UNITED STATES SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-Q
(Mark One)
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________ TO
_________________
Commission file number 1-10389
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WESTERN GAS RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 84-1127613
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12200 N. Pecos Street, Denver, Colorado 80234-3439
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(Address of principal executive offices) (Zip Code)
(303) 452-5603
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Registrant's telephone number, including area code
No changes
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(Former name, former address and former fiscal year, if changed since last
report).
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
On May 1, 1999, there were 32,147,993 shares of the registrant's Common Stock
outstanding.
1
<PAGE>
Western Gas Resources, Inc.
Form 10-Q
Table of Contents
<TABLE>
<CAPTION>
PART I - Financial Information Page
- ------------------------------ ----
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheet - March 31, 1999 and December 31, 1998................ 3
Consolidated Statement of Cash Flows - Three Months Ended March 31, 1999
and 1998......................................................................... 4
Consolidated Statement of Operations - Three Months Ended March 31, 1999 and 1998 5
Consolidated Statement of Changes in Stockholders' Equity - Three Months Ended
March 31, 1999................................................................... 6
Notes to Consolidated Financial Statements....................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations....................................................................... 10
<CAPTION>
PART II - Other Information
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<S> <C> <C>
Item 1. Legal Proceedings................................................................ 19
Item 6. Exhibits and Reports on Form 8-K................................................. 20
Signatures................................................................................... 21
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
WESTERN GAS RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except share data)e
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
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ASSETS (unaudited)
- ------
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................................... $ 12,697 $ 4,400
Trade accounts receivable, net............................................... 185,169 233,574
Product inventory............................................................ 22,114 46,207
Parts inventory.............................................................. 9,913 10,153
Other........................................................................ 2,239 2,951
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Total current assets........................................................ 232,132 297,285
---------- ----------
Property and equipment:
Gas gathering, processing, storage and transmission.......................... 966,065 952,531
Oil and gas properties and equipment......................................... 114,488 111,602
Construction in progress..................................................... 89,012 87,943
---------- ----------
1,169,565 1,152,076
Accumulated depreciation, depletion and amortization.......................... (317,388) (305,589)
---------- ----------
Total property and equipment, net........................................... 852,177 846,487
---------- ----------
Other assets:
Gas purchase contracts (net of accumulated amortization of $30,531 and
$29,978, respectively)...................................................... 40,710 41,263
Other........................................................................ 37,654 34,342
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Total other assets.......................................................... 78,364 75,605
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Total assets.................................................................. $1,162,673 $1,219,377
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable............................................................. $ 180,850 $ 245,315
Accrued expenses.............................................................. 25,978 31,727
Dividends payable............................................................ 4,217 4,217
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Total current liabilities................................................... 211,045 281,259
Long-term debt................................................................ 526,609 504,881
Deferred income taxes payable................................................. 46,648 48,021
---------- ----------
Total liabilities........................................................... 784,302 834,161
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Commitments and contingent liabilities........................................ - -
Stockholders' equity:
Preferred stock, par value $.10; 10,000,000 shares authorized:
$2.28 cumulative preferred stock; 1,400,000 shares issued and outstanding
($35,000,000 aggregate liquidation preference)............................. 140 140
$2.625 cumulative convertible preferred stock; 2,760,000 shares issued and
outstanding ($138,000,000 aggregate liquidation preference)................ 276 276
Common stock, par value $.10; 100,000,000 shares authorized; 32,173,009 and
32,173,009 shares issued respectively....................................... 3,217 3,217
Treasury stock, at cost, 25,016 shares in treasury........................... (788) (788)
Additional paid-in capital................................................... 397,344 397,344
Accumulated deficit.......................................................... (23,467) (17,075)
Accumulated other comprehensive income....................................... 2,533 3,053
Notes receivable from key employees secured by common stock.................. (884) (951)
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Total stockholders' equity.................................................. 378,371 385,216
---------- ----------
Total liabilities and stockholders' equity.................................... $1,162,673 $1,219,377
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
WESTERN GAS RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1999 1998
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<S> <C> <C>
Reconciliation of net income (loss) to net cash provided by (used in) operating
activities:
Net income (loss)..................................................................... $ (2,176) $ 13,185
Add income items that do not affect cash:
Depreciation, depletion and amortization............................................. 13,558 14,502
Gain on the sale of property and equipment........................................... (145) (14,866)
Deferred income taxes................................................................ (1,373) 10,343
Other non-cash items, net............................................................ (371) 282
---------- ----------
9,493 23,446
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Adjustments to working capital to arrive at net cash provided by (used in)
operating activities:
Decrease in trade accounts receivable................................................ 48,405 28,727
(Increase) decrease in product inventory............................................. 24,093 (3,423)
(Increase) decrease in parts inventory............................................... 240 (27)
Decrease in other current assets..................................................... 712 228
Decrease in other assets and liabilities, net........................................ 67 109
Decrease in accounts payable......................................................... (64,465) (65,186)
Decrease in accrued expenses......................................................... (5,884) (190)
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Net cash provided by (used in) operating activities................................... 12,661 (16,316)
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment.................................................. (20,843) (30,839)
Proceeds from the dispositions of property and equipment............................. 100 22,150
Contributions to equity investees.................................................... (891) (992)
--------- ---------
Net cash used in investing activities................................................. (21,634) (9,681)
--------- ---------
Cash flows from financing activities:
Proceeds from exercise of common stock options....................................... - 11
Debt issue costs paid................................................................ (243) (2)
Payments on revolving credit facility................................................ (794,650) (669,050)
Borrowings under revolving credit facility........................................... 864,951 684,050
Payments on notes.................................................................... (48,571) -
Dividends paid....................................................................... (4,217) (4,217)
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Net cash provided by financing activities............................................. 17,270 10,792
--------- ---------
Net increase (decrease) in cash and cash equivalents.................................. 8,297 (15,205)
Cash and cash equivalents at beginning of period...................................... 4,400 19,777
--------- ---------
Cash and cash equivalents at end of period............................................ $ 12,697 $ 4,572
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
WESTERN GAS RESOURCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(Dollars in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1999 1998
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<S> <C> <C>
Revenues:
Sale of gas........................................................... $ 350,841 $ 426,627
Sale of natural gas liquids........................................... 63,648 123,758
Processing, transportation and storage revenue........................ 11,073 11,335
Other, net............................................................ 3,943 18,735
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Total revenues....................................................... 429,505 580,455
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Costs and expenses:
Product purchases..................................................... 381,365 507,287
Plant operating expense............................................... 19,465 20,255
Oil and gas exploration and production expense........................ 1,858 1,392
Depreciation, depletion and amortization.............................. 13,558 14,502
Selling and administrative expense.................................... 7,815 8,124
Interest expense...................................................... 8,743 8,156
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Total costs and expenses............................................. 432,804 559,716
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Income (loss) before taxes............................................. (3,299) 20,739
Provision for (benefit from) income taxes:
Current............................................................... 250 (2,789)
Deferred.............................................................. (1,373) 10,343
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(1,123) 7,554
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Net income (loss)...................................................... (2,176) 13,185
Preferred stock requirements........................................... (2,610) (2,610)
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Income (loss) attributable to common stock............................. $ (4,786) $ 10,575
=========== ===========
Earnings (loss) per share of common stock.............................. $ (.15) $ . 33
=========== ===========
Weighted average shares of common stock outstanding.................... 32,147,993 32,146,570
=========== ===========
Earnings (loss) per share of common stock-assuming dilution............ $ (.15) $ . 33
=========== ===========
Weighted average shares of common stock outstanding-assuming dilution.. 32,147,993 32,149,869
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
WESTERN GAS RESOURCES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
Shares of
Shares of $2.625 $2.625
$2.28 Cumulative Shares $2.28 Cumulative
Cumulative Convertible Shares Of Common Cumulative Convertible
Preferred Preferred of Common Stock Preferred Preferred
Stock Stock Stock in Treasury Stock Stock
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998........ 1,400,000 2,760,000 32,147,993 25,016 $ 140 $ 276
Comprehensive Income:
Net loss............................ - - - - - -
Foreign Currency Translation........ - - - - - -
Comprehensive Income
Dividends:
Dividends declared on common
stock.............................. - - - - - -
Dividends declared on $2.28
cumulative preferred stock......... - - - - - -
Dividends declared on $2.625
cumulative convertible preferred
stock.............................. - - - - - -
Stock options exercised............. - - - - - -
Loans forgiven...................... - - - - - -
---------- ---------- ---------- ---------- ---------- ----------
Balance at March 31, 1999........... 1,400,000 2,760,000 32,147,993 25,016 $ 140 $ 276
=====================================================================================
<CAPTION>
Accumulated Notes Total
Additional Other Receivable Stock-
Common Treasury Paid-in Accumulated Comprehensive from Key holders'
Stock Stock Capital Deficit Income Employees Equity
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998........ $3,217 $(788) $397,344 $(17,075) $3,053 $(951) $385,216
Comprehensive Income:
Net loss............................ - - - (2,176) - - (2,176)
Foreign Currency Translation........ - - - - (520) - (520)
--------
Comprehensive Income (2,696)
--------
Dividends:
Dividends declared on common
stock.............................. - - - (1,607) - - (1,607)
Dividends declared on $2.28
cumulative preferred stock......... - - - (798) - - (798)
Dividends declared on $2.625
cumulative convertible preferred
stock.............................. - - - (1,811) - - (1,811)
Stock options exercised............. - - - - - - -
Loans forgiven...................... - - - - - 67 67
--------- ------- -------- --------- ---------- --------- --------
Balance at March 31, 1999........... $3,217 $(788) $397,344 $(23,467) $2,533 $(884) $378,371
==============================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
WESTERN GAS RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
GENERAL
The interim consolidated financial statements presented herein should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
included in our Annual Report on Form 10-K for the year ended December 31, 1998.
The interim consolidated financial statements as of March 31, 1999 and for the
three month periods ended March 31, 1999 and 1998 included herein are unaudited
but reflect, in the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to fairly present the results for such
periods. The results of operations for the three months ended March 31, 1999
are not necessarily indicative of the results of operations expected for the
year ended December 31, 1999.
Certain prior year's amounts in the Consolidated Financial Statements and Notes
have been reclassified to conform to the presentation used in 1999.
EARNINGS PER SHARE OF COMMON STOCK
Earnings per share of common stock is computed by dividing income attributable
to common stock by the weighted average shares of common stock outstanding. In
addition, earnings per share of common stock - assuming dilution is computed by
dividing income attributable to common stock by the weighted average shares of
common stock outstanding as adjusted for potential common shares. Income
attributable to common stock is income less preferred stock dividends. We
declared preferred stock dividends of $2.6 million for each of the three-month
periods ended March 31, 1999 and 1998. Common stock options, which are potential
common shares, were anti-dilutive for the period ended March 31, 1999 and were
not included in the calculation of earnings per share. For the period ended
March 31, 1998 common stock options had a dilutive effect on earnings and
increased the weighted average shares of common stock outstanding by 3,299. The
numerators and the denominators for the three month periods ended March 31, 1999
and 1998 are not adjusted to reflect our $2.625 Cumulative Convertible Preferred
Stock outstanding. These shares are antidilutive as the incremental shares
result in an increase in earnings per share after giving effect to the dividend
requirements.
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid was $9.7 million and $8.0 million for the three months ended March
31, 1999 and 1998, respectively.
No income taxes were paid during the three months ended March 31, 1999 or for
the three months ended March 31, 1998.
Segment Reporting
We operate in four principal business segments, as follows: Gas Gathering and
Processing, Producing Properties, Marketing and Transmission. These segments
are separately monitored by management for performance against its internal
forecast and are consistent with our internal financial reporting package.
These segments have been identified based upon the differing products and
services, regulatory environment and the expertise required for these
operations.
The Gas Gathering and Processing segment connects producers' wells to its
gathering systems for delivery to its processing or treating plants, processes
the natural gas to extract NGLs and treats the natural gas in order to meet
pipeline specifications. The residue gas and NGLs extracted at the processing
facilities are sold by the Marketing segment.
The activities of the Producing Properties segment include the exploration and
development of certain oil and gas producing properties in basins where our
facilities are located. The majority of the gas and oil produced from these
properties is sold by the Marketing segment.
The Marketing segment buys and sells gas and NGLs nationwide and in Canada,
providing storage, transportation, scheduling, peaking and other services our
customers. In addition, this segment also markets gas and NGLs produced by our
facilities. The operations associated with the Katy Facility are included in the
Marketing segment as are our Canadian marketing operations (which is immaterial
for separate presentation).
The Transmission segment reflects the operations of our MIGC and MGTC pipelines.
The majority of the revenue presented in this segment is derived from
transportation of residue gas.
The following table sets forth our segment information as of and for the
quarters ended March 31, 1999 and 1998 (in thousands). Due to our integrated
operations, the use of allocations in the determination of business segment
information is necessary. Intersegment revenues are valued at prices comparable
to those of unaffiliated customers.
<PAGE>
<TABLE>
<CAPTION>
Gas
Gathering Elim-
and Producing Trans- inating
Processing Properties Marketing mission Corporate Entries Total
---------- ---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Quarter ended March 31, 1999
Revenues from unaffiliated customers...... $ 11,225 $ 531 $414,302 $ 1,799 $ 1,468 $ (14) $429,311
Interest income........................... 1 - 2 - 7,053 (6,993) 63
Other, net................................ 108 - 23 - - - 131
Intersegment sales........................ 75,557 6,016 17,989 4,099 - (103,661) -
-------- -------- -------- ------- ------- --------- --------
Total revenues............................ 86,891 6,547 432,316 5,898 8,521 (110,668) 429,505
-------- -------- -------- ------- ------- --------- --------
Product purchases......................... 59,083 448 427,197 (1,077) (1,329) (102,957) 381,365
Plant operating expense................... 13,539 498 1,112 3,729 922 (335) 19,465
Oil and gas exploration
and production expense.................... - 1,776 (44) - 126 - 1,858
-------- -------- -------- ------- ------- --------- --------
Operating profit.......................... $ 14,269 $ 3,825 $ 4,051 $ 3,246 $ 8,802 $ (7,376) $ 26,817
======== ======== ======== ======= ======= ========= ========
Depreciation, depletion and amortization.. 13,558
Interest expense.......................... 8,743
Selling and administrative expense....... 7,815
--------
Income (loss) before income taxes......... $ (3,299)
========
Identifiable assets....................... $557,149 $ 94,965 $117,633 $66,700 $35,631 $ - $872,078
======== ======== ======== ======= ======= ========= ========
<CAPTION>
Gas
Gathering Elim-
and Producing Trans- inating
Processing Properties Marketing mission Corporate Entries Total
---------- ---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Quarter ended March 31, 1998
Revenues from unaffiliated customers...... $ 9,017 $ 350 $552,108 $ 2,292 $ 93 $ 197 $564,057
Interest income........................... - - - - 6,613 (5,912) 701
Other, net................................ 15,123 408 166 - - - 15,697
Intersegment sales........................ 110,906 6,983 18,838 2,635 - (139,362) -
-------- -------- -------- ------- ------- --------- --------
Total revenues............................ 135,046 7,741 571,112 4,927 6,706 (145,077) 580,455
-------- -------- -------- ------- ------- --------- --------
Product purchases......................... 83,388 369 562,600 625 (1,452) (138,243) 507,287
Plant operating expense................... 15,191 792 1,364 2,333 1,417 (842) 20,255
Oil and gas exploration
and production expense.................... 1,377 3 - - 12 1,392
-------- -------- -------- ------- ------- --------- --------
Operating profit.......................... $ 36,467 $ 5,203 $ 7,145 $ 1,969 $ 6,741 $ (6,004) $ 51,521
======== ======== ======== ======= ======= ========= ========
Depreciation, depletion and amortization.. 14,502
Interest expense.......................... 8,156
Selling and administrative expense....... 8,124
--------
Income (loss) before income taxes......... $ 20,739
========
Identifiable assets....................... $677,930 $112,298 $120,768 $50,065 $28,735 $ - $989,796
======== ======== ======== ======= ======= ========= ========
</TABLE>
Subsequent Events
Effective April 30, 1999 we sold all of the stock of our wholly owned
subsidiary, Western Gas Resources Storage, Inc. to the Aquila Energy
Corporation, a business unit of Utilicorp United. The sole asset of Western Gas
Resources Storage, Inc. is the Katy Hub and Gas Storage Facility. The proceeds
received from the sale of the Katy facility were $100.0 million. We will realize
an after tax loss on this sale of approximately $10.9, subject to final
accounting adjustment, million in the second quarter of 1999. In connection with
this transaction, Aquila purchased approximately 5.1 Bcf of stored gas at the
facility for proceeds of $11.7 million. The proceeds of the sale were equal to
the value of the inventory on our books.
Also on April 30, 1999 we completed the sale of our Giddings gathering system to
GPM Gas Corporation, a business unit of Phillips Petroleum Company. This
transaction had an effective date of January 1, 1999. The proceeds from this
sale were $36.0 million. We will realize an after-tax loss on this sale of
approximately $3.7, subject to final accounting adjustment, million in the
second quarter of 1999.
The proceeds of $147.7 million received from these transactions was used to
reduce outstanding debt.
