[Execution Copy]
Exhibit 10.24
LIMITED WAIVER, CONSENT, RELEASE AND AMENDMENT NO. 4
TO
SECOND AMENDED AND RESTATED MASTER SHELF AGREEMENT
(Western Gas Resources, Inc.)
This LIMITED WAIVER, CONSENT, RELEASE AND AMENDMENT NO. 4 TO SECOND AMENDED
AND RESTATED MASTER SHELF AGREEMENT (this "Amendment") is entered into as of
August 25, 2000, by and among Western Gas Resources, Inc., a Delaware
corporation (the "Company"), and The Prudential Insurance Company of America and
Pruco Life Insurance Company (together, "Prudential").
PRELIMINARY STATEMENTS
1. The Company and Prudential entered into a Second Amended and Restated
Master Shelf Agreement dated as of December 19, 1991 (effective January 31,
1996), as amended by Letter Amendment No. 1 dated November 21, 1997, Letter
Amendment No. 2 dated March 31, 1999 and Limited Waiver, Consent, Release and
Amendment No. 3 dated June 1, 1999 (as amended, the "Agreement"). Capitalized
terms not otherwise defined herein shall have the meanings specified in the
Agreement, as amended hereby.
2. The Company is the sole shareholder of Western Gas Resources - Oklahoma,
Inc. ("WGRO").
3. WGRO has recently acquired all of the partnership interests in Westana
Gathering Company, a general partnership ("Westana"), the primary assets of
which are the Xxxxx/Waynoka gathering system (the "System") and the Xxxxxxx gas
processing plant (the "Plant").
4. Concurrently with the repayment of the notes issued under the 1995
Note Purchase Agreement (the "American General Notes"), the Company desires to
undertake the following transactions with respect to WGRO and Westana
(collectively, the "Westana Transactions"):
(a) all of Westana's assets shall be liquidated into WGRO;
(b) WGRO shall concurrently therewith create a new subsidiary
("Newco"), which shall be capitalized with the System; and
(c) subsequent to the creation Newco, WGRO will be merged with and into
Newco with Newco being the surviving entity, and, as a result of such
merger, the Company shall become the owner of the Plant.
5. In order to secure the Obligations (as defined in the hereinafter
defined WGRO Guaranty), including the obligations of the Company under the Notes
and the Agreement, the Company caused Western Gas Resources - Oklahoma, Inc., a
Delaware corporation ("WGR Oklahoma"), to execute and deliver to Prudential a
Guaranty in favor of Prudential together with all subsequent holders of the
Obligations (the "WGRO Guaranty").
6. In order to secure the Secured Obligations (as defined in the Pledge
Agreement), including the obligations of the Company under the Notes and the
Agreement, the Company executed and delivered the Pledge Agreement pursuant to
which the Company pledged and granted a security interest to Prudential in,
among other things, the common stock of WGRO (the "WGRO Pledged Stock").
7. The Company and WGRO have requested that Prudential (i) terminate the
WGRO Guaranty and otherwise grant a general release of WGRO under the WGRO
Guaranty and any other obligations and liabilities arising under all documents
and agreements delivered pursuant to the WGRO Guaranty or in connection
therewith and (ii) release Prudential's security interest in the shares of
capital stock of WGRO under the Pledge Agreement (the "Release").
8. The Company and Prudential desire to amend the Agreement for the
purposes described herein and to consent to the consummation of the Westana
Transactions in connection with the repayment of the American General Notes.
9. Prudential is willing to grant the Release, subject to the condition
that the lenders parties to the NCNB Agreement grant a similar release of the
guaranty provided by WGRO to such lenders parties to the NCNB Agreement and NCNB
and the respective security interests of such lenders parties to the NCNB
Agreement and NCNB in shares of common stock of WGRO (the "Corresponding
Release").
10. Prudential is the holder of 100% of the outstanding principal amount of
the Notes issued under the Agreement.
In consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Consents, Waivers and Releases.
(a) Consent to Westana Transactions; Waiver. Prudential hereby consents to
the Westana Transactions.
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(b) Release of WGRO. Prudential hereby terminates, releases and
discharges the shares of common stock of WGRO from the liens and security
interests granted by the Company pursuant to the Pledge Agreement, in each case
on or after the Westana Effective Date and the satisfaction in full of all
conditions precedent set forth in Section 3 of this Amendment. The Company
hereby agrees to deliver to Prudential, within 30 days after the Westana
Effective Date, an amendment to the Intercreditor Agreement duly executed by the
parties thereto confirming the matters described in Section 3(h) hereto and the
removal of American General Life Insurance Company as a party thereto due to
payment in full of the American General Notes.
SECTION 2. Amendments.
(a) Amendment to Paragraph 6C(4). Sale of Stock and Debt of
Subsidiaries. Paragraph 6C(4) is hereby amended in its entirety 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, and
except that all shares of stock and Debt of any Subsidiary 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 (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 and (iii) the assets 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, and provided
further 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."
