intercreditor Agreement shall have been executed and delivered by
all parties thereto;
(v) the Company shall have delivered a certificate of the Secretary or
Assistant Secretary of the Company certifying (a) the resolutions of the Board
of Directors of the Company approving this Letter Amendment No. 2, the Company
Pledge Agreement and all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Letter Amendment No. 2
and the Company Pledge Agreement, and (b) the names and true signatures of the
officers of the Company authorized to sign this Amendment and the other
documents to be delivered hereunder;
(vi) a certificate of the Secretary or Assistant Secretary of each
Guarantor other than MIGC certifying (a) the resolutions of the board of
directors or similar governing body of such Guarantor approving the Guaranty
and/or Consent, as applicable, executed in connection with this Agreement by
such Guarantor and all documents evidencing other necessary corporate or similar
action and governmental approvals, if any, with respect to the Guaranty and/or
Consent, as applicable, executed in connection with this Agreement by such
Guarantor, and (b) the names and true signatures of the officers of such
Guarantor authorized to sign the Guaranty and/or Consent, as applicable,
executed in connection with this Agreement by such Guarantor, and the other
documents to be delivered by such Guarantor hereunder;
19
(vii) a certificate of the Secretary or Assistant Secretary of MIGC
certifying (a) the resolutions of the board of directors of MIGC approving the
MIGC Pledge Agreement and the Consent executed in connection with this Agreement
by MIGC and all documents evidencing other necessary corporate action or
governmental approvals, if any, with respect to the MIGC Pledge Agreement and
the Consent executed in connection with this Agreement by MIGC, and (b) the
names and true signatures of the officers of MIGC authorized to sign the MIGC
Pledge Agreement and the Consent executed in connection with this Agreement by
MIGC, and the other documents to be delivered by MIGC hereunder;
(viii) a favorable opinion of Xxxx X. Xxxxxx, General Counsel of the
Company, satisfactory to Prudential as to such matters as Prudential may
request. The Company hereby directs such counsel to deliver such opinion, and
understands and agrees that Prudential will and is hereby authorized to rely on
such opinion in entering into this Letter Amendment No. 2;
(ix) Prudential and Pruco shall receive a structuring fee in the amount of
$670,834.50 payable as set forth in Schedule I attached hereto and shall have
received a documentation fee of $35,000;
(x) the 1995 Note Agreement shall have been amended in a manner
satisfactory to you;
(xi) Western Gas Wyoming, L.L.C. shall have guaranteed the Notes;
(xii) a copy of the Bridge Facility, in form and substance satisfactory to
the Required Holders and certified by an Authorized Officer of the Company as
being true and complete;
(xiii) a copy of the NCNB Agreement, in form and substance satisfactory to
the Required Holders and certified by an Authorized Officer of the Company as
being true and complete, together with evidence satisfactory to the Required
Holders as to the ability of the Company to satisfy the conditions precedent to
the extension of credit thereunder;
(xiv) copies of all pledge agreements for the benefit of the holders of
Debt under the Bridge Facility, the NCNB Agreement or the 1995 Note Purchase
Agreement, in each case in form and substance satisfactory to the Required
Holders and certified by an Authorized Officer of the Company as being true and
complete; and
(xv) a fee of $7,500 to reimburse Prudential for the allocable costs of
its in-house counsel.
E. The effectiveness of this Letter Amendment No. 2 is conditioned upon
the absence of any requirement of the NCNB Agreement, the Bridge Facility or the
1995 Note Agreement (or if so required, such conditions shall simultaneously
terminate) (i) to xxxxx x Xxxx on any property of the Company or any Subsidiary
(other than (a) Liens in favor of NCNB, as agent, and the lenders under the NCNB
Agreement and in favor of NCNB as lender under the Bridge Facility, in each case
as permitted by clauses (vi) and (vii) of paragraph 6C(1), and (b) Liens created
by the pledge agreements that are subject to the Intercreditor Agreement and in
connection with which the holders of the Notes, or a collateral agent appointed
by them, shall
20
have received a Pledge Agreement from the same pledgor and covering the same
collateral) or (ii) to deliver any security agreement or the guaranty or
agreement to provide guaranties of the obligations of the Company under such
agreements other than (a) any Existing Guaranty which is subject to the
Intercreditor Agreement and for which the holders of the Notes shall have
received a guaranty from the same Guarantor, (b) the pledge agreements that are
subject to the Intercreditor Agreement and in connection with which the holders
of the Notes, or a collateral agent appointed by them, shall have received a
Pledge Agreement from the same pledgor and covering the same collateral and (c)
any other guaranty or agreement to provide guaranties of the obligations of the
Company under such agreements delivered after the Effective Date which becomes
subject to the Intercreditor Agreement and in connection with which the holders
of the Notes shall have received a Guaranty pursuant to paragraph 5M from the
same Guarantor. In addition, such agreements shall not require that any lender
or purchaser party thereto, or an agent or representative thereof, be named as
beneficiary or loss payee on any insurance policy, and all insurance policies of
the Company and its Subsidiaries shall not name any such lender or agent as
beneficiary or loss payee.