7
<PAGE>
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," ("SFAS No. 133") with an effective date for fiscal
years beginning after June 15, 1999. We will comply with the accounting and
reporting requirements of SFAS No. 133 when required. We have not completed our
evaluation of the impact that SFAS No. 133 will have upon our financial
statements.
LEGAL PROCEEDINGS
Reference is made to "Part II - Other Information - Item 1. Legal Proceedings,"
of this Form 10-Q.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
- -------------
The following discussion and analysis relates to factors which have affected our
consolidated financial condition and results of operations for the three months
ended March 31, 1999 and 1998. Certain prior year amounts have been reclassified
to conform to the presentation used in 1999. Reference should also be made to
our interim Consolidated Financial Statements and Notes thereto included
elsewhere in this document. This section, as well as other sections in this Form
10-Q, contain "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, which can be identified by the use of
forward-looking terminology, such as "may," "intend," "will," "expect,"
"anticipate," "estimate," or "continue" or the negative thereof or other
variations thereon or comparable terminology. In addition to the important
factors referred to herein, numerous factors affecting the gas processing
industry generally and in the markets for gas and NGLs in which we operate could
cause actual results to differ materially from those in such forward-looking
statements.
Results of Operations
Three months ended March 31, 1999 compared to the three months ended March 31,
1998
(Dollars in thousands, except per share amounts and operating data).
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------- Percent
1999 1998 Change
---------- --------- --------
<S> <C> <C> <C>
Financial results:
Revenues................................................. $429,505 $580,455 (26)
Gross profit............................................. 13,259 37,019 (64)
Net income (loss)........................................ (2,176) 13,185 -
Earnings (loss) per share of common stock - basic and
diluted................................................ (.15) .33 -
Net cash (used in) provided by operating activities...... $ 12,661 $(16,316) -
Operating data:
Average gas sales (MMcf/D)............................... 2,135 2,280 (6)
Average NGL sales (MGal/D)............................... 3,030 4,655 (35)
Average gas prices ($/Mcf)............................... $ 1.82 $ 2.08 (12)
Average NGL prices ($/Gal)............................... $ .23 $ .29 (21)
</TABLE>
Net income decreased $15.4 million for the quarter ended March 31, 1999 compared
to 1998. The decrease in net income for the first quarter was primarily due to
lower volumes and significantly lower prices compared to the prior year.
Revenues from the sale of gas decreased approximately $75.9 million for the
three months ended March 31, 1999 compared to the same period in 1998. Average
gas sales volumes decreased 145 MMcf per day to 2,135 MMcf per day for the three
months ended March 31, 1999 compared to the same period in 1998, largely due to
a decrease in the sale of gas purchased from third parties. Average gas prices
realized by us decreased $.26 per Mcf to $1.82 per Mcf for the three months
ended March 31, 1999 compared to the same period in 1998. Included in the
realized gas price was approximately $337,000 of gain recognized for the three
months ended March 31, 1999 related to futures positions on equity gas volumes.
We have entered into futures positions for a portion of our equity gas for the
remainder of 1999 and throughout 2000. See further discussion in " - Liquidity
and Capital Resources - Risk Management Activities."
Revenues from the sale of NGLs decreased approximately $60.1 million for the
three months ended March 31, 1999 compared to the same period in 1998. Average
NGL sales volumes decreased 1,625 MGal per day to 3,030 MGal per day for the
three months ended March 31, 1999 compared to the same period in 1998, primarily
due to a decrease in sales of third-party product. Average NGL prices realized
by us decreased $.06 per gallon to $.23 per gallon for the three months ended
March 31, 1999 compared to the same period in 1998. Included in the realized NGL
price was approximately $62,000 of loss recognized for the three months ended
March 31, 1999 related to futures positions on equity NGL volumes. We have has
entered into futures positions for a portion of our equity production for the
remainder of 1999. See further discussion in " - Liquidity and Capital Resources
- - Risk Management Activities."
9
<PAGE>
Other net revenue decreased approximately $14.8 million for the three months
ended March 31, 1999 compared to the same period in 1998. This decrease was
primarily due to both a gain recognized on the sale of the Perkins facility of
$14.9 million and the recognition of a $1.0 million non-refundable option
payment from RIS Resources (USA) Inc. in the first quarter of 1998.
The decrease of $125.9 million in product purchases was primarily due to a
decrease in both commodity prices and sales volumes. Combined product purchases
as a percentage of gas and NGL sales remained constant at 92% for the three
months ended March 31, 1999 compared to the same period in 1998. Included in
product purchases for the three months ended March 31, 1998 were lower of cost
or market write-downs of NGL inventory of $328,000. There were no inventory
write-downs for the first quarter of 1999.
Depreciation, depletion and amortization decreased $944,000 for the quarter
ended March 31, 1999 compared to the same quarter in 1998. The decrease was
primarily due to the sales of assets during 1998. The Perkins plant was sold in
March 1998 and the Edgewood gathering system was sold in October 1998.
Interest expense increased $587,000 for the three months ended March 31, 1999
compared to the same period in 1998. The increase was due to less interest being
capitalized related to capital projects and larger debt balances outstanding
during the first quarter of 1999 compared to the corresponding period in 1998.
The larger debt balances resulted primarily from capital expenditures and
reduced income from operations.
Subsequent Events
Effective April 30, 1999 we sold all of the stock of our wholly owned
subsidiary, Western Gas Resources Storage, Inc. to the Aquila Energy
Corporation, a business unit of Utilicorp United. The sole asset of Western Gas
Resources Storage, Inc. is the Katy Hub and Gas Storage Facility. The proceeds
received from the sale of the Katy facility were $100.0 million. We will realize
an after tax loss on this sale of approximately $10.9, subject to final
accounting adjustment, million in the second quarter of 1999. In connection with
this transaction, Aquila purchased approximately 5.1 Bcf of stored gas at the
facility for proceeds of $11.7 million. The proceeds of the sale were equal to
the value of the inventory on our books.
Also on April 30, 1999 we completed the sale of our Giddings gathering system to
GPM Gas Corporation, a business unit of Phillips Petroleum Company. This
transaction had an effective date of January 1, 1999. The proceeds from this
sale were $36.0 million. We will realize an after-tax loss on this sale of
approximately $3.7, subject to final accounting adjustment, million in the
second quarter of 1999.
The proceeds of $147.7 million received from these transactions was used to
reduce outstanding debt.
10
<PAGE>
Liquidity and Capital Resources
Our sources of liquidity and capital resources historically have been net cash
provided by operating activities, funds available under our financing facilities
and proceeds from offerings of equity securities. In the past, these sources
have been sufficient to meet our needs and finance the growth of our business.
We can give no assurance that the historical sources of liquidity and capital
resources will be available for future development and acquisition projects, and
we may be required to seek alternative financing sources. In 1998, sources of
liquidity included the sales of the Perkins facility and the Edgewood facility
and related production. In April 1999, we completed the sales of our Giddings
and Katy facilities. In connection with the sale, we sold gas held in storage at
the Katy facility. The total proceeds from these 1999 transactions were $147.7
million. We used the proceeds from these sales to reduce debt. Product prices,
sales of inventory, our success in increasing the number and efficiency of our
facilities and the volumes of natural gas processed by these facilities, the
margin on third-party product purchased for resale, as well as the timely
collection of our receivables will affect all future net cash provided by
operating activities. Additionally, our future growth will be dependent upon
obtaining additions to dedicated plant reserves, acquisitions, new project
development, marketing, efficient operation of our facilities and our ability to
obtain financing at favorable terms.
Given the depressed oil and NGL prices we have experienced and the disappointing
results from the Bethel treating facility, we have successfully negotiated
amendments to in our various financing facilities which are intended to provide
more flexibility in a low price environment. There can be no assurance that we
can obtain further amendments or waivers in the future, if necessary, or that
the terms would be favorable to us. To strengthen our credit ratings and to
reduce our overall debt outstanding, we will continue to dispose of non-
strategic assets and investigate alternative financing sources, including
project-financing, joint ventures, issuance of public debt and operating
leases.
We believe that the amounts available to be borrowed under the Revolving Credit
Facility, together with net cash provided by operating activities and the sale
of non-strategic assets, will provide us with sufficient funds to connect new
reserves, maintain our existing facilities and complete our current capital
expenditure program. Depending on the timing and the amount of our future
projects, we may be required to seek additional sources of capital. Our ability
to secure such capital is restricted by our financing facilities, although we
may request additional borrowing capacity from our lenders, seek waivers from
our lenders to permit us to borrow funds from third parties, seek replacement
financing facilities from other lenders, use stock as a currency for an
acquisition, sell existing assets or a combination of such alternatives. While
we believe that we would be able to secure additional financing, if required, we
can provide no assurance that we will be able to do so or as to the terms of any
such financing. We also believe that cash provided by operating activities and
amounts available under our Revolving Credit Facility will be sufficient to meet
our debt service and preferred stock dividend requirements for the remainder of
1999.
Historically, while certain individual plants have experienced declines in
dedicated reserves, we have been successful in connecting additional reserves to
more than offset the natural declines. There has been a reduction in drilling
activity, primarily in basins that produce oil and casinghead gas, from levels
that existed in prior years. However, higher gas prices in 1997 and 1998,
improved technology, e.g., 3-D seismic and horizontal drilling, and increased
pipeline capacity from the Rocky Mountain region have stimulated drilling in the
Powder River basin and Southwest Wyoming. The overall level of drilling will
depend upon, among other factors, the prices for gas and oil, the drilling
budgets of third-party producers, the energy policy of the federal government
and the availability of foreign oil and gas, none of which is within our
control. We have increased our dedicated estimated plant reserves from 2.2 Tcf
at December 31, 1993 to 3.1 Tcf at December 31, 1998. On average, over this five
year period, including the reserves associated with our joint ventures and
partnerships and excluding the facilities sold during this period, we connected
new reserves to our facilities to replace approximately 165% of throughput over
this period. There is no assurance that we will continue to be successful in
replacing the dedicated reserves processed at our facilities.
We have effective shelf registration statements filed with the Commission
for an aggregate of $200 million of debt securities and preferred stock, along
with the shares of common stock, if any, into which such securities are
convertible, and $62 million of debt securities, preferred stock or common
stock.
Our sources and uses of funds for the three months ended March 31, 1999 are
summarized as follows (In thousands):
<TABLE>
<CAPTION>
Sources of funds:
<S> <C>
Borrowings under revolving credit facility................ $864,951
Proceeds from the dispositions of property and equipment.. 100
Net cash provided by operating activities................. 12,661
--------
Total sources of funds.................................. $877,712
========
<CAPTION>
Uses of funds:
<S> <C>
Payments related to long-term debt........................ $843,464
Capital expenditures...................................... 21,734
Dividends paid............................................ 4,217
--------
Total uses of funds..................................... $869,415
========
</TABLE>
Additional sources of liquidity available to us are our inventories of gas and
NGLs in storage facilities. We store gas and NGLs primarily to ensure an
adequate supply for long-term sales contracts and for resale during periods when
prices are favorable. We held gas in storage and in imbalances of approximately
11.4 Bcf at an average cost of $1.70 per Mcf at March 31, 1999 compared to 8.2
Bcf at an average cost of $2.02 per Mcf at March 31, 1998, at various storage
facilities, including the Katy facility. On April 30, 1999 we sold 5.1 Bcf of
stored gas at the Katy facility for $11.7 million. At March 31, 1999, we had
hedging contracts in place for anticipated sales of approximately 11.3 Bcf of
stored gas at a weighted average price of $2.13 per Mcf for the stored
inventory.
11
<PAGE>
We held NGLs in storage of 6,900 MGal, consisting primarily of propane and
normal butane, at an average cost of $.24 per gallon and 14,800 MGal at an
average cost of $.32 per gallon at March 31, 1999 and 1998, respectively, at
various third-party storage facilities. At March 31, 1999, we had no significant
hedging contracts in place for anticipated sales of stored NGLs.
Capital Investment Program
Largely as a result of low commodity prices, primarily affecting NGL products,
we have reduced our budget for capital expenditures in 1999 from the levels
expended in 1997 and 1998. We expect capital expenditures related to existing
operations to be approximately $67.0 million during 1999, consisting of the
following: (i) approximately $39.6 million related to gathering, processing and
pipeline assets, of which $6.3 million is for maintaining existing facilities;
(ii) approximately $24.6 million on exploration and production activities; and
(iii) approximately $2.8 million for miscellaneous items. Overall, capital
expenditures in the Powder River basin coal bed methane development and in
Southwest Wyoming operations represent 53% and 22%, respectively, of the total
1999 budget. As of March 31, 1999, we have expended $21.7 million, consisting of
the following: (i) $12.6 million for new connects, system expansions and asset
consolidations; (ii) $1.2 million for maintaining existing facilities; (iii)
$7.8 million for exploration and production activities; and (iv) $178,000
related to other miscellaneous items.
Powder River Basin - We continue to develop our Powder River basin coal bed
methane natural gas gathering system and our coal seam gas reserves in Wyoming.
The average drilling, completion and gathering cost for our coal bed methane
wells is approximately $65,000 with average proven reserves per well of
approximately 300 MMcf. As deeper wells are drilled, the average cost per well
is expected to increase. Production of coal bed methane from the Powder River
basin has been expanding, and approximately 116 MMcf/D of gas volumes in March
1999 were being produced by several operators in the area as compared to 61
MMcf/D in January 1998. Approximately 75% of this production is from acreage
equally owned by our partner, Barrett Resources Corporation and us. We transport
most of the coal bed methane gas through our MIGC interstate pipeline located in
Wyoming, for redelivery to gas markets in the Rocky Mountain and Midwest regions
of the United States.
In December 1998, we joined with other industry partners to form Fort Union Gas
Gathering, L.L.C., which is currently constructing a 106-mile long, 24-inch
gathering pipeline and treater to gather and treat natural gas produced in the
Powder River basin. We own a 13% equity interest in Fort Union and are the
construction manager and field operator. We expect this new gathering pipeline
to have an initial capacity of approximately 450 MMcf/D of natural gas with
expansion capability. This project is expected to be operational on or about
the end of the third quarter of 1999.
Southwest Wyoming - The United States Geologic Survey estimates that the Greater
Green River basin contains over 120 Tcf of unrecovered natural gas reserves.
Our facilities are located in the Southwest Wyoming portion of this basin. They
include the Granger gathering and processing facility and a 72% ownership
interest in the Lincoln Road gathering and processing facility. These
facilities have a combined operational capacity of 225 MMcf/D and processed an
average of 179 MMcf/D in the first quarter of 1999. We connected 65 new gas
wells to these facilities in 1998 despite low commodity prices. We believe that
as governmental drilling restrictions affecting a portion of our service area in
this basin are removed in the fourth quarter of 1999, we may have the
opportunity to expand these facilities in the year 2000.
Financing Facilities
Revolving Credit Facility. The Revolving Credit Facility is with a
syndicate of banks and provides for a maximum borrowing commitment of $300
million, $268.8 million of which was outstanding at March 31, 1999. The interest
rate payable on the facility at March 31, 1999 was 6.7%. In April 1999, we
restated the facility to reflect the following changes. The restated Revolving
Credit Facility provides for an aggregate borrowing commitment of $250 million
consisting of an $83 million 364-day Revolving Credit Facility, or Tranche A,
and a five-year $167 million Revolving Credit Facility, or Tranche B. The
Revolving Credit Facility bears interest at certain spreads over the Eurodollar
rate, at the Federal Funds rate plus .50% or at the agent banks' prime rate. We
have the option to determine which rate will be used. We also pay a facility fee
on the commitment. The interest rate spreads and facility fee are adjusted based
on our debt to capitalization ratio and range from .75% to 2.00%. We are
required to maintain a total debt to capitalization ratio of not more than 60%
through December 31, 2000 and of not more than 55% thereafter, and a senior debt
to capitalization ratio of not more than 40% beginning September 30, 1999
through December 31, 2001 and of not more than 35% thereafter. The agreement
also requires a ratio of EBITDA, excluding certain non-recurring items, to
interest and dividends on preferred stock as of the end of any fiscal quarter,
for the four preceding quarters, of not less than 1.35 to 1.0 beginning June 30,
1999 and increasing to 3.25 to 1.0 by December 31, 2002. This facility is
guaranteed and secured via a pledge of the stock of our
12
<PAGE>
significant subsidiaries. We generally utilize excess daily funds to reduce any
outstanding balances on the Revolving Credit Facility and associated interest
expense, and we intend to continue such practice.