(b) Amendment to Paragraph 6C(5). Merger and Sale of Assets. Clause
(v) of paragraph 6C(5) is amended in its entirety to read as follows:
"(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, and (c) the assets of all
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Subsidiaries the stock or Debt of which has been sold or otherwise disposed
of during the preceding 12-month period pursuant to the first 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,"
(c) Amendment to Paragraph 6. Negative Covenants. Paragraph 6 is
amended by adding to end thereof a new paragraph 6F to read as follows:
"6F. Restrictions on Hedging Transactions. The Company will not and will
not permit any Subsidiary to enter into Hedging Transactions with respect to
crude oil, natural gas or liquid hydrocarbons other than Hedging
Transactions (i) that apply to not more than the Adjusted Equity Gas Volume
in any calendar year and (ii) for the succeeding three calendar years;
provided, however, that this paragraph 6F shall not prevent the Company and
its Subsidiaries from entering into Hedging Transactions with respect to
100% of the natural gas of the Company or its Subsidiaries (a) held in
storage facilities owned by the Company or its Subsidiaries or (b) purchased
from third parties and sold to third parties in connection with the
marketing operations of the Company and its Subsidiaries. 'Adjusted Equity
Gas Volume' for any calendar year, shall mean the volumes of natural gas and
liquid hydrocarbons owned by the Company and its Subsidiaries either through
ownership of interests in oil and gas properties ('ownership interests') or
pursuant to contractual gathering and processing agreements ('contractual
arrangements') that, (x) in the case of ownership interests, do not exceed
75% of proved developed producing reserves to be produced in such calendar
year and 50% of proved undeveloped reserves projected to be producing during
such calendar year and, (y) in the case of contractual arrangements, do not
exceed 75% of the Company's and its Subsidiaries' pro rata share of minimum
contracted volumes of gas to be collected and/or processed in such calendar
year. 'Hedging Transactions' shall mean, with respect to the Company and its
Subsidiaries, any commodity basis swap, forward commodity transaction,
commodity swap, commodity option, commodity index swap, commodity cap
transaction, commodity floor transaction, commodity collar transaction, any
other similar transaction that relates to commodities (including any option
with respect to any of the foregoing transactions) or any combination of the
foregoing transactions. The Company will deliver to the holder of each Note
a statement detailing its hedge position in a form satisfactory to the
Required Holders of the Notes of each Series at the same time it delivers
the financial statements contemplated by paragraphs 5A (i) and 5A(ii)."
(d) Amendment to Xxxxxxxxx 00X. Other Terms. Paragraph 10B of the
Agreement is amended by amending the definition of "Consolidated Net Earnings"
in its entirety to read as follows:
"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
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assets not constituting current assets) and other non-cash gains, 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 other non-cash losses) 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."
(e) Amendment to Pledge Agreement. Exhibit B of the Pledge Agreement
is hereby deleted and replaced with Exhibit B attached hereto.
SECTION 3. Conditions of Effectiveness.
Except for the Westana Amendments, this Amendment shall become
effective as of the date first above written (the "Amendment No. 4 Effective
Date") when, and only when, Prudential shall have received all of the following
and the Westana Amendments shall become effective as the Westana Effective Date
when and only when, Prudential shall have received all of the following:
(a) duly executed counterparts of this Amendment;
(b) copies of an amendment in similar form and substance to this
Amendment to the NCNB Agreement certified as true and correct copies by the
Company;
(c) copies of the Corresponding Release;
(d) the Consent attached hereto, duly executed by each Guarantor except
WGRO;
(e) a certificate of a duly authorized officer of the Company dated the
date of this Amendment certifying: (i) that all of the representations and
warranties set forth in Section 4 hereof are true and correct at and as of
the time of such effectiveness; and (ii) as to such other corporate matters
as Prudential shall deem necessary;
(f) a written legal opinion of in-house counsel for the Company, dated
as of the date of this Amendment, addressed to Prudential, to the effect
that this Amendment
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has been duly authorized, executed and delivered by the Company and that the
Agreement and each other document, as affected hereby, to which any Related
Person is a party constitutes the legal, valid and binding obligation of
each such Related Person, enforceable in accordance with their terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency and similar laws and to general principles of
equity) and such other matters as Prudential may require;
(g) payment of $2,700.00 to compensate Prudential for its allocable
overhead for in-house legal support; and
(h) The Westana Amendments shall become effective as of the date on
which the American General Notes are repaid in full (the "Westana Effective
Date") when and only when, Prudential shall have received evidence
satisfactory to Prudential, in its sole and absolute discretion, that each
other Person then a party to the Intercreditor Agreement has released its
guaranty from WGRO and lien and security interest in the common stock of
WGRO.
SECTION 4. Representations and Warranties of Company.
As an inducement to Prudential to enter into this Amendment, the Company
represents and warrants as follows:
(a) Representations. The representations and warranties contained in
paragraph 8 of the Agreement are true and correct at and as of the time of
the effectiveness hereof (except as such representations and warranties have
been modified by the transactions contemplated herein).
(b) Organization. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Delaware.