F. In connection with the prepayment of the Notes pursuant to the 1999
Action Plan, Prudential hereby waives the 10 Business Days' notice requirement
contained in paragraph 4C of the Agreement.
G. The Company represents and warrants that the representations and
warranties contained in paragraph 8 of the Agreement, as amended by this Letter
Amendment No. 2, are true and correct.
Very truly yours,
WESTERN GAS RESOURCES, INC.
By:
---------------------------
Xxxxxxx X. Xxxxxxx
Vice President-Finance
Agreed as of the date first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
-------------------------------------- -
Vice President
PRUCO LIFE INSURANCE COMPANY
By:
---------------------------------------
Vice President
21
CONSENT TO AMENDMENT
Each of the undersigned is a Guarantor ("Guarantor" and, collectively,
"Guarantors") under separate guaranties (each being a "Guaranty ") in favor of
The Prudential Insurance Company of America ("Prudential"), for itself and on
beha lf of affiliates of Prudential with respect to the obligations of Western
Gas Resources, Inc. (the "Company") under that certain Second Amended and
Restated Master Shelf Agreement dated as of December 19, 1991 (effective as of
January 31, 1996) as amended by Letter Amendment No. 1 dated November 21, 1997
(as amended, the "Agreement"). The terms used herein have the meaning specified
in each Guaranty unless otherwise defined herein. Prudential, Pruco Life
Insurance Company and the Company are entering into that certain Letter
Amendment No. 2 dated as of March 31, 1999 to the Agreement to which this
consent is attached ("Letter Amendment No. 2"). Each of the undersigned hereby
consents to Letter Amendment No. 2 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 Agreement as amended by
the Letter Amendment No. 2.
Dated as of March 31, 1999.
XXXXX OIL & GAS COMPANY, INC.
MGTC, INC.
MIGC, INC.
MOUNTAIN GAS RESOURCES, INC.
PINNACLE GAS TREATING, INC.
WESTERN GAS RESOURCES - TEXAS, INC.
WESTERN GAS RESOURCES OKLAHOMA, INC.
WGR CANADA, INC.
WESTERN GAS WYOMING, L.L.C.
By
-----------------------------------------------
Xxxxxxx X. Xxxxxxx, as Vice President-
Finance of each of the above-named companies.
SCHEDULE I
In connection with Letter Amendment No. 2 dated March 31, 1999 to the Second
Amended and Restated Master Shelf Agreement dated as of December 19, 1991
between Western Gas Resources, Inc., The Prudential Insurance Company of America
and Pruco Life Insurance Company, the $670,834.50 structuring fee and the
$35,000 documentation fee should be paid to the following accounts in same day
funds:
(1) The Prudential Insurance Company of America
$662,655.00 - Structuring Fee
$34,573.24 - Documentation Fee
Bank of New York
New York, NY
ABA No. 000-000-000
For Credit to the Account of: The Prudential Insurance Company of
America
Account No. 000-0000-000
Re: $662,655.00 - Western Gas Structuring Fee
$34,573.24 - Western Gas Documentation Fee
(2) Pruco Life Insurance Company
$8,179.50 - Structuring Fee
$426.76 - Documentation Fee
Bank of New York
New York, New York
ABA No. 000-000-000
For Credit to the Account of: Pruco Life Insurance Company
Account No. 000-0000-000
Re: Western Gas Structuring Fee