Master Shelf Agreement. In December 1991, we entered into a Master Shelf
agreement with The Prudential Insurance Company of America. Amounts outstanding
under the Master Shelf agreement at March 31, 1999 are as indicated in the
following table (Dollars in thousands):
<TABLE>
<CAPTION>
Interest Final
Issue Date Amount Rate Maturity Principal Payments Due
- -------------------- -------- --------- ------------------ -----------------------------------------------
<S> <C> <C> <C> <C>
October 27, 1992 $ 16,667 7.51% October 27, 2000 $8,333 on each of October 27, 1999 through 2000
October 27, 1992 25,000 7.99% October 27, 2003 $8,333 on each of October 27, 2001 through 2003
September 22, 1993 25,000 6.77% September 22, 2003 single payment at maturity
December 27, 1993 25,000 7.23% December 27, 2003 single payment at maturity
October 27, 1994 25,000 9.05% October 27, 2001 single payment at maturity
October 27, 1994 25,000 9.24% October 27, 2004 single payment at maturity
July 28, 1995 50,000 7.61% July 28, 2007 $10,000 on each of July 28, 2003 through 2007
--------
$191,667
========
</TABLE>
In April 1999, effective January 1999, we amended our agreement with Prudential
with the following provisions. We are required to maintain a current ratio, as
defined therein, of at least .9 to 1.0, a minimum tangible net worth equal to
the sum of $300 million plus 50% of consolidated net earnings earned from
January 1, 1999 plus 75% of the net proceeds of any equity offerings after
January 1, 1999, and a total debt to capitalization ratio of not more than 60%
through December 31, 2001 and of not more than 55% thereafter. A senior debt to
capitalization ratio will be implemented, if and when, we issue subordinated
debt. This amendment also requires an EBITDA to interest ratio of not less than
1.75 to 1.0 increasing to a ratio of not less than 3.75 to 1.0 by March 31, 2002
and an EBITDA to interest on senior debt ratio of not less than 1.75 to 1.0
increasing to a ratio of not less than 5.50 to 1.0 by March 31, 2002. A senior
debt to EBITDA ratio will be implemented, if and when we issue subordinated
debt. EBITDA in these calculations excludes certain non-recurring items. In
addition, we are prohibited from declaring or paying dividends that in the
aggregate exceed the sum of $50 million plus 50% of consolidated net income
earned after June 30, 1995, or minus 100% of a net loss, plus the aggregate net
cash proceeds received after June 30, 1995 from the sale of any stock. At March
31, 1999, $32.0 million was available under this limitation. This amount is
expected to be reduced by approximately $14.6 million as a result of the
after-tax losses recognized on the sales of the Giddings and Katy facilities. We
presently intend to finance the $8.3 million payment due in October 1999 with
amounts available under the Revolving Credit Facility. The Master Shelf
agreement is guaranteed and secured via a pledge of the stock of our significant
subsidiaries.
1995 Senior Notes. In 1995, we sold $42 million of Senior Notes, the 1995
Senior Notes, to a group of insurance companies with an interest rate of 8.16%
per annum. In March 1999, we prepaid $15 million of the principal amounts
outstanding on the 1995 Senior Notes at par. These payments were financed by a
portion of the $37 million Bridge Loan (described below) and by amounts
available under the Revolving Credit Facility. The remaining principal amount
outstanding of $27 million is due in a single payment in December 2005. The 1995
Senior Notes are guaranteed and secured via a pledge of the stock of our
significant subsidiaries. This facility contains covenants similar to the Master
Shelf agreement. In April 1999, we posted letters of credit for approximately
$5.0 million for the benefit of the holders of the 1995 Senior Notes for
approximately 4% of the net proceeds from the sale of Katy and Giddings.
We are currently paying an average annual fee of not more than .65% on the
amounts outstanding on the Master Shelf and the 1995 Senior Notes. This fee will
continue until we have received an implied investment grade rating on our senior
secured debt. On the portion of the 1995 Senior Notes for which a letter of
credit is posted, this annual fee will not be due.
1993 Senior Notes. In 1993, we sold $50 million of 7.65% Senior Notes, the
1993 Senior Notes, to a group of insurance companies. Scheduled annual principal
payments of $7.1 million on the 1993 Senior Notes were made on April 30 of 1997
and 1998. In February 1999, we prepaid $33.5 million of the total principal
amounts outstanding of $35.6 million at par. These payments were financed by a
portion of the $37 million Bridge Loan (described below). We prepaid the
remaining outstanding principal of $2.1 million in April 1999 with amounts
available under the Revolving Credit Facility.
13
<PAGE>
Bridge Loan. In February 1999, in order to finance prepayments of amounts
outstanding on the 1993 and 1995 Senior Notes, we entered into a Bridge Loan
agreement in the amount of $37 million with our agent bank. This facility was
paid in full in April 1999 with a portion of the proceeds from the sale of the
Katy facility.
Covenant Compliance. Taking into account all the covenants contained in
these agreements, we had approximately $31.0 million of available borrowing
capacity at March 31, 1999. In April 1999, we amended our various financing
facilities providing for financial flexibility and covenant modifications. These
amendments were needed given the depressed commodity pricing experienced in the
industry in general and the disappointing results we have experienced at our
Bethel Treating facility. We can provide no assurance that further amendments or
waivers can be obtained in the future, if necessary, or that the terms would be
favorable to us. To strengthen our credit ratings and to reduce our overall debt
outstanding, we will continue to dispose of non- strategic assets and
investigate alternative financing sources including the issuance of public debt,
project financing, joint ventures and operating leases.
Risk Management Activities
Our commodity price risk management program has two primary objectives. The
first goal is to preserve and enhance the value of our equity volumes of gas and
NGLs with regard to the impact of commodity price movements on cash flow, net
income and earnings per share in relation to those anticipated by our operating
budget. The second goal is to manage price risk related to our gas, crude oil
and NGL marketing activities to protect profit margins. This risk relates to
hedging fixed price purchase and sale commitments, preserving the value of
storage inventories, reducing exposure to physical market price volatility and
providing risk management services to a variety of customers.
We utilize a combination of fixed price forward contracts, exchange-traded
futures and options, as well as fixed index swaps, basis swaps and options
traded in the over-the-counter, or OTC, market to accomplish these objectives.
These instruments allow us to preserve value and protect margins because
corresponding losses or gains in the value of the financial instruments offset
gains or losses in the physical market.
We use futures, swaps and options to reduce price risk and basis risk. Basis is
the difference in price between the physical commodity being hedged and the
price of the futures contract used for hedging. Basis risk is the risk that an
adverse change in the futures market will not be completely offset by an equal
and opposite change in the cash price of the commodity being hedged. Basis risk
exists in natural gas primarily due to the geographic price differentials
between cash market locations and futures contract delivery locations.
We enter into futures transactions on the New York Mercantile Exchange, or
NYMEX, and the Kansas City Board of Trade and through OTC swaps and options with
various counterparties, consisting primarily of financial institutions and other
natural gas companies. We conduct our standard credit review of OTC
counterparties and have agreements with these parties that contain collateral
requirements. We generally use standardized swap agreements that allow for
offset of positive and negative exposures. OTC exposure is marked to market
daily for the credit review process. Our OTC credit risk exposure is partially
limited by our ability to require a margin deposit from our major counterparties
based upon the mark-to-market value of their net exposure. We are subject to
margin deposit requirements under these same agreements. In addition, we are
subject to similar margin deposit requirements for our NYMEX counterparties
related to our net exposures.
The use of financial instruments may expose us to the risk of financial loss in
certain circumstances, including instances when (i) equity volumes are less than
expected, (ii) our customers fail to purchase or deliver the contracted
quantities of natural gas or NGLs, or (iii) our OTC counterparties fail to
perform. To the extent that we engage in hedging activities, we may be prevented
from realizing the benefits of favorable price changes in the physical market.
However, we are similarly insulated against decreases in these prices.
We hedged a portion of our estimated equity volumes of gas and NGLs in 1999,
particularly in the first quarter, at pricing levels approximating our 1999
operating budget. Our equity hedging strategy establishes a minimum and maximum
price while allowing market participation between these levels. As of March 31,
1999 we had hedged approximately 76% of our anticipated equity gas for 1999 at a
weighted average NYMEX equivalent minimum price of $2.00 per Mcf. Additionally,
we have hedged approximately 77% of our anticipated equity NGLs for 1999 at a
weighted average composite Mont Belvieu and West Texas Intermediate crude oil
equivalent minimum price of $.23 per gallon.
14
<PAGE>
At March 31, 1999, we had $50,000 of losses deferred in inventory that will be
recognized over the remainder of 1999, and will be offset by margins from our
related forward fixed price hedges and physical sales. At March 31, 1999, we had
unrecognized net losses of $432,000 related to financial instruments that were
offset by corresponding unrecognized net gains from our obligations to sell
physical quantities of gas and NGLs.
We enter into speculative futures, swap and option trades on a very limited
basis for purposes that include testing of hedging techniques. Our policies
contain strict guidelines for these trades including predetermined stop-loss
requirements and net open position limits. Speculative futures, swap and option
positions are marked to market at the end of each accounting period and any gain
or loss is recognized in income for that period. Net gains or losses from these
speculative activities for the quarters ended March 31, 1999 and 1998 were not
material.
Year 2000
We have made a comprehensive review of our computer systems to identify the
systems that could be affected by the Year 2000 issue and are in the process of
identifying and making the appropriate modifications to these computer systems.
We have: (i) created a Year 2000 awareness program to educate employees; (ii)
compiled an inventory of all systems; (iii) developed system test plans as
appropriate; and (iv) began the testing and remediation as required for both
information and non-information technology systems. Additionally, we have
initiated a program under which we survey our business counterparties
periodically regarding their Year 2000 conversion and contingency plans.
Currently, we anticipate spending approximately $1.5 million, of which
approximately 67% is currently committed, for remediation purposes, which are
primarily consisting of hardware and operating system upgrades. We have incurred
and will continue to incur internal staff costs as well as some consulting and
other expenses, which have been and are expected to continue to be immaterial.
We anticipate our Year 2000 conversion project to be substantially completed by
October 1999. Currently, we believe our most significant risk for the Year 2000
issue is that the systems of other companies on which we rely will not be Year
2000 compliant and that any failure to convert by another company will have an
adverse effect on our results of operations or financial position. In order to
mitigate this risk, we continue to develop contingency plans and are surveying
our vendors and customers to verify the status of their conversion and
contingency plans.
15
<PAGE>
Principal Facilities
The following tables provide information concerning our principal facilities at
March 31, 1999. We also own and operate several smaller treating, processing and
transmission facilities located in the same areas as its other facilities.
<TABLE>
<CAPTION>
Average for the Three Months Ended
March 31, 1999
Gas Gas --------------------------------------------------
Gathering Throughput Gas Gas NGL
Year Placed Systems Capacity Throughput Production Production
Plant Facilities (1) In Service Miles(2) (MMcf/D)(2) (MMcf/D)(3) (MMcf/D)(4) (MGal/D)(5)
- --------------------------------- ----------- --------------- --------------- -------------- ------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Southern Region:
Texas
Bethel Treating (6)............ 1997 86 350 70 66 -
Giddings Gathering(14)......... 1979 661 80 46 32 68
Gomez Treating................. 1971 385 280 108 101 -
Midkiff/Benedum................ 1955 2,139 165 139 94 836
Mitchell Puckett Gathering..... 1972 86 120 107 70 2
MiVida Treating (6)............ 1972 289 150 48 46 -
Rosita Treating................ 1973 - 60 39 - -
Louisiana
Black Lake..................... 1966 56 75 12 7 17
Toca (7)(8).................... 1958 - 160 66 62 56
Northern Region:
Wyoming
Coal Bed Methane
Gathering..................... 1990 389 105 107 85 -
Granger (7)(9)(10)............. 1987 448 235 155 142 156
Hilight Complex (7)............ 1969 622 80 25 20 73
Kitty/Amos Draw (7)............ 1969 313 17 12 9 48
Lincoln Road (10).............. 1988 149 50 24 22 22
Newcastle...................... 1981 146 5 2 1 16
Red Desert..................... 1979 111 42 18 16 31
Reno Junction (9).............. 1991 - - - - 51
Oklahoma
Arkoma......................... 1985 72 8 5 5 -
Chaney Dell.................... 1966 2,050 180 61 47 203
Westana........................ 1986 791 45 69 60 45
New Mexico
San Juan River (6)............. 1955 149 60 25 21 16
Utah
Four Corners Gathering......... 1988 104 15 3 3 9
----- ----- ----- --- -----
Total......................... 9,046 2,282 1,141 909 1,649
===== ===== ===== === =====
</TABLE>
<TABLE>
<CAPTION>
Average for the
Three Months Ended
March 31, 1999
Interconnect ---------------
and Gas Storage Pipeline Gas
Storage and Year Placed Transmission Capacity Capacity Throughput
Transmission Facilities (1) In Service Miles(2) (Bcf)(2) (MMcf/D)(2) (MMcf/D)(3)
- --------------------------------- ----------- ------------ ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Katy Facility (11)(14)........... 1994 17 20 - 241
MIGC (12)(15).................... 1970 245 - 130 153
MGTC (13)........................ 1963 252 - 18 14
----- ----- ----- ---
Total.......................... 514 20 148 408
===== ===== ===== ===
</TABLE>
Footnotes on following page.
16
<PAGE>
(1) Our interest in all facilities is 100% except for Midkiff/Benedum (73%);
Black Lake (69%); Lincoln Road (72%); Westana Gathering Company (50%);
Newcastle (50%) and Coal Bed Methane Gathering (50%). We operate all
facilities and all data includes our interests and the interests of other
joint interest owners and producers of gas volumes dedicated to the
facility. Unless otherwise indicated, all facilities shown in the table are
gathering and processing facilities.
(2) Gas gathering systems miles, interconnect and transmission miles, gas
storage capacity and pipeline capacity are as of March 31, 1999.
(3) Gas throughput capacity is as of March 31, 1999 and represents capacity in
accordance with design specifications unless other constraints exist,
including permitting or field compression limits.
(4) Aggregate wellhead natural gas volumes collected by a gathering system,
aggregate volumes delivered over the header at the Katy Hub and Gas Storage
Facility or volumes transported by a pipeline.
(5) Volumes of gas and NGLs are allocated to a facility when a well is
connected to that facility; volumes exclude NGLs fractionated for third
parties.
(6) Sour gas facility (capable of processing or treating gas containing
hydrogen sulfide and/or carbon dioxide).
(7) Fractionation facility (capable of fractionating raw NGLs into end-use
products).
(8) Straddle plant, or a plant located near a transmission pipeline that
processes gas dedicated to or gathered by a pipeline company or another
third party.
(9) NGL production includes conversion of third-party feedstock to iso-butane.
(10) We and our joint venture partner at the Lincoln Road facility have agreed
to process such gas at our Granger facility so long as there is available
capacity at the Granger facility. Accordingly, operations at the Lincoln
Road facility were temporarily suspended for the period between January
1999 and March 1999.
(11) Hub and gas storage facility.
(12) MIGC is an interstate pipeline located in Wyoming and is regulated by the
Federal Energy Regulatory Commission.
(13) MGTC is a public utility located in Wyoming and is regulated by the Wyoming
Public Service Commission.
(14) On April 30, 1999 we sold both of these facilities.
(15) Pipeline capacity represents capacity at the Powder River junction only and
it does not include northern delivery points.
17
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
McMurry Oil Company, et al. v. TBI Exploration, Inc., Mountain Gas Resources,
Inc. and Wildhorse Energy Partners, LLC, District Court, Ninth Judicial
District, Sublette County, Wyoming, Civil Action No. 5882.
McMurry Oil Company and certain other producers (collectively, "McMurry") filed
suit against TBI Exploration, Inc. ("TBI"), Mountain Gas Resources, Inc., our
wholly-owned subsidiary ("Mountain Gas") and Wildhorse Energy Partners, LLC
("Wildhorse"). The central dispute in this case concerns certain preferential
rights which are set forth in a December 23, 1991 Lease Participation Agreement
(the "Participation Agreement") entered into by Presidio Exploration, Inc.
("Presidio") and McMurry. The Participation Agreement granted Presidio a call on
certain gas and the right to match offers for gathering and/or purchasing gases
(collectively, the "Preferential Rights"). There is a dispute between McMurry
and Mountain Gas as to whether any Preferential Rights exist and, if they do,
whether Mountain Gas has exercised the Preferential Rights and whether McMurry
has tendered all third-party offers to Mountain Gas in order to allow Mountain
Gas to determine if it wishes to exercise the Preferential Rights. In addition,
McMurry and Mountain Gas dispute the extent of the Preferential Rights. There is
also a dispute as to who owns the Preferential Rights contained in the
Participation Agreement which consolidated Presidio Oil Company's and it's
gathering, processing, and marketing business into Mountain Gas. In November
1998, the Wyoming District Court granted summary judgment on all claims in favor
of McMurry and against Mountain Gas, TBI and Wildhorse (with the exception of
Mountain Gas' third-party claim against Jonah Gas Gathering Company). In early
1999, McMurry, TBI and Wildhorse settled their claims and crossclaims and TBI
and Wildhorse were dismissed. The allegation of Mountain Gas' liability to
McMurry for Mountain Gas' slander of title and its intentional interference with
contract has been set for trial beginning May 10, 1999. At the present time, it
is not possible to express an opinion as to the likely outcome of this
litigation or to estimate the amount of potential damages.
Berco Resources, Inc. v. Amerada Hess Corporation and Western Gas Resources,
Inc., United States District Court, District of Colorado, Civil Action No.
97- WM-1332.