(c) Power and Authority. The Company has all requisite corporate power
to execute, deliver and perform its obligations under this Amendment. The
execution, delivery and performance by the Company of this Amendment have
been duly authorized by all requisite corporate action on the part of the
Company. The Company has duly executed and delivered this Amendment and this
Amendment constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(d) No Conflicts. Neither the execution and delivery of this Amendment
by the Company, nor the consummation of the transactions contemplated
hereby, nor fulfillment of nor compliance with the terms and provisions
hereof will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of,
or result in the creation of any security interest, lien or other
encumbrance upon any of the properties or assets of the Company pursuant to,
its charter or by-laws, any award of any arbitrator or any agreement
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(including any agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which the Company is subject.
(e) Consents. Neither the nature of the business conducted by the
Company, nor any of its properties, nor any relationship between the Company
and any other Person, nor any circumstance in connection with the
transactions contemplated by this Amendment is such as to require any
authorization, consent, approval, exemption or other action by or notice to
or filing with any court or administrative or governmental body or any other
Person in connection with the execution and delivery of this Amendment or
fulfillment of or compliance with the terms and provisions hereof.
(f) Additional Documentation. No documents or instruments, including
consents, authorizations and filings, are required under the certificate of
incorporation and bylaws of the Company, or any applicable law with respect
to the Company or any of its property or to which the Company or any of its
property is subject, or by any material provision of any security issued by
the Company or of any agreement, instrument or undertaking under which the
Company is obligated or by which it or any of the property owned by it is
bound, in connection with the execution, delivery, performance, validity and
enforceability of this Amendment and the other documents to be executed and
delivered hereunder.
(g) No Material Adverse Change. Except as previously disclosed to
Prudential in writing, there has been no material adverse change in the
business, property or assets, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole since
December 31, 1999.
(h) No Event of Default or Default. As of the date of this Amendment,
no Event of Default or Default exists.
(i) Newco Guaranty Not Required. Upon the Westana Effective Date, Newco
shall not be required to execute and deliver to Agent under the NCNB Agreement a
guaranty of the obligations under Section 7.3 of the NCNB Agreement.
SECTION 5. Miscellaneous.
(a) Upon and after the Amendment No. 4 Effective Date, each reference
to the Agreement or "this Agreement" in the Agreement and each Note shall
mean and be a reference to the Agreement as amended by this Amendment.
(b) Except as specifically amended herein, the Agreement shall remain
in full force and effect, and is hereby ratified and confirmed.
(c) Other than as expressly set forth herein, the execution, delivery
and effectiveness of this Amendment shall not operate as a waiver of any
right, power or
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remedy of Prudential, nor constitute a waiver of any provision of the
Agreement, the Notes, the Guaranties, the Pledge Agreement or any other
document, instrument or agreement executed and delivered in connection with
the Agreement.
(d) The Company confirms its agreement, pursuant to paragraph 11B of
the Agreement, to pay promptly all expenses of Prudential related to this
Amendment and all matters contemplated hereby.
(e) GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK.
(f) This Amendment may be executed in counterparts (including those
transmitted by facsimile), each of which shall be deemed an original and all
of which taken together shall constitute one and the same document. Delivery
of this Amendment may be made by telecopy of a duly executed counterpart
copy hereof.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute this Amendment as of the day and year first above
written.
WESTERN GAS RESOURCES, INC.
By: __________________________________
Vice President-Finance
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: __________________________________
Vice President
PRUCO LIFE INSURANCE COMPANY
By: __________________________________
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") in favor of
The Prudential Insurance Company of America and Pruco Life Insurance Company
(together, "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, Letter
Amendment No. 2 dated March 31, 1999 and Limited Waiver, Consent, Release and
Amendment No. 3 dated June 1, 1999 (as amended, the "Agreement"). Prudential
and the Company are entering into that certain Limited Waiver, Consent, Release
and Amendment No. 4 to Second Amended and Restated Master Shelf Agreement, dated
as of August 25, 2000 (the "Amendment"). Each of the undersigned hereby
consents to the 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 "Agreement," "thereunder," "thereof," or words of like import
referring to the Agreement shall mean the Agreement as amended by the Amendment,
as the same may be further amended or modified from time to time.
Dated as of August 25, 2000.
XXXXX OIL & GAS COMPANY, INC.
MGTC, INC.
MIGC, INC.
MOUNTAIN GAS RESOURCES, INC.
PINNACLE GAS TREATING, INC.
WESTERN GAS RESOURCES - TEXAS, INC.
WESTERN GAS WYOMING, L.L.C.
By: _____________________________________________
Xxxxxxx X. Xxxxxxx, as Vice President-
Finance of each of the above-named companies.
EXHIBIT B
Issuers
-------
Corporations
Issuer Certificate No. No. of Shares Class
------ --------------- ------------- --------
MIGC, Inc. 3 100,000 common
Western Gas Resources - Texas, Inc. 3 990 common
Western Gas Resources - Texas, Inc. 4 10 common
Mountain Gas Resources, Inc. A-3 1,000,834 common
Western Power Services, Inc. 1 1,000 common
Pinnacle Gas Treating, Inc. 1 1,000 common
Xxxxx Oil & Gas Company, Inc. 1 1,000 common
Limited Liability Companies
Issuer Membership Interest
------ -------------------
Western Gas Wyoming, L.L.C. 100%