Berco Resources, Inc. is an independent producer and marketer of natural gas and
alleges that it owns or has the right to produce and sell natural gas in the
Temple/Tioga Area in North Dakota. Berco alleges that Amerada Hess engaged in
unlawful monopolization under Section 2 of the Sherman Act and Section 7 of the
Clayton Act by acquiring natural gas gathering and producing facilities owned by
us. Berco alleges that we, along with Amerada Hess have conspired, through the
purchase and sale of our facilities in the Temple/Tioga Area, to create a
monopoly affecting an appreciable amount of interstate commerce in violation of
Sections 1 and 2 of the Sherman Act. Berco seeks an award against Amerada Hess
and us of threefold the amount of damages actually sustained by Berco, in an
amount to be determined at trial, and/or divestiture of the assets which Amerada
Hess acquired, for an order restraining and enjoining us and Amerada Hess from
violating the antitrust laws, and for costs, attorney fees and interest. We
believe that we have meritorious defenses to the claims and will vigorously
defend such claims. At the present time it is not possible to predict the
outcome of this litigation or to estimate the amount of potential damages.
Internal Revenue Service
The Internal Revenue Service ("IRS") has completed its examination of our tax
returns for the years 1990 and 1991 and has proposed adjustments to taxable
income reflected in such tax returns that would shift the recognition of certain
items of income and expense from one year to another ("Timing Adjustments"). To
the extent taxable income in a prior year is increased by proposed Timing
Adjustments, taxable income may be reduced by a corresponding amount in other
years. However, we would incur an interest charge as a result of such
adjustments. We are currently protesting certain of these proposed adjustments.
In the opinion of management, any proposed adjustments for the additional income
taxes and interest that may result would not be material. However, it is
reasonably possible that the ultimate resolution could result in an amount which
differs materially from management's estimates.
Other
We are involved in various other litigation and administrative proceedings
arising in the normal course of business. In the opinion of management, any
liabilities that may result from these claims, will not, individually or in the
aggregate, have a material adverse effect on our financial position or results
of operations.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
10.20 Loan Agreement dated April 29, 1999 by and among Western Gas
Resources, Inc. and NationsBank, as agent, and the Lenders.
10.21 Amended and Restated Note Purchase Agreement dated April 28, 1999
by and among Western Gas Resources, Inc. and the purchasers
identified in the original agreement dated November 29, 1995.
10.22 Letter Amendment No. 2 dated March 31, 1999 to the Second Amended
and Restated Master Shelf Agreement effective January 31, 1996 by
and among Western Gas Resources, Inc. and The Prudential Insurance
Company of America and Pruco Life Insurance Company.
(b) Reports on Form 8-K:
A report on Form 8-K was filed on May 11, 1999 with the Securities and
Exchange Commission to notify our stockholders of the disposition of our
Katy Hub and Gas Storage Facility and the disposition of our Giddings
gathering system.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTERN GAS RESOURCES, INC.
---------------------------
(Registrant)
Date: May 13, 1999 By: /s/ LANNY F. OUTLAW
---------------------
Lanny F. Outlaw
President and Chief Operating Officer
Date: May 13, 1999 By: /s/WILLIAM J. KRYSIAK
---------------------
William J. Krysiak
Vice President - Finance
(Principal Financial and Accounting
Officer)
19
EXHIBIT 10.20
- --------------------------------------------------------------------------------
LOAN AGREEMENT
----------
WESTERN GAS RESOURCES, INC.
and
NATIONSBANK, N.A.
as Agent
NATIONSBANC MONTGOMERY SECURITIES LLC
as Lead Arranger
SOCIETE GENERALE
as Syndication Agent
ABN AMRO BANK N.V.
as Documentation Agent
and certain banks
as Lenders
----------
$300,000,000
April 29, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. - Definitions and References........................................1
Section 1.1. Defined Terms.............................................1
Section 1.2. Exhibits and Schedules; Additional Definitions...........19
Section 1.3. Amendment of Defined Instruments.........................20
Section 1.4. References and Titles....................................20
Section 1.5. Calculations and Determinations..........................20
ARTICLE II. - The Loans.......................................................20
Section 2.1. Committed Loans..........................................20
Section 2.2. Requests for New Loans...................................22
Section 2.3. Continuations and Conversions of Existing Committed
Loans ...................................................23
Section 2.4. Competitive Bid Loans....................................24
Section 2.5. Use of Proceeds..........................................26
Section 2.6. Optional Prepayments.....................................27
Section 2.7. Mandatory Prepayments....................................27
Section 2.8. Payments to Lenders......................................29
Section 2.9. Facility Fees............................................30
Section 2.10. Increased Cost and Reduced Return........................30
Section 2.11. Limitation on Types of Loans.............................31
Section 2.12. Illegality...............................................32
Section 2.13. Treatment of Affected Loans..............................32
Section 2.14. Compensation.............................................33
Section 2.15. Taxes....................................................33
Section 2.16. Compensation Procedure...................................35
Section 2.17. Interest Rate Changes....................................35
ARTICLE III. - Letters of Credit..............................................36
Section 3.1. LCs......................................................36
Section 3.2. Reimbursement of LCs.....................................36
Section 3.3. Transferees of LCs.......................................38
Section 3.4. Extension of Maturity of LCs.............................38
Section 3.5. Restriction on Liability.................................38
Section 3.6. No Duty to Inquire.......................................39
Section 3.7. LC Fees..................................................39
ARTICLE IV. - Conditions Precedent to Lending.................................39
Section 4.1. Documents to be Delivered................................39
Section 4.2. Additional Conditions Precedent..........................40
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ARTICLE V. - Representations and Warranties...................................41
Section 5.1. Borrower's Representations and Warranties................41
Section 5.2. Representation by Lenders................................46
ARTICLE VI. - Covenants of Borrower...........................................46
Section 6.1. Affirmative Covenants....................................46
Section 6.2. Negative Covenants.......................................52
ARTICLE VII. - Security.......................................................58
Section 7.1. The Security.............................................58
Section 7.2. Offset...................................................58
Section 7.3. Guaranties of Borrower's Subsidiaries....................58
Section 7.4. Deposits.................................................59
ARTICLE VIII. - Events of Default and Remedies................................60
Section 8.1. Events of Default........................................60
Section 8.2. Remedies.................................................63
Section 8.3. Indemnity................................................63
ARTICLE IX. - Agent...........................................................64
Section 9.1. Appointment, Powers, and Immunities......................64
Section 9.2. Reliance by Agent........................................64
Section 9.3. Defaults.................................................64
Section 9.4. Rights as Lender.........................................65
Section 9.5. Indemnification..........................................65
Section 9.6. Non-Reliance on Agent and Other Lenders..................65
Section 9.7. Resignation of Agent.....................................66
Section 9.8. Appointment and Authority................................66
Section 9.9. Exculpation, Agent's Reliance, Etc.......................67
Section 9.10. Lenders' Credit Decisions................................67
Section 9.11. Expenses; Indemnification................................67
Section 9.12. Rights as Lender.........................................68
Section 9.13. Adjustments..............................................68
Section 9.14. Benefit of Article IX....................................69
Section 9.15. Agency/Administrative Fee................................69
ARTICLE X. - Miscellaneous....................................................69
Section 10.1. Waivers and Amendments; Acknowledgments..................69
Section 10.2. Survival of Agreements; Cumulative Nature................71
Section 10.3. Notices..................................................71
Section 10.4. Joint and Several Liability; Parties in Interest.........72
Section 10.5. Assignments and Participations...........................72
Section 10.6. Governing Law; Submission to Process.....................74
Section 10.7. Limitation on Interest...................................74
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Section 10.8. Termination; Limited Survival............................75
Section 10.9. Severability.............................................76
Section 10.10. Confidentiality..........................................76
Section 10.11. Counterparts.............................................76
Section 10.12. Waiver of Jury Trial, Punitive Damages, Etc..............76
Section 10.13. Restatement..............................................77
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SCHEDULE 1 - Disclosure Schedule
SCHEDULE 2 - Security Schedule
SCHEDULE 3 - Lenders
SCHEDULE 4 - Joint Ventures
EXHIBIT A - Tranche A Note
EXHIBIT B - Tranche B Note
EXHIBIT C - Borrowing Notice
EXHIBIT D - Letter of Credit Application
EXHIBIT E - Continuation/Conversion Notice
EXHIBIT F - Officer's Certificate
EXHIBIT G - Assignment and Acceptance
EXHIBIT H - Form of Opinion of Borrower's General Counsel
EXHIBIT I - Form of Cash Flow Projections
EXHIBIT J - Competitive Bid Request
EXHIBIT K - Invitation to Bid
EXHIBIT L - Competitive Bid
EXHIBIT M - Competitive Bid Accept/Reject Letter
EXHIBIT N - Competitive Bid Note
EXHIBIT O - Notice of Final Agreement
EXHIBIT P - Risk Management Policy
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<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of April 29,1999 and shall be effective for
all purposes as of the Effective Date, by and among Western Gas Resources, Inc.,
a Delaware corporation (herein called "Borrower"), NationsBank, N.A., a national
banking association (herein called "Agent") and Lenders referred to below. In
consideration of the mutual covenants and agreements contained herein the
parties hereto agree as follows:
ARTICLE I. - Definitions and References
Section I.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 15% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Agent" means NationsBank, as Agent hereunder, and its successors in such
capacity.
"Agreement" means this Loan Agreement.
"American General Group" means, collectively, The Variable Annuity Life
Insurance Company, American General Life Insurance Company, American General
Life and Accident Insurance Company (successor in interest to Gulf Life
Insurance Company), First Allmerica Financial Life Insurance Company, and
Allmerica Financial Life Insurance and Annuity Company.
"Applicable Lending Office" means, for each Lender and for each Type of
Committed Loan, the "Lending Office" of such Lender (or of an affiliate of such
Lender) designated for such Type of Loan on Schedule 3 or such other office of
such Lender (or an affiliate of such Lender) as such Lender may from time to
time specify to Agent and Borrower by written notice in accordance with the
terms hereof as the office by which its Committed Loans of such Type are to be
made and maintained.
"Asset Sale" means each sale of an asset or group of assets by a Related
Person for a purchase price of $1,000,000 or more.
<PAGE>
"Asset Sale Proceeds" means with respect to each Asset Sale, all proceeds
from the sale of such asset or group of assets, net of reasonable out-of-pocket
expenses of sales and associated cash taxes, if any, incurred by such Related
Person.
"At Risk Position" has the meaning given it in Section 6.2(k).
"Authorized Officer" means, with respect to any act to be performed or
duty to be discharged by or on behalf of any Person who is not an individual,
any officer, agent or representative thereof who is at the time in question
authorized to perform such act or discharge such duty on behalf of such Person.
"Base Rate" means the per annum rate of interest equal to the sum of (i)
the greater of (A) the Prime Rate from time to time in effect or (B) the Federal
Funds Rate from time to time in effect plus one-half of one percent (.50%), plus
(ii) the Base Rate Spread, plus (iii) the Senior Cap Spread, if any, and (iv)
the Issuance Spread, if any. If the Prime Rate or the Federal Funds Rate, as the
case may be, changes after the date hereof the Base Rate shall be automatically
increased or decreased, as the case may be, without notice to Borrower from time
to time as of the effective time of each such change. The Base Rate shall in no
event, however, exceed the Highest Lawful Rate.
"Base Rate Payment Date" means (i) the first day of each January, April,
July and October beginning on and including July 1, 1999, and (ii) any day on
which past due interest or principal is owed hereunder and is unpaid. If the
terms hereof provide that payments of interest or principal hereon shall be
deferred from one Base Rate Payment Date to another day, such other day shall
also be a Base Rate Payment Date.
"Base Rate Spread" means:
(a) for each period in which the Debt to Capitalization Ratio in
effect pursuant to Section 2.17 is less than or equal to 0.50 to 1.0,
0.00%;
(b) for each period in which the Debt to Capitalization Ratio in
effect pursuant to Section 2.17 is greater than 0.50 to 1.0 but less than
or equal to 0.55 to 1.0, 0.25%; and
(c) for each period in which the Debt to Capitalization Ratio in
effect pursuant to Section 2.17 is greater than 0.55 to 1.0, 0.50%.
"Borrower" means Western Gas Resources, Inc., a Delaware corporation.
"Borrowing" means any of the following: (i) a borrowing of new Committed
Loans of a single Type pursuant to Section 2.2; (ii) a continuation or
conversion of existing Committed Loans into a single Type (and, in the case of
Committed Eurodollar Loans, with the same Interest Period) pursuant to Section
2.3; and (iii) a combination of new Committed Loans and a
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continuation or conversion of existing Committed Loans in a single Type (and, in
the case of Committed Eurodollar Loans, with the same Interest Period).
"Borrowing Notice" means a request for a Borrowing made by Borrower either
(i) in writing in the form and substance of the "Borrowing Notice" attached
hereto as Exhibit C, duly completed, or (ii) by telephone providing the same
information to Agent.
"Bridge Facility" means that certain Loan Agreement among Borrower, as
borrower, and NationsBank, N.A., as lender, dated as of February 17, 1999.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Dallas, Texas and New
York City, New York. Any Business Day in any way relating to Committed
Eurodollar Loans (such as the day on which an Interest Period begins or ends)
must also be a day on which, in the judgment of Agent, significant transactions
in dollars are carried out in the interbank eurocurrency market.
"Change in Control" means any of the following:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of more than 25% of the
total Voting Shares of Borrower after the date hereof; or
(b) Borrower is merged with or into or consolidated with another Person
and immediately after giving effect to the merger or consolidation, (i) less
than 50% of the total voting power of the outstanding Voting Shares of the
surviving or resulting Person is then "beneficially owned" (within the meaning
of Rule 13d-3 under the Exchange Act) in the aggregate by the stockholders of
Borrower immediately prior to such merger or consolidation, and (ii) any
"person" or "group" (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange
Act) has become the direct or indirect "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of more than 50% of the total voting power of the
Voting Shares of the surviving or resulting Person; or
(c) Borrower, either individually or in conjunction with one or more
Subsidiaries, sells, assigns, conveys, transfers, leases or otherwise disposes
of, or the Subsidiaries sell, assign, convey, transfer, lease or otherwise
dispose of, all or substantially all of the properties of Borrower and the
Subsidiaries, taken as a whole (either in one transaction or a series of related
transactions) including capital stock of the Subsidiaries, to any Person (other
than Borrower or a wholly owned Subsidiary); or
(d) during any consecutive two-year period, individuals who at the
beginning of such period constituted the board of directors of Borrower
(together with any new directors whose election by such board of directors or
whose nomination for election by the stockholders of Borrower was approved by a
vote of a majority of the directors then still in office who were
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<PAGE>
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the board of directors of Borrower then in office; or
(e) the liquidation or dissolution of Borrower.
"Collateral" means all property of any kind which is subject to a Lien in
favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien, in each case granted or created to secure all or part of the Obligations.
"Commitment" means the aggregate amount of the Tranche A Commitment and
the Tranche B Commitment as reduced from time to time pursuant to Section 2.7.
"Committed Base Rate Loans" means all Tranche A Base Rate Loans and all
Tranche B Base Rate Loans.
"Committed Eurodollar Loans" means all Tranche A Eurodollar Loans and all
Tranche B Eurodollar Loans.
"Committed Loans" means all Tranche A Loans and all Tranche B Loans.
"Committed Notes" means all Tranche A Notes and all Tranche B Notes.
"Competitive Bid" means a response from any Lender to an Invitation to
Bid, substantially in the form of Exhibit L.
"Competitive Bid Accept/Reject Letter" means a notice sent by Borrower to
Agent, substantially in the form of Exhibit M, indicating its acceptance or
rejection of Competitive Bids from various Lenders.
"Competitive Bid Interest Period" means, with respect to a Competitive Bid
Loan, a period from one day to fifty-nine days as specified in the Competitive
Bid applicable thereto.
"Competitive Bid Loan" means a loan from a Lender to Borrower pursuant to
the bidding procedure described in Section 2.4.
"Competitive Bid Note" has the meaning given it in Section 2.4(f).
"Competitive Bid Rate" means, for any Competitive Bid Loan, the fixed rate
at which such Lender is willing to make such Competitive Bid Loan indicated in
its Competitive Bid. The Competitive Bid Rate shall in no event, however, exceed
the Highest Lawful Rate.
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"Competitive Bid Request" means a request by Borrower in the form of
Exhibit J for Lenders to submit Competitive Bids.
"Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.
"Continuation/Conversion Notice" means a request for a continuation or
conversion of existing Committed Loans made by Borrower pursuant to Section 2.3
either (i) in writing in the form and substance of the "Continuation/Conversion
Notice" attached hereto as Exhibit E, duly completed, or (ii) by telephone
providing the same information to Agent.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.3 of a Committed Eurodollar Loan of one Type
as a Committed Eurodollar Loan of the same Type from one Interest Period to the
next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 2.3 of one Type of Loan into another Type of Loan.
"Debt" of any Person means the sum of the following indebtedness,
liabilities and obligations of such Person (without duplication), whether
matured or unmatured, liquidated or unliquidated, primary or secondary:
(a) obligations for borrowed money,
(b) obligations to pay the deferred purchase price of property or
services,
(c) obligations evidenced by a bond, debenture, note or similar financial
instrument,
(d) obligations which (i) would under GAAP be shown on such Person's
balance sheet as a liability, and (ii) are payable more than one year from the
date of creation thereof (other than reserves for taxes and reserves for
contingent obligations),
(e) obligations arising under Hedging Contracts to which such Person is a
party,
(f) obligations arising under leases, whether or not the payments
thereunder are capitalized in accordance with GAAP,
(g) obligations arising under conditional sales or other title retention
agreements,
(h) obligations owing under direct or indirect guaranties of Debt of any
other Person or constituting obligations to purchase or acquire or to otherwise
protect or insure a creditor
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<PAGE>
against loss in respect of Debt of any other Person (such as obligations under
working capital maintenance agreements, agreements to keep-well, or agreements
to purchase Debt, assets, goods, securities or services),
(i) obligations (for example, repurchase agreements) to purchase
securities or other property, if such obligations arise out of or in connection
with the sale of the same or similar securities or property,
(j) obligations with respect to letters of credit or reimbursement
agreements therefor,
(k) obligations with respect to payments received in consideration of oil,
gas, or other minerals yet to be acquired or produced at the time of payment
(including obligations under "take-or-pay" contracts to deliver gas in return
for payments already received and the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment), or
(l) obligations to deliver goods or services in consideration of advance
payments therefor;
provided, however, that the "Debt" of any Person shall not include Debt that was
incurred by such Person on ordinary trade terms to vendors, suppliers, or other
Persons providing goods and services for use by such Person in the ordinary
course of its business, unless and until such Debt is outstanding more than
ninety (90) days past the original invoice or billing date therefor.
"Debt to Capitalization Ratio" means, at the time of determination, the
ratio of (a) Funded Debt to (b) the sum of the Funded Debt plus Shareholders'
Equity. (Determination will be made in connection with the delivery of the
officer's certificate pursuant to Section 6.1(b)(iii) and may be made pursuant
to Section 2.17 from time to time.)
"Debt Securities" means collectively, (i) those senior notes dated October
27, 1992, September 22, 1993, December 27, 1993, October 27, 1994 and July 28,
1995 issued by Borrower pursuant to that certain Master Shelf Agreement dated as
of December 19, 1991 between Borrower and the Prudential Insurance Company of
America (as amended and restated from time to time, the "Shelf Agreement") and
(ii) the 8.02% senior notes due December 1, 2005 in the aggregate principal
amount of $42,000,000 issued by Borrower pursuant to a note purchase agreement
among Borrower and the members of the American General Group (as amended and
restated from time to time, the "American General Agreement").
"Default" means any Event of Default and any default, event or condition
which would, with the giving of any requisite notices and the passage of any
requisite periods of time, constitute an Event of Default.
"Default Rate" means, at the time in question, (i) with respect to any
Committed Base Rate Loan, two percent (2.0%) per annum plus the Base Rate then
in effect; (ii) with respect to
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any Committed Eurodollar Loan, two percent (2.0%) per annum plus (A) with
respect to Tranche A Eurodollar Loans, the Tranche A Fixed Rate, or (B) with
respect to Tranche B Eurodollar Loans, the Tranche B Fixed Rate; and (iii) with
respect to any Competitive Bid Loan, two percent (2.0%) per annum plus the
applicable Competitive Bid Rate, unless otherwise agreed to by Borrower and the
applicable Lender, and (iv) with respect to any Obligation other than a Loan
(including but not limited to Matured LC Obligations), two percent (2.0%) per
annum plus the Base Rate then in effect. The Default Rate shall in no event,
however, exceed the Highest Lawful Rate.
"Disclosure Report" means either a notice given by Borrower under Section
6.1(d) or a certificate given by Borrower's chief financial officer, treasurer,
executive vice president or president under Section 6.1(b)(iii).
"Disclosure Schedule" means Schedule 1 hereto.
"EBITDA" means with respect to any Person, for any period, the sum
(determined without duplication on a Consolidated basis and in accordance with
GAAP) of (a) such Person's net income (or net loss), and (b) such Person's
Consolidated taxes, interest, depreciation, amortization and depletion expenses
taken into account in determining such net income (or net loss) for such period.
"Effective Date" means the date of the first Borrowing hereunder.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender; and
(iii) any other Person approved by Agent and, unless an Event of Default has
occurred and is continuing at the time any assignment is effected in accordance
with Section 10.5; Borrower, such approval not to be unreasonably withheld or
delayed by Borrower and such approval to be deemed given by Borrower if no
objection is received by the assigning Lender and Agent from Borrower within two
Business Days after notice of such proposed assignment has been provided by the
assigning Lender to Borrower; provided, however, that any such Eligible Assignee
shall have capital and surplus in excess of $1,000,000,000 and, in Agent's
reasonable opinion, has experience in lending to companies in the oil and gas
business and provided further that neither Borrower nor an Affiliate of Borrower
(excluding the members of the Board of Directors of Borrower and their
Affiliates) shall qualify as an Eligible Assignee.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes.
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<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Plan" means any employee pension benefit plan subject to Title IV
of ERISA maintained by any Related Person or any Affiliate thereof with respect
to which any Related Person has a fixed or contingent liability.
"Eurodollar Rate" means, for any Committed Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Dow Jones Market Service (formerly
Telerate Access Service) Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period. If for any reason such rate is
not available, the term "Eurodollar Rate" shall mean, for any Committed
Eurodollar Loan for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates (rounded upwards,
if necessary, to the nearest 1/100 of 1%).
"Event of Default" has the meaning given it in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Agreement" means that certain Loan Agreement dated as of May 30,
1997 among Borrower, Agent and the lenders named therein, as amended to the date
hereof.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to Agent (in its
individual capacity) on such day on such transactions as determined by Agent.
"Fiscal Quarter" means a three-month period ending on March 31, June 30,
September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
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"Fixed Rate Payment Date" means, with respect to any Committed Eurodollar
Loan: (i) the day on which the related Interest Period ends and, if such
Eurodollar Interest Period is six months in length, the date specified by Agent
which is approximately three months after such Eurodollar Interest Period begins
and (ii) any day on which past due interest or past due principal is owed
hereunder with respect to such Committed Eurodollar Loan and is unpaid. If the
terms hereof provide that payments of interest or principal with respect to such
Committed Eurodollar Loan shall be deferred from one Fixed Rate Payment Date to
another day, such other day shall also be a Fixed Rate Payment Date.
"Funded Debt" means the aggregate of the following Debt of Borrower and
its Subsidiaries, after elimination of intercompany items and other
Consolidation in accordance with GAAP: (a) Debt (including the Obligations) for
borrowed money, regardless of maturity, (b) Debt constituting an obligation to
pay the deferred purchase price of property, (c) Debt evidenced by a bond,
debenture, note or similar instrument, and (d) Debt which is due and payable at
the time in question, with respect to letters of credit or reimbursement
agreements therefor.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor) and which, in the case of Borrower and its
Consolidated subsidiaries, are applied for all periods after the date hereof in
a manner consistent with the manner in which such principles and practices were
applied to the audited Initial Financial Statements. If any change in any
accounting principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such principle or practice
to continue as a generally accepted accounting principle or practice, all
reports and financial statements required hereunder with respect to Borrower or
with respect to Borrower and its Consolidated subsidiaries may be prepared in
accordance with such change but, if such change is material, all calculations
and determinations to be made hereunder may be made in accordance with such
change only after notice of such change is given to each Lender and Majority
Lenders agree to such change insofar as it affects the accounting of Borrower or
of Borrower and its Consolidated subsidiaries.
"Guarantor" means MIGC, MGR, MGTC, PGT, WGRC, WGRO, WGRT, WGW, and Lance
and any other Person who has guaranteed some or all of the Obligations pursuant
to a guaranty listed on the Security Schedule or any other Person who has
guaranteed some or all of the Obligations and who has been accepted by Agent as
a Guarantor or any Subsidiary of Borrower which now or hereafter executes and
delivers a guaranty to Agent pursuant to Section 7.3.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contracts" means futures contracts, forward contracts, swap, cap
or collar contracts, option contracts, hedging contracts, other derivative
contracts, or similar agreements.
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"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately for
each Lender as appropriate to assure that the Loan Documents are not construed
to obligate any Person to pay interest to any Lender at a rate in excess of the
Highest Lawful Rate applicable to such Lender.
"Initial Financial Statements" means the audited annual Consolidated
financial statements of Borrower dated as of December 31, 1998.
"Interest Period" means, with respect to each particular Committed
Eurodollar Loan, a period of 1, 2, 3 or 6 months, as specified in the Borrowing
Notice or Continuation/Conversion Notice applicable thereto, beginning on and
including the date specified in such Borrowing Notice or Continuation/Conversion
Notice (which must be a Business Day), and ending on but not including the same
day of the month as the day on which it began (e.g., a period beginning on the
third day of one month shall end on but not include the third day of another
month), provided that each Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day
(unless such next succeeding Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end on the immediately
preceding Business Day). No Interest Period may be elected, which would extend
past the date on which the associated Note is due and payable in full.
"Invitation to Bid" means an invitation by Agent to Lender, substantially
in the form of Exhibit K, inviting each Lender to submit Competitive Bids in
response to a Competitive Bid Request.
"Issuance Date" means the first date after the date hereof on which
Borrower has issued at least $150,000,000 of Subordinated Debt.
"Issuance Spread" means, only if the Issuance Date has not occurred on or
before June 30, 1999, one-fourth of one percent (0.25%) during the period from
and after July 1, 1999 until the Issuance Date.
"Issuing Bank" shall mean NationsBank, N.A., in its capacity as the issuer
of LCs hereunder, and its successors in such capacity.
"Lance" means Lance Oil & Gas Company, Inc., a Delaware corporation.
"LC" has the meaning given it in Section 3.1.
"LC Obligations" means, at the time in question, the sum of all Matured LC
Obligations plus the maximum amounts which Issuing Bank might then or thereafter
be called upon to advance under all LCs then outstanding.
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"LC Sublimit" means $25,000,000.
"Lenders" means each signatory hereto (other than Borrower), including
NationsBank, N.A. in its capacity as a lender hereunder rather than as Agent,
and the successors of each as holder of a Note.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such property or assets or which allows him to have such Debt satisfied out
of such property or assets prior to the general creditors of any owner thereof,
including any lien, mortgage, security interest, pledge, deposit, production
payment, rights of a vendor under any title retention or conditional sale
agreement or lease substantially equivalent thereto, tax lien, mechanic's or
materialman's lien, or any other charge or encumbrance for security purposes,
whether arising by law or agreement or otherwise, but excluding any right of
offset which arises without agreement in the ordinary course of business. "Lien"
also means any filed financing statement, any registration of a pledge (such as
with an issuer of uncertificated securities), or any other arrangement or action
which would serve to perfect a Lien described in the preceding sentence,
regardless of whether such financing statement is filed, such registration is
made, or such arrangement or action is undertaken before or after such Lien
exists.
"Loan" means a Committed Loan or a Competitive Bid Loan, as applicable.
"Loans" means all Committed Loans and Competitive Bid Loans.
"Loan Documents" means this Agreement, the Notes, the LCs, the Security
Documents and all other agreements, certificates, documents, instruments and
writings at any time delivered in connection herewith or therewith (excluding
term sheets, commitment letters, correspondence and similar documents used in
the negotiation hereof, except to the extent the same contain information about
Borrower or its Affiliates, properties, business or prospects, and further
excluding all offering memorandums prepared by NationsBanc Montgomery Securities
LLC, for use in connection with the Loans).
"Majority Lenders" shall mean at the time in question two or more Lenders
collectively having at least a 66-2/3% Percentage Share; provided, however, that
in the event the obligation of Lenders to make Committed Loans hereunder has
been terminated or the Obligations have been accelerated at the time in
question, "Majority Lenders" shall mean two or more Lenders whose aggregate
ratable share of the sum of the aggregate unpaid principal balance of all Loans
at the time in question and the aggregate unpaid Matured LC Obligations at such
time is at least 66 2/3%.
"Material Adverse Effect" shall mean a material, adverse effect on the
businesses, properties, prospects, operations, or financial condition of
Borrower on a Consolidated basis or on the right or ability of any Related
Person to consummate the transactions contemplated by the Loan Documents or to
perform its obligations thereunder.
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"Matured LC Obligations" has the meaning given it in Section 3.2.
"MGR" means Mountain Gas Resources, Inc., a Delaware corporation.
"MGTC" means MGTC, Inc., a Wyoming corporation.
"MIGC" means MIGC, Inc., a Delaware corporation.
"NationsBank" means NationsBank, N.A., in its individual capacity.
"Note" means a Committed Note or a Competitive Bid Note, as appropriate.
"Obligations" means all Debt from time to time owing by any of the Related
Persons to Agent or any Lender under or pursuant to any of the Loan Documents.
"Obligation" means any part of the Obligations.
"Percentage Share" means, with respect to any Lender (a) when used in
Sections 2.1 or 2.9, in any Notice of Borrowing or when no Committed Loans are
outstanding hereunder, the percentage set forth opposite such Lender's name on
the Schedule 3 attached hereto, and (b) when used otherwise, the percentage
equal to the percentage obtained by dividing (i) the sum of the unpaid principal
balance of such Lender's Committed Loans at the time in question plus the
Matured LC Obligations which such Lender has funded pursuant to Section 3.2(b)
plus that portion of the amount which Lenders might be called upon to advance
under all LCs then outstanding that such Lender would be obligated to fund under
Section 3.2(b), by (ii) the aggregate unpaid principal balance of all Committed
Loans at such time plus the aggregate amount of LC Obligations outstanding at
such time.
"Person" means an individual, corporation, partnership, limited liability
company, association, joint stock company, trust or trustee thereof, estate or
executor thereof, unincorporated organization or joint venture, court or
governmental unit or any agency or subdivision thereof, or any other legally
recognizable entity.
"PGT" means Pinnacle Gas Treating, Inc., a Texas corporation and
wholly-owned subsidiary of Borrower.
"Preferred Stock" means all issued and outstanding preferred stock of
Borrower, as the same may change from time to time, including but not limited to
(i) the 1,400,000 shares of $2.28 Cumulative Preferred Stock of Borrower and
(ii) the 2,760,000 shares of $2.625 Cumulative Convertible Preferred Stock of
Borrower.
"Prime Rate" means the per annum rate of interest established from time to
time by NationsBank as its prime rate, which rate may not be the lowest rate of
interest charged by NationsBank to its customers.
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"Prohibited Lien" means any Lien not expressly allowed under Section
6.2(b).
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect.
"Related Person" means any of Borrower, each Guarantor, and each other
Subsidiary of Borrower with the exception of Westana, Williston Gas Company, and
Sandia.
"Reserve Requirement" means, on any day with respect to each particular
Committed Eurodollar Loan, the maximum rate at which reserves (including,
without limitation, any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (i) any category of liabilities which
includes deposits by reference to which the Tranche A Fixed Rate or the Tranche
B Fixed Rate is to be determined, or (ii) any category of extensions of credit
or other assets which include Eurodollar Loans. The Tranche A Fixed Rate and the
Tranche B Fixed Rate shall be adjusted automatically on and as of the effective
date of any change in the Reserve Requirement.
"Right" has the meaning given it in the definition of "Shareholder Rights
Plan" set forth in Section 1.1.
"Rights Plan Preferred Stock" shall mean preferred stock of Borrower
issued in connection with the exercise of a Right that: (a) is economically
comparable to Borrower's common stock (including dividend rights), (b) contains
no financial or operating covenants; (c) does not require Borrower to make any
sinking fund or similar mandatory prepayments and is not otherwise subject to
redemption at the option of the holder thereof; and (d) is not convertible or
exchangeable into Debt of Borrower.
"Risk Management Policy" means that certain WGR Commodity Price Risk
Management Policy of Borrower effective as of January 24, 1997, a true and
correct copy of which is attached hereto as Exhibit P.
"Sandia" means Sandia Energy Resources Joint Venture.
"Security Documents" means the instruments listed in the Security Schedule
and all other security agreements, deeds of trust, mortgages, chattel mortgages,
pledges, guaranties, financing statements, continuation statements, extension
agreements and other agreements or instruments now, heretofore, or hereafter
delivered by any Related Person to Agent in connection with this Agreement or
any transaction contemplated hereby to secure or guarantee the payment of any
part of the Obligations or the performance of any Related Person's other duties
and obligations under the Loan Documents.
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"Security Schedule" means Schedule 2 hereto.
"Senior Cap Spread" means with respect to any Fiscal Quarter, one-fourth
of one percent (0.25%) only if the Senior Debt to Capitalization Ratio in effect
pursuant to Section 2.17 as of the immediately preceding Fiscal Quarter is
greater than 0.40 to 1.0.
"Senior Debt" means all of the Obligations and all indebtedness owing by
the Related Persons under the Debt Securities.
"Senior Debt to Capitalization Ratio" means, at the time of determination,
the ratio of (a) the Senior Debt to (b) the sum of the Funded Debt plus
Shareholders' Equity. (Determination will be made in connection with the
delivery of the officer's certificate pursuant to Section 6.1(b)(iii) and may be
made pursuant to Section 2.17 from time to time.)
"Shareholder Rights Plan" means a plan containing terms that are usual and
customary pursuant to which: (i) holders of Borrower's common stock at the time
of adoption of the plan (and any common stock of Borrower issued thereafter)
receive by way of a dividend a right (a "Right") to purchase shares of either
common stock or Rights Plan Preferred Stock of Borrower or shares of common
stock of an acquiring Person, which Rights are not exercisable until a
Triggering Event (as hereinafter defined) occurs: (ii) prior to a Triggering
Event, the Rights may be transferred only as a right attaching to Borrower's
common stock; (iii) the Rights to purchase shares are not exercisable until a
Triggering Event occurs; (iv) the Person or group of Persons that cause the
Triggering Event shall not be permitted to exercise any Rights; and (v) Borrower
may redeem the Rights for nominal consideration under certain conditions which
shall not exceed an aggregate amount of $1,000,000. For purposes of this
definition, the term "Triggering Event" means the acquisition by a Person or
group of Persons of a certain percentage (as set forth in the respective
Shareholder Rights Plan) of the shares of common stock of Borrower or the
announcement by a Person or group of Persons of a tender offer or exchange offer
for such percentage of the common stock of Borrower.
"Shareholders' Equity" means the remainder of (i) Borrower's Consolidated
assets minus (ii) the sum of (x) Borrower's Consolidated liabilities plus (y)
all treasury stock of Borrower and its Subsidiaries plus (z) all intangible
assets of Borrower and its Subsidiaries (including without limitation all
patents, copyrights, licenses, franchises, goodwill, trade names and trade
secrets); provided that the term "Shareholder's Equity" shall include the book
value of long-term gas contracts with producers that Borrower assumes in
connection with acquisitions that are reflected on the books of Borrower as
assets.
"Stock Option Agreements" means, collectively, those certain Agreements to
Provide Loan(s) to enable certain employees to exercise stock options by and
among Borrower and certain of its key employees.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or
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effectively through one or more intermediaries, controlled by or owned fifty-one
percent or more by such Person, 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" of such Person.
"Subordinated Debt" means unsecured Debt issued by Borrower that is
subordinated to the Obligations and the Debt Securities on terms acceptable to
Majority Lenders and guarantees thereof by Borrower's Subsidiaries each of which
is subordinated to the Obligations and the Debt Securities on terms acceptable
to Majority Lenders.
"Subordinated Debt Proceeds" has the meaning given it in Section 2.7.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any Related Person or
of any Affiliate of any Related Person from an ERISA Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA,
or (c) the filing of a notice of intent to terminate any ERISA Plan or the
treatment of any ERISA Plan amendment as a termination under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by the
Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any
other event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
ERISA Plan.
"Tranche A Base Rate Loan" means a Tranche A Loan which does not bear
interest at the Tranche A Fixed Rate.
"Tranche A Commitment" means $100,000,000 as reduced from time to time
pursuant to Section 2.7.
"Tranche A Commitment Period" means the period from and including the
until and including the earlier of the Tranche A Maturity Date or the day on
which the Tranche A Notes become due and payable in full.
"Tranche A Eurodollar Loan" means a Tranche A Loan which is properly
designated to bear interest at the Tranche A Fixed Rate pursuant to Section 2.2
or 2.3.
"Tranche A Eurodollar Spread" means, with respect to each Tranche A
Eurodollar Loan:
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(a) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is less than or equal to 0.35 to 1.0, 0.625%;
(b) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.35 to 1.0 but less than or equal to
0.45 to 1.0, 0.825%;
(c) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.45 to 1.0 but less than or equal to
0.50 to 1.0, 1.025%;
(d) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.50 to 1.0 but less than or equal to
0.55 to 1.0, 1.25%; and
(e) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.55 to 1.0, 1.30%.
"Tranche A Facility Fee Rate" means:
(a) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is less than or equal to 0.35 to 1.0, 0.125% per annum;
(b) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.35 to 1.0 but less than or equal to
0.45 to 1.0, 0.175% per annum;
(c) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.45 to 1.0 but less than or equal to
0.50 to 1.0, 0.225% per annum;
(d) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.50 to 1.0 but less than or equal to
0.55 to 1.0, 0.250% per annum; and
(e) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.55 to 1.0, 0.450% per annum,
"Tranche A Fixed Rate" means, with respect to each particular Tranche A
Eurodollar Loan and the associated Eurodollar Rate and Reserve Requirement, the
rate per annum calculated by Agent (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined on a daily basis pursuant to the following
formula:
Tranche A Fixed Rate =
Eurodollar Rate + Tranche A Spread
- -------------------------------
100.0% - Reserve Requirement
The Tranche A Fixed Rate for any Tranche A Eurodollar Loan shall change whenever
the Tranche A Eurodollar Spread changes, whenever the Senior Cap Spread changes,
whenever the
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Issuance Spread changes, and whenever the Reserve Requirement changes. The
Tranche A Fixed Rate shall in no event, however, exceed the Highest Lawful Rate.
"Tranche A Loan" has the meaning given it Section 2.1(a).
"Tranche A Maturity Date" means the date which is 364 days after the date
hereof.
"Tranche A Note" has the meaning given it in Section 2.1(a).
"Tranche A Spread" means, at the time of determination, the sum of the
Tranche A Eurodollar Spread, the Issuance Spread, if any, and the Senior Cap
Spread, if any, then in effect.
"Tranche B Base Rate Loan" means a Tranche B Loan which does not bear
interest at the Tranche B Fixed Rate.
"Tranche B Commitment" means $200,000,000, as reduced from time to time
pursuant to Section 2.7.
"Tranche B Commitment Period" means the period from and including the
until and including the earlier of the Tranche B Maturity Date or the day on
which the Tranche B Notes become due and payable in full.
"Tranche B Eurodollar Loan" means a Tranche B Loan which is properly
designated to bear interest at the Tranche B Fixed Rate pursuant to Section 2.2
or 2.3.
"Tranche B Eurodollar Spread" means, with respect to each Tranche B
Eurodollar Loan:
(a) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is less than or equal to 0.35 to 1.0, 0.60%;
(b) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.35 to 1.0 but less than or equal to
0.45 to 1.0, 0.80%;
(c) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.45 to 1.0 but less than or equal to
0.50 to 1.0, 1.00%;
(d) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.50 to 1.0 but less than or equal to
0.55 to 1.0, 1.20%; and
(e) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.55 to 1.0, 1.25%.
"Tranche B Facility Fee Rate" means:
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(a) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is less than or equal to 0.35 to 1.0, 0.15% per annum;
(b) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.35 to 1.0 but less than or equal to
0.45 to 1.0, 0.20% per annum;
(c) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.45 to 1.0 but less than or equal to
0.50 to 1.0, 0.25% per annum;
(d) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.50 to 1.0 but less than or equal to
0.55 to 1.0, 0.30% per annum; and
(e) for each period in which the Debt to Capitalization Ratio in effect
pursuant to Section 2.17 is greater than 0.55 to 1.0, 0.50% per annum.
"Tranche B Fixed Rate" means, with respect to each particular Tranche B
Eurodollar Loan and the associated Eurodollar Rate and Reserve Requirement, the
rate per annum calculated by Agent (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined on a daily basis pursuant to the following
formula:
Tranche B Fixed Rate =
Eurodollar Rate + Tranche B Spread
- ------------------------------
100.0% - Reserve Requirement
The Tranche B Fixed Rate for any Tranche B Eurodollar Loan shall change whenever
the Tranche B Eurodollar Spread changes, whenever the Senior Cap Spread changes,
whenever the Issuance Spread changes, and whenever the Reserve Requirement
changes. The Tranche B Fixed Rate shall in no event, however, exceed the Highest
Lawful Rate.
"Tranche B Loan" has the meaning given it Section 2.1(b).
"Tranche B Maturity Date" means March 31, 2004.
"Tranche B Note" has the meaning given it in Section 2.1(b).
"Tranche B Spread" means, at the time of determination, the sum of the
Tranche B Eurodollar Spread, the Issuance Spread, if any, and the Senior Cap
Spread, if any, then in effect.
"Type" means, with respect to any Committed Loan, the characterization of
such Committed Loan as either a Committed Base Rate Loan or Committed Eurodollar
Loan.
"Voting Shares" means at the time in question, the sum of (a) all
outstanding shares of common stock of Borrower, (b) all other securities issued
by Borrower which entitle the holder
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thereof to voting rights with respect to Borrower at such time (as used in this
definition, the shares described in the immediately preceding clauses (a) and
(b) are collectively called ("Shares")), and (c) the amount of additional Shares
(not including any share or security included in the preceding clauses (a) and
(b)) which may be obtained by converting outstanding shares of capital stock of
Borrower or rights under other outstanding instruments into Shares.
"Westana" means the general partnership formed between WGRO and Panhandle
Gathering Company, a wholly-owned subsidiary of Panhandle Eastern Pipeline
Company.
"WGRC" means WGR Canada, Inc., a New Brunswick corporation and
wholly-owned subsidiary of Borrower.
"WGRO" means Western Gas Resources - Oklahoma, Inc., a Delaware
corporation and wholly-owned subsidiary of Borrower.
"WGRS" means Western Gas Resources Storage, Inc., a Texas corporation and
wholly-owned subsidiary of Borrower.
"WGRT" means Western Gas Resources Texas, Inc., a Texas corporation and
wholly-owned subsidiary of Borrower.
"WGW" means Western Gas Wyoming, L.L.C., a Wyoming limited liability
company.
"Williston Gas Company" means the joint venture formed pursuant to that
certain Amended and Restated Joint Venture Agreement dated August 1, 1990
between Borrower (as successor in interest) and Enron Gas Processing, as amended
to the date hereof.
"WPS" means Western Power Services, Inc., a Delaware corporation and
wholly-owned subsidiary of Borrower.
Section I.2. Exhibits and Schedules; Additional Definitions. All Exhibits
and Schedules attached to this Agreement are a part hereof for all purposes.
Reference is hereby made to the Security Schedule for the meaning of certain
terms defined therein and used but not defined herein, which definitions are
incorporated herein by reference.
Section I.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section I.4. References and Titles. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules,
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articles, sections, subsections and other subdivisions of this Agreement unless
expressly provided otherwise. Titles appearing at the beginning of any
subdivisions are for convenience only and do not constitute any part of such
subdivisions and shall be disregarded in construing the language contained in
such subdivisions. The words "this Agreement", "this instrument", "herein",
"hereof", "hereby", "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited. The phrases "this section" and "this subsection" and similar phrases
refer only to the sections or subsections hereof in which such phrases occur.
The word "or" is not exclusive, and the word "including" (in its various forms)
means "including without limitation". Pronouns in masculine, feminine and neuter
genders shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise requires.
Section I.5. Calculations and Determinations. All calculations under the
Loan Documents with respect to the Federal Funds Rate, Fixed Rate Portions or
the interest chargeable with respect thereto shall be made on the basis of
actual days elapsed (including the first day but excluding the last) and a year
of 360 days. All calculations under the Loan Documents which are unrelated to
the Federal Funds Rate, Committed Eurodollar Loans and the interest chargeable
with respect thereto shall be made on the basis of actual days elapsed
(including the first day but excluding the last) and a year of 365 or 366 days,
as appropriate. Each determination by Agent or a Lender as to any Eurodollar
Rate, Fixed Rate, Business Day, Interest Period, Reserve Requirement or similar
matters shall be conclusive and binding for all purposes, provided that such
determinations and allocations are made on a reasonable basis. Unless otherwise
expressly provided herein or unless Majority Lenders otherwise consent all
financial statements and reports furnished to Agent or any Lender hereunder
shall be prepared and all financial computations and determinations pursuant
hereto shall be made in accordance with GAAP (except for financial projections).
ARTICLE II. - The Loans
II.1. Committed Loans.
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(a) Tranche A Loans. Subject to the terms and conditions hereof, Lenders
agree to make loans to Borrower (herein called such Lender's "Tranche A Loans")
from time to time during the Tranche A Commitment Period so long as (i) all
Lenders are requested to make Tranche A Committed Loans of the same Type in
accordance with their respective Percentage Shares and as part of the same
Borrowing, (ii) the aggregate amount of all Tranche A Committed Loans
outstanding does not exceed the Tranche A Commitment at any time and (iii) the
aggregate amount of all Loans (including Committed Loans and Competitive Bid
Loans) and all LC Obligations does not exceed the Commitment. The aggregate
amount of all Tranche A Loans in any Borrowing must be greater than or equal to
$250,000 and must be an integral multiple of $250,000 for requests of $1,000,000
or less and an integral multiple of $100,000 for requests over $1,000,000 or
must equal the unadvanced portion of the Tranche A Commitment. The obligation of
Borrower to repay to each Lender the aggregate amount of all Tranche A Loans
made by such Lender, together with interest accruing in connection therewith,
shall be evidenced by a single promissory note made by Borrower payable to the
order of such Lender (herein called such Lender's "Tranche A Note") in the form
of Exhibit A with appropriate insertions. The amount of principal owing on any
Lender's Tranche A Note at any given time shall be the aggregate amount of all
Tranche A Loans theretofore by such Lender made minus all payments of principal
theretofore received by such Lender on its Tranche A Note. Principal paid or
prepaid on the Tranche A Notes may, subject to the terms and conditions hereof,
be reborrowed during the Tranche A Commitment Period. Interest on each Tranche A
Note shall accrue and be payable as provided herein and therein.
(b) Tranche B Loans. Subject to the terms and conditions hereof, Lenders
agree to make loans to Borrower (herein called such Lender's "Tranche B Loans")
from time to time during the Tranche B Commitment Period so long as (i) all
Lenders are requested to make Tranche B Committed Loans of the same Type in
accordance with their respective Percentage Shares and as part of the same
Borrowing, (ii) the sum of (a) the aggregate amount of all Tranche B Loans
outstanding plus (b) the LC Obligations outstanding does not exceed the Tranche
B Commitment at any time and (iii) the aggregate amount of all Loans (including
Committed Loans and Competitive Bid Loans) and all LC Obligations does not
exceed the Commitment. The aggregate amount of all Tranche B Loans in any
Borrowing must be greater than or equal to $250,000 and must be an integral
multiple of $250,000 for requests of $1,000,000 or less and an integral multiple
of $100,000 for requests over $1,000,000 or must equal the unadvanced portion of
the Tranche B Commitment. In addition to the foregoing, upon the making of each
payment by the Issuing Bank pursuant to any LC, Borrower shall be deemed to have
requested each Lender to, and such Lender shall, make a Tranche B Loan in the
amount of such Lender's Percentage Share of Borrower's consequent reimbursement
obligation and apply the proceeds thereof to the payment of such reimbursement
obligation. When any Matured LC Obligations is repaid with proceeds of a
Borrowing, such Matured LC Obligations so repaid shall be extinguished and such
Borrowing shall be governed by the terms of this Agreement applicable to all
other Borrowings. Any such Borrowings are Borrowings of Committed Base Rate
Loans unless otherwise designated by Borrower in compliance with the notice
requirements set forth in Section 2.2. The obligation of Borrower to repay to
each Lender the aggregate amount of all Tranche B Loans made by such Lender,
together with interest accruing in connection therewith,
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shall be evidenced by a single promissory note made by Borrower payable to the
order of such Lender (herein called such Lender's "Tranche B Note") in the form
of Exhibit B with appropriate insertions. The amount of principal owing on any
Lender's Tranche B Note at any given time shall be the aggregate amount of all
Tranche B Loans theretofore by such Lender made minus all payments of principal
theretofore received by such Lender on its Tranche B Note. Principal paid or
prepaid on the Tranche B Notes may, subject to the terms and conditions hereof,
be reborrowed during the Tranche B Commitment Period. Interest on each Tranche B
Note shall accrue and be payable as provided herein and therein.
Section II.2. Requests for New Loans. Borrower must give to Agent a
Borrowing Notice for any requested Borrowing of new Committed Loans to be
advanced by Lenders (i) by telephone (which telephonic notice shall be confirmed
in writing by Agent) or (ii) if Agent so requests, in writing. Each Borrowing
Notice must:
(a specify (i) the aggregate amount of any such Borrowing of new Committed
Base Rate Loans and the date on which such Committed Base Rate Loans are to be
advanced, or (ii) the aggregate amount of any such Borrowing of new Committed
Eurodollar Loans, the date on which such Committed Eurodollar Loans are to be
advanced (which shall be the first day of the Interest Period which is to apply
thereto), and the length of the applicable Interest Period, or (iii) if such new
Committed Eurodollar Loans are to be combined with existing Committed Loans in a
new Borrowing, the foregoing information with respect to such combined
Borrowing; and
(b be received by Agent not later than 10:00 a.m., Dallas, Texas time, on
(i) the day on which any such Committed Base Rate Loans are to be made, or (ii)
if Committed Eurodollar Loans are to be made, the third Business Day preceding
the day on which such Committed Eurodollar Loans are to be made.
Each telephonic Borrowing Notice shall be deemed a representation, warranty,
acknowledgment and agreement by Borrower as to the matters which are required to
be set out in a written Borrowing Notice. Upon receipt of any Borrowing Notice,
Agent shall give each Lender prompt notice of the terms thereof. If all
conditions precedent to such new Committed Loans have been met, each Lender will
on the date requested promptly remit to Agent at Agent's office in Dallas, Texas
the amount of such Lender's new Committed Loan in immediately available funds,
and upon receipt of such funds, unless to its actual knowledge any conditions
precedent to such Committed Loans have been neither met nor waived as provided
herein, Agent shall promptly make such Committed Loans available to Borrower.
Unless Agent shall have received prompt notice from a Lender that such Lender
will not make available to Agent such Lender's new Committed Loan, Agent may in
its discretion assume that such Lender has made such Committed Loan available to
Agent in accordance with this section and Agent may if it chooses, in reliance
upon such assumption, make such Committed Loan available to Borrower. If and to
the extent such Lender shall not so make its new Committed Loan available to
Agent, such Lender and Borrower severally agree to pay or repay to Agent within
three days after demand the amount of such Loan together with interest thereon,
for each day from the date such amount was
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made available to Borrower until the date such amount is paid or repaid to
Agent, with interest at (i) the Federal Funds Rate, if such Lender is making
such payment and (ii) the interest rate applicable at the time to the other new
Committed Loans made on such date, if Borrower is making such repayment. If
neither such Lender nor Borrower pay or repay to Agent such amount within such
three-day period, Agent shall in addition to such amount be entitled to recover
from such Lender and from Borrower, on demand, interest thereon at the Default
Rate, calculated from the date such amount was made available to Borrower. The
failure of any Lender to make any new Committed Loan to be made by it hereunder
shall not relieve any other Lender of its obligation hereunder, if any, to make
its new Committed Loan, but no Lender shall be responsible for the failure of
any other Lender to make any new Committed Loan to be made by such other Lender.
Section II.3. Continuations and Conversions of Existing Committed Loans.
Borrower may make the following elections with respect to Committed Loans
already outstanding: to Convert Committed Base Rate Loans to Committed
Eurodollar Loans, to Convert Committed Eurodollar Loans to Committed Base Rate
Loans on the last day of the Interest Period applicable thereto, or to continue
Committed Eurodollar Loans beyond the expiration of such Interest Period by
designating a new Interest Period to take effect at the time of such expiration.
In making such elections, Borrower may combine existing Committed Loans made
pursuant to separate Borrowings into one new Borrowing or divide existing
Committed Loans made pursuant to one Borrowing into separate new Borrowings or
combine existing Committed Loans with new Committed Loans. To make any such
election, Borrower must give to Agent a Continuation/Conversion Notice for any
such conversion or continuation of existing Committed Loans, with a separate
notice given for each new Borrowing (i) by telephone (which telephonic notice
shall be confirmed in writing by Agent) or (ii) if Agent so requests, in
writing. Each such Continuation/Conversion Notice must:
(a specify the existing Committed Loans which are to be Continued or
Converted, and if such existing Committed Loans are to be combined with new
Committed Loans, specify such new Committed Loans;
(b specify (i) the aggregate amount of any Borrowing of Committed Base
Rate Loans into which such existing Committed Loans are to be continued or
converted and the date on which such Continuation or Conversion is to occur, or
(ii) the aggregate amount of any Borrowing of Committed Eurodollar Loans into
which such existing Committed Loans are to be continued, converted or combined,
the date on which such Continuation, Conversion or combination is to occur
(which shall be the first day of the Interest Period which is to apply to such
Committed Eurodollar Loans), and the length of the applicable Interest Period;
and
(c be received by Agent not later than 10:00 a.m., Dallas, Texas time, on
(i) the day on which any such continuation or conversion to Committed Base Rate
Loans is to occur, or (ii) the third Business Day preceding the day on which any
such Continuation or Conversion to Committed Eurodollar Loans is to occur.
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Each telephonic Continuation/Conversion Notice shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in the written Continuation/Conversion Notice. Upon
receipt of any Continuation/Conversion Notice, Agent shall give each Lender
prompt notice of the terms thereof. Each Continuation/Conversion Notice shall be
irrevocable and binding on Borrower. During the continuance of any Default,
Borrower may not make any election to convert existing Committed Loans into
Committed Eurodollar Loans or continue existing Committed Loans as Committed
Eurodollar Loans. If (due to the existence of a Default or for any other reason)
Borrower fails to timely and properly give any notice of continuation or
conversion with respect to a Borrowing of existing Committed Eurodollar Loans at
least three days prior to the end of the Interest Period applicable thereto,
such Committed Eurodollar Loans shall automatically be converted into Committed
Base Rate Loans at the end of such Interest Period. No new funds shall be repaid
by Borrower or advanced by any Lender in connection with any continuation or
conversion of existing Loans pursuant to this section, and no such continuation
or conversion shall be deemed to be a new advance of funds for any purpose; such
continuations and conversions merely constitute a change in the interest rate
applicable to already outstanding Committed Loans.
Section II.4. Competitive Bid Loans. (a) Borrower may request that each
Lender submit Competitive Bids (on a several basis) to Borrower on any Business
Day during the Tranche B Commitment Period, provided that all Lenders are
requested to make a Competitive Bid on the same basis at the same time. In order
to request Competitive Bids, Borrower shall deliver by hand or telecopy to Agent
a Competitive Bid Request, to be received by Agent not later than 9:00 a.m.,
Dallas time one Business Day before the date specified for a proposed
Competitive Bid Loan. A Competitive Bid Request that does not conform
substantially to the format of Exhibit J may be rejected in Agent's sole
discretion, and Agent shall promptly notify Borrower of such rejection by
telecopier. After receiving an acceptable Competitive Bid Request, Agent shall
no later than 12:00 noon, Dallas time on the date such Competitive Bid Request
is received by Agent, by telecopier deliver to Lenders an Invitation to Bid
substantially in the form of Exhibit K with respect thereto.
(b Each Lender may, in its sole discretion, make one or more Competitive
Bids to Agent responsive to each Competitive Bid Request given by Borrower. Each
Competitive Bid by a Lender must be received by Agent by telecopier not later
than 9:00 a.m., Dallas time on the date specified for a proposed Competitive Bid
Loan. Multiple bids may be accepted by Agent. Competitive Bids that do not
conform substantially to the format of Exhibit L may be rejected by Agent after
conferring with, and upon the instruction of, Borrower, and Agent shall notify
the bidding Lender of such rejection as soon as practicable. If any Lender shall
elect not to make a Competitive Bid, such Lender shall so notify Agent by
telecopier not later than 9:00 a.m., Dallas time, on the date specified for a
Competitive Bid Loan; provided, however, that failure by any Lender to give such
notice shall not cause such Lender to be obligated to make any Competitive Bid
Loan. A Competitive Bid submitted by a Lender shall be irrevocable.
(c Promptly, and in no event later than 9:30 a.m., Dallas time, on the
date specified for a proposed Competitive Bid Loan, Agent shall notify Borrower
by telecopier of all the
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Competitive Bids made, the Competitive Bid Rate and the principal amount of each
Competitive Bid Loan in respect of which a Competitive Bid was made, and the
identity of each Lender that made each Competitive Bid. Agent shall send a copy
of all Competitive Bids to Borrower for its records as soon as practicable after
completion of the bidding process.
(d Borrower may, subject only to the provisions hereof, accept or reject
any Competitive Bid. Borrower shall notify Agent by telecopier pursuant to a
Competitive Bid Accept/Reject Letter whether and to what extent Borrower has
decided to accept or reject any or all of the Competitive Bids, not later than
10:30 a.m., Dallas time, on the date specified for a proposed Competitive Bid
Loan; provided, however, that:
(i) the failure by Borrower to accept or reject any Competitive Bid
within the time period specified herein shall be deemed to be a rejection
of such Competitive Bid,
(ii) the aggregate amount of the Competitive Bids accepted by
Borrower shall not exceed the principal amount specified in the
Competitive Bid Request,
(iii) the aggregate amount of all Lenders' Competitive Bid Loans
outstanding at any time shall not exceed $100,000,000 and the aggregate
amount of all Loans (including all Competitive Bid Loans and all Committed
Loans) and all LC Obligations shall not exceed the Commitment,
(iv) if Borrower shall accept a Competitive Bid or Competitive Bids
made at a particular Competitive Bid Rate, but the amount of such
Competitive Bid or Competitive Bids shall cause the total amount of
Competitive Bids to be accepted by Borrower to exceed the amount specified
in the Competitive Bid Request, then Borrower shall accept a portion of
such Competitive Bid or Competitive Bids in an amount equal to the amount
specified in the Competitive Bid Request less the amount of all other
Competitive Bids accepted with respect to such Competitive Bid Request,
which acceptance, in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount
of each such Competitive Bid at such Competitive Bid Rate, and
(v) no Competitive Bid shall be accepted for a Competitive Bid Loan
unless such Competitive Bid Loan is in a minimum principal amount of
$1,000,000 and an integral multiple of $500,000 and is part of a
Competitive Bid Loan in a minimum principal amount of $5,000,000; provided
further, however, that if a Competitive Bid Loan must be in an amount less
than $1,000,000 because of the provisions of clause (v) above, such
Competitive Bid Loan may be for a minimum of $500,000 or any integral
multiple thereof, and in calculating the pro rata allocation of
acceptances or portions of multiple bids at a particular Competitive Bid
Rate pursuant to clause (v), the amounts shall be rounded to integral
multiples of $500,000 in a manner which shall be in the sole and absolute
discretion of Borrower.
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(e Promptly on each date Borrower accepts a Competitive Bid, Agent shall
notify each Lender whether or not its Competitive Bid has been accepted (and if
so, in what amount and at what Competitive Bid Rate) by telecopier transmission
sent by Agent, and each successful bidder will thereupon become bound, subject
to the other applicable conditions hereof, to make the Competitive Bid Loan in
respect of which its Competitive Bid has been accepted. After completing the
notifications referred to in the immediately preceding sentence, Agent shall
notify each Lender of the aggregate principal amount of all Competitive Bids
accepted. Each Lender which is to make a Competitive Bid Loan shall, before
11:00 a.m., Dallas time, on the borrowing date specified in the Competitive Bid
Request applicable thereto, make available to Agent in immediately available
funds the amount of each Competitive Bid Loan to be made by such Lender, and
Agent shall promptly deposit such funds to an account designated by Borrower. As
soon as practicable thereafter, Agent shall notify each Lender of the aggregate
amount of Competitive Bid Loans advanced, the respective Competitive Bid
Interest Periods thereof and Competitive Bid Rate applicable thereto.
(f The obligation of Borrower to repay to each Lender the aggregate amount
of all Competitive Bid Loans made by such Lender, together with interest
accruing in connection therewith, shall be evidenced by promissory notes
(respectively, such Lender's "Competitive Bid Note") made by Borrower payable to
the order of such Lender in the form of Exhibit N, with appropriate insertions.
The amount of principal owing on any Lender's Competitive Bid Note at any given
time shall be the aggregate amount of all Competitive Bid Loans theretofore made
by such Lender thereunder minus all payments of principal theretofore received
by such Lender thereon. Interest on each Competitive Bid Note shall accrue and
be due and payable as provided herein and therein. Borrower shall repay on the
final day of the Competitive Bid Interest Period of each Competitive Bid Loan
(such date being that specified by Borrower for repayment of such Competitive
Bid Loan in the related Competitive Bid Request and such date being no later
than six months after the date of the Competitive Bid Loan) the then unpaid
principal amount of such Competitive Bid Loan. Subject to Section 2.6 and the
payment of amounts described in Section 2.14, Borrower shall have the right to
prepay any principal amount of any Competitive Bid Loan.
(g) No Competitive Bid Loan shall be made within five Business Days after
the date of any other Competitive Bid Loan, unless Borrower and Agent shall
mutually agree otherwise. If Agent shall at any time elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such bid directly
to Borrower requesting such Competitive Bid one quarter of an hour earlier than
the latest time at which the other Lenders are required to submit their bids to
Agent.
Section II.5. Use of Proceeds. Borrower shall use all funds from the
Borrowings under the Loans (i) first, to repay in full all existing outstanding
indebtedness owing under the Existing Agreement, and (ii) thereafter, to make
capital expenditures and provide working capital for its operations, to meet its
reimbursement obligations under LCs, and for other general business purposes. In
no event shall any LC or any Borrowing be used directly or indirectly for the
purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or
carrying any "margin stock" or any "margin securities" (as such terms are
defined respectively in Regulation U promulgated by the Board of Governors of
the Federal Reserve System) or to extend credit to
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others directly or indirectly for the purpose of purchasing or carrying any such
margin stock or margin securities. Borrower represents and warrants to Lenders
that it is not engaged principally, or as one of its important activities, in
the business of extending credit to others for the purpose of purchasing or
carrying such margin stock or margin securities.
Section II.6. Optional Prepayments.
(a) Subject to the provisions of this Section 2.6, Borrower may from time
to time prepay the Notes, including Competitive Bid Notes, in whole or in part,
so long as (A) Borrower so notifies Agent by 10:00 a.m. Dallas, Texas time on
the date such prepayment is to be made, which date must be a Business Day, and
(B) the aggregate amount of all partial prepayments of principal concurrently
paid on any category of Notes is greater than or equal to $250,000 and is an
integral multiple of $250,000 for prepayments of $1,000,000 or less and an
integral multiple of $100,000 for prepayments over $1,000,000, provided that any
prepayment of any Committed Eurodollar Loan or Competitive Bid Loan shall be
accompanied by all reimbursement amounts payable pursuant to Section 2.14.
Unless otherwise designated by Borrower, any prepayment of Competitive Bid Loans
shall be applied to the outstanding Competitive Bid Loans in order of shortest
maturity. Agent shall give each Lender prompt notice of any notice of prepayment
it receives from Borrower.
(b) Each prepayment of principal under this Section 2.6, shall be
accompanied by all interest accrued at the interest rate applicable to the
principal amount being prepaid through the date of such prepayment and unpaid on
such Notes. Each principal payment of a Committed Loan made under this Section
2.6 shall be apportioned and applied to each Lender's Committed Note in
accordance with such Lender's Percentage Share of such payment. Any principal or
interest prepaid pursuant to this Section 2.6 shall be in addition to, and not
in lieu of, all payments otherwise required to be paid under the Loan Documents
at the time of such prepayment.
Section II.7. Mandatory Prepayments.
(a) Tranche A Loans. If the aggregate unpaid principal balance of the
Tranche A Loans ever exceeds the Tranche A Commitment, Borrower shall,
immediately after Agent on behalf of Majority Lenders gives written notice of
such fact to Borrower, make a prepayment to Agent for distribution to Lenders in
the amount of such excess on the Tranche A Loans in accordance with Lenders'
Percentage Shares.
(b) Tranche B Loans. If the sum of (i) the aggregate unpaid principal
balance of the Tranche B Loans and (ii) the LC Obligations outstanding ever
exceeds the Tranche B Commitment, Borrower shall, immediately after Agent on
behalf of Majority Lenders gives written notice of such fact to Borrower, make a
prepayment to Agent for distribution to Lenders in the amount of such excess on
the Tranche B Loans in accordance with Lenders' Percentage Shares.
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(c) Proceeds of Asset Sales and Related Reduction of Commitment. Until the
Issuance Date:
(i) Ninety percent (90%) of the Asset Sale Proceeds arising from
each Asset Sale shall be delivered by Borrower, first, to NationsBank to
pay the outstanding principal balance of, and accrued and unpaid interest
on, the Debt outstanding under the Bridge Facility until such Debt is
reduced to zero and, second, to Agent to pay the unpaid principal balance
of, and accrued and unpaid interest on, the Tranche A Loans until the
aggregate unpaid principal balance of the Tranche A Loans does not exceed
the Tranche A Commitment and to pay the Tranche B Loans until the sum of
the aggregate unpaid principal balance of the Tranche B Loans and the LC
Obligations does not exceed the Tranche B Commitment, in each case after
the reductions described in the immediately following subsection (ii);
(ii) In connection with each Asset Sale for which all Asset Sale
Proceeds are not applied to the Bridge Facility, each of the Tranche A
Commitment and the Tranche B Commitment shall be reduced, pro rata, so as
to represent the same proportion of the Commitment after such reduction as
it represented before such reduction, by an amount equal to fifty percent
(50%) of the Asset Sale Proceeds arising from such Asset Sale which are
not applied to the Bridge Facility, such reduction to be effective on the
date of receipt thereof by any Related Person.
(d) Proceeds of Issuance of Subordinated Debt and Related Reduction of
Commitment. The proceeds from the issuance of Subordinated Debt, net of
reasonable out-of-pocket costs of issuance incurred by Borrower ("Subordinated
Debt Proceeds") shall be applied as follows:
(i) First, the Subordinated Debt Proceeds shall be delivered by
Borrower to NationsBank to pay the outstanding principal balance of, and
accrued and unpaid interest on, the Debt outstanding under the Bridge
Facility until such Debt is reduced to zero.
(ii) Second, until the aggregate amount of the Tranche A Commitment
and the Tranche B Commitment is equal to $250,000,000:
(A) Each of the Tranche A Commitment and the Tranche B
Commitment shall be reduced, pro rata, so as to represent the same
proportion of the Commitment after such reduction as it represented
before such reduction, by an amount equal to fifty percent (50%) of
the Subordinated Debt Proceeds remaining after the Debt under the
Bridge Facility has been paid in full, such reduction to be
effective on the date of receipt thereof by any Related Person; and
(B) Borrower shall deliver to Agent Subordinated Debt Proceeds
in the amount necessary to pay the unpaid principal balance of, and
accrued and unpaid interest on, the Tranche A Loans until the
aggregate unpaid principal balance of
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the Tranche A Loans does not exceed the Tranche A Commitment and to
pay the Tranche B Loans until the sum of the aggregate unpaid
principal balance of the Tranche B Loans and the LC Obligations does
not exceed the Tranche B Commitment, in each case after the
reductions described in subsection immediately above.
(e) Reduction in Commitment on September 30,1999. If the Commitment has
not been reduced to $250,000,000 pursuant to Section 2.7(c) or Section 2.7(d) by
September 30, 1999, on such date the Commitment shall be reduced automatically
to $250,000,000, and each of the Tranche A Commitment and the Tranche B
Commitment shall be reduced automatically on such date, pro rata, so as to
represent the same proportion of the Commitment after such reduction as it
represented before such reduction, by the amount necessary to reduce the
aggregate amount of the Commitment to $250,000,000.
(f) Prepayment Procedures. Each prepayment of principal on a Committed
Note made under this Section 2.7 shall be accompanied by all interest then
accrued at the interest rate applicable to the principal amount being prepaid
and unpaid on such Committed Note; provided that any prepayment under a
Committed Note must be accompanied by any amounts due under Section 2.14 as a
result of such prepayments.
Section II.8. Payments to Lenders. Borrower will make each payment which
it owes under the Loan Documents (whether under any of Sections 2.6, 2.7, 3.2,
or otherwise) to Agent for the account of Lender to whom such payment is owed
not later than noon, Dallas time, in lawful money of the United States of
America and in immediately available funds. Any payment received by Agent after
such time will be deemed to have been made on the next following Business Day.
Should any such payment become due and payable on a day other than a Business
Day, the maturity of such payment shall be extended to the next succeeding
Business Day, and, in the case of a payment of principal or past due interest,
interest shall accrue and be payable thereon for the period of such extension as
provided in the Loan Document under which such payment is due. Each payment
under a Loan Document shall be payable at the place provided therein and, if no
specific place of payment is provided, shall be payable at the place of payment
of the Notes. When Agent collects or receives money on account of the
Obligations, Agent shall distribute all money so collected or received, and
Agent and Lenders shall apply all such money so distributed, as follows:
(a) first, for the payment of all Obligations other than Swap Obligations
(as defined below) which are then due, and if such money is insufficient to pay
all such Obligations, first to any reimbursements due Agent or any Lender under
Section 6.1(i) or 9.11 and then to the partial payment of all other Obligations
then due in proportion to the amounts thereof, or as Lenders shall otherwise
agree;
(b) then for the prepayment of amounts owing under the Loan Documents
(other than Swap Obligations and principal on the Notes) if so specified by
Borrower;
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(c) then for the prepayment of principal on the Notes, together with
accrued and unpaid interest on the principal so prepaid; and
(d) last, for the payment or prepayment of any other Obligations.
All payments applied to principal or interest on any Note shall be applied first
to any interest then due and payable, then to principal then due and payable,
and last to any prepayment of principal and interest in compliance with Sections
2.6 and 2.7. All distributions of amounts described in any of subsections (b),
(c) or (d) above shall be made by Agent pro rata to Agent and each Lender then
owed Obligations described in such subsection in proportion to all amounts owed
to all Lenders which are described in such subsection. As used in this Section
2.8, the term "Swap Obligations" means the Obligations described in clause (ii)
of Section 2(a) of each Guaranty described in the Security Schedule.
Section II.9. Facility Fees. In consideration of Lenders' commitment to
enter into this Agreement and to advance funds to Borrower hereunder, Borrower
will pay to Agent, for pro rata distribution to each Lender in accordance with
its Percentage Share, a facility fee for Tranche A Commitment determined on a
daily basis by applying the Tranche A Facility Fee Rate to the Tranche A
Commitment and a facility fee for the Tranche B Commitment determined on a daily
basis by applying the Tranche B Facility Fee Rate to the Tranche B Commitment.
Promptly at the end of each Fiscal Quarter Agent shall calculate the facility
fees then due and shall notify Borrower thereof. Borrower shall pay such
facility fee to Agent within five Business Days after receiving such notice.
Section II.10. Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law, rule,
or regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such governmental authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Committed Eurodollar
Loans or Competitive Bid Loans, its Notes, or its obligation to make
Committed Eurodollar Loans, or change the basis of taxation of any amounts
payable to such Lender (or its Applicable Lending Office) under this
Agreement or its Notes in respect of any Committed Eurodollar Loans or
Competitive Bid Loans (other than taxes imposed on the overall net income
of such Lender by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, or similar requirement (other than the Reserve
Requirement utilized in the
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determination of the Fixed Rate) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or commitments
of, such Lender (or its Applicable Lending Office), including the
Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending Office)
or the London interbank market any other condition affecting this
Agreement or its Notes or any of such extensions of credit or liabilities
or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Committed Eurodollar Loans or Competitive Bid Loans or to reduce
any sum received or receivable by such Lender (or its Applicable Lending Office)
under this Agreement or its Notes with respect to any Committed Eurodollar Loans
or Competitive Bid Loans, then Borrower shall pay to such Lender on demand such
amount or amounts as will compensate such Lender for such increased cost or
reduction. If any Lender requests compensation by Borrower under this Section
2.10(a), Borrower may, by notice to such Lender (with a copy to Agent), suspend
the obligation of such Lender to make or Continue Loans of the Type with respect
to which such compensation is requested, or to Convert Loans of any other Type
into Loans of such Type, until the event or condition giving rise to such
request ceases to be in effect (in which case the provisions of Section 2.13
shall be applicable); provided that such suspension shall not affect the right
of such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify Borrower and Agent of any event of
which it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a different
Applicable Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such Lender,
be otherwise disadvantageous to it. Any Lender claiming compensation under this
Section shall furnish to Borrower and Agent a statement setting forth the
additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
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Section II.11. Limitation on Types of Loans. If on or prior to the first
day of any Interest Period for any Committed Eurodollar Loan:
(a) Agent determines (which determination shall be conclusive) that by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such Interest
Period; or
(b) the Majority Lenders determine (which determination shall be
conclusive) and notify Agent that the Fixed Rate will not adequately and fairly
reflect the cost to Lenders of funding Committed Eurodollar Loans for such
Interest Period;
then Agent shall give Borrower prompt notice thereof specifying the relevant
Type of Loans and the relevant amounts or periods, and so long as such condition
remains in effect, Lenders shall be under no obligation to make additional Loans
of such Type, Continue Loans of such Type, or to Convert Loans of any other Type
into Loans of such Type and Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Loans of the affected Type,
either prepay such Loans or Convert such Loans into another Type of Loan in
accordance with the terms of this Agreement.
Section II.12. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Committed Eurodollar Loans
hereunder, then such Lender shall promptly notify Borrower thereof and such
Lender's obligation to make or Continue Eurodollar Loans and to Convert other
Types of Loans into Eurodollar Loans shall be suspended until such time as such
Lender may again make, maintain, and fund Eurodollar Loans (in which case the
provisions of Section 2.13 shall be applicable).
Section II.13. Treatment of Affected Loans. If the obligation of any
Lender to make a particular Type of Committed Eurodollar Loan or to Continue, or
to Convert Loans of any other Type into, Loans of a particular Type shall be
suspended pursuant to Section 2.10 or 2.12 hereof (Loans of such Type being
herein called "Affected Loans" and such Type being herein called the "Affected
Type"), such Lender's Affected Loans shall be automatically Converted into Base
Rate Loans on the last day(s) of the then current Interest Period(s) for
Affected Loans (or, in the case of a Conversion required by Section 2.12 hereof,
on such earlier date as such Lender may specify to Borrower with a copy to
Agent) and, unless and until such Lender gives notice as provided below that the
circumstances specified in Section 2.10 or 2.12 hereof that gave rise to such
Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Lender's Affected Loans shall be applied instead to its Base
Rate Loans; and
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(b) all Loans that would otherwise be made or Continued by such Lender as
Loans of the Affected Type shall be made or Continued instead as Base Rate
Loans, and all Loans of such Lender that would otherwise be Converted into Loans
of the Affected Type shall be Converted instead into (or shall remain as) Base
Rate Loans.
If such Lender gives notice to Borrower (with a copy to Agent) that the
circumstances specified in Section 2.10 or 2.12 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 2.13 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Commitments.
Section II.14. Compensation. Upon the request of any Lender, Borrower
shall pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Committed Eurodollar Loan
for any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 8.1) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by Borrower for any reason (including, without limitation,
the failure of any condition precedent specified in Article IV to be satisfied)
to borrow, Convert, Continue, or prepay a Committed Eurodollar Loan on the date
for such borrowing, Conversion, Continuation, or prepayment specified in the
relevant notice of borrowing, prepayment, Continuation, or Conversion under this
Agreement.
Section II.15. Taxes. (a) Any and all payments by Borrower to or for the
account of any Lender or Agent hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Lender and
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender (or its Applicable Lending
Office) or Agent (as the case may be) is organized or any political subdivision
thereof (all such non-excluded taxes, duties, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to as
"Taxes"). If Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable under this Agreement or any other Loan Document to
any Lender or Agent, (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.15) such Lender or Agent receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the
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full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) Borrower agrees to indemnify each Lender and Agent for the full amount
of Taxes and Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this
Section 2.15) paid by such Lender or Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by Borrower or
Agent (but only so long as such Lender remains lawfully able to do so), shall
provide Borrower and Agent with (i) Internal Revenue Service Form 1001 or 4224,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an income tax
treaty to which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States, (ii) Internal Revenue Service Form W-8 or W-9,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Lender is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to provide
Borrower and Agent with the appropriate form pursuant to Section 2.15(d) (unless
such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under Section 2.15(a) or
2.15(b) with respect to Taxes imposed by the United States; provided, however,
that should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, Borrower shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such Taxes.
(f) If Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 2.15, then such Lender will agree
to use reasonable efforts to
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change the jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such change,
in the judgment of such Lender, is not otherwise disadvantageous to such Lender
and in the event Lender is reimbursed for an amount paid by Borrower pursuant to
this Section 2.15, it shall promptly return such amount to Borrower.
(g) Within thirty (30) days after the date of any payment of Taxes,
Borrower shall furnish to Agent the original or a certified copy of a receipt
evidencing such payment.
(h) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section
2.15 shall survive the termination of the Commitments and the payment in full of
the Notes.
Section II.16. Compensation Procedure. Any Lender or Issuing Bank
notifying Borrower of the incurrence of additional costs under Sections 2.10
through 2.15 shall in such notice to Borrower and Agent set forth in reasonable
detail the basis and amount of its request for compensation; provided that if
such Lender or Issuing Bank fails to give notice to Borrower of any additional
costs within ninety (90) days after it has actual knowledge thereof, neither
such Lender nor Issuing Bank shall be entitled to compensation for such
additional costs incurred more than ninety (90) days prior to the date on which
notice is given by such Lender or Issuing Bank. Determinations and allocations
by each Lender or Issuing Bank for purposes of Sections 2.10 through 2.15 of the
effect of any change in applicable laws, treaties, rules or regulations or in
the interpretation or administration thereof, any losses or expenses incurred by
reason of the liquidation or reemployment of deposits or other funds, any taxes,
levies, costs and charges imposed, or the effect of capital maintained on its
costs or rate of return of maintaining Loans or its obligation to make Loans or
issue LCs, or on amounts receivable by it in respect of Loans or LCs, and of the
amounts required to compensate such Lender under Sections 2.10 through 2.15,
shall be conclusive and binding for all purposes, provided that such
determinations and allocations are made on a reasonable basis and there shall be
no demand for duplicate payments of the same additional cost. Any request for
compensation under this Section 2.16 shall be paid by Borrower within thirty
(30) Business Days of the receipt by Borrower of the notice described in this
Section 2.16.
Section II.17. Interest Rate Changes.
(a) Initial Debt to Capitalization Ratio and Initial Senior Debt to
Capitalization Ratio. The Debt to Capitalization Ratio in effect from the date
hereof until changed as herein provided is 0.57 to 1.0. The Senior Debt to
Capitalization Ratio in effect from the date hereof until changed as herein
provided is 0.57 to 1.0.
(b) Decreases In Rates. Any reduction in the Base Rate, the Tranche A
Fixed Rate, the Tranche B Fixed Rate or the rate being used to determine
facility fees pursuant to Section 2.9 (in this section collectively called the
"Rates") as a result of a change in the Debt to Capitalization Ratio or Senior
Debt to Capitalization Ratio shall be requested by Borrower in a certificate
delivered to Agent in which Borrower certifies as to the Debt to Capitalization
Ratio
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and Senior Debt to Capitalization Ratio in effect on the date thereof. Together
with any such certificate, Borrower shall deliver to Agent true and correct
financial statements of Borrower, in form and substance satisfactory to Agent,
supporting Borrower's calculation of such Debt to Capitalization Ratio and
Senior Debt to Capitalization Ratio. If Agent determines Borrower's calculation
is correct, the reduction in the Rates shall become effective on the fifth
Business Day following the date on which such notice is given to Agent or
Lenders otherwise become aware of such a change in the Debt to Capitalization
Ratio or the Senior Debt to Capitalization Ratio; provided that with respect to
Committed Eurodollar Loans, such decrease shall apply only to Committed
Eurodollar Loans continued or converted after such effective date.
(c) Increases In Rates. With respect to any increase in the Rates,
Borrower must notify Agent of any change in the Rates as a result of a change in
the Debt to Capitalization Ratio or Senior Debt to Capitalization Ratio. Any
such increase in the Rates shall become effective on the fifth Business Day
following the date on which such notice is given to Agent or Lenders otherwise
become aware of such a change in the Debt to Capitalization Ratio or the Senior
Debt to Capitalization Ratio; provided that with respect to Committed Eurodollar
Loans, such increase shall apply only to Committed Eurodollar Loans made,
continued or converted after such effective date.
ARTICLE III. - Letters of Credit
Section III.1 LCs. From time to time during the Tranche B Commitment
Period, Borrower may request Issuing Bank to issue, in reliance on the
agreements of Lenders set forth in Section 3.2(b), letters of credit (each
herein called an "LC") by means of an application in the form of Exhibit C,
appropriately completed and with a proposed form of LC attached. Issuing Bank
shall have no obligation whatsoever to issue any such requested LC, but any such
LC which Issuing Bank does issue shall be subject to all terms and provisions
hereof relating to LCs, and shall be subject to the following restrictions: (a)
no LC issued hereunder shall have an expiration date later than the earlier of
two years after the date of issuance thereof or the end of the Tranche B
Commitment Period, without the prior written consent of all Lenders; (b) no LC
issued hereunder shall be issued in an amount greater than $10,000,000 without
the prior written consent of Majority Lenders; (c) the LC Obligations
outstanding shall at no time exceed the LC Sublimit; (d) the sum of (i) the LC
Obligations outstanding and (ii) the aggregate amount of all Tranche B Loans
does not exceed the Tranche B Commitment; and (e) the aggregate amount of all
Loans (including Committed Loans and Competitive Bid Loans) and all LC
Obligations does not exceed the Commitment.
Section III.2. Reimbursement of LCs.
(a) Reimbursement by Borrower. Each payment by Issuing Bank pursuant to
any LC (whether in response to a draft, a demand for payment, or otherwise),
shall constitute a loan to and an obligation of Borrower. Borrower hereby
promises to pay to Issuing Bank, or to Issuing Bank's order, at Issuing Bank's
office at 901 Main Street, Dallas, Texas, on demand, any and all
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amounts paid by Issuing Bank pursuant to any and all LCs (such amounts being
herein called the "Matured LC Obligations"). Section 2.1(b) describes certain
situations in which such payments may be made with funds advanced by Lenders
under the Tranche B Notes, but Borrower's obligations to pay the Matured LC
Obligations as provided in this section are absolute and not contingent upon the
conditions for such Borrowings being met. Borrower hereby promises to pay to
Issuing Bank, or to Issuing Bank's order, at Issuing Bank's office at 901 Main
Street, Dallas, Texas, on demand, interest at the Default Rate on (a) any
outstanding Matured LC Obligations and (b) any fees or other amounts due with
respect to LCs (to the extent the same can legally bear interest). Borrower
hereby promises to pay, when due, all present and future taxes, levies, costs
and charges whatsoever imposed, assessed, levied or collected on, under or in
respect of this Agreement or any LC and any payments of principal, interest or
other amounts made on or in respect of any thereof (excluding, however, any such
taxes, levies, costs and charges imposed on or measured by the overall net
income of Issuing Bank). Borrower promises to indemnify Issuing Bank against,
and to reimburse Issuing Bank on demand for, any of the foregoing taxes, levies,
costs or charges paid by Issuing Bank and any loss, liability, claim or expense,
including interest, penalties and legal fees, that Issuing Bank may incur
because of or in connection with the failure of Borrower to make any such
payment of taxes, levies, costs or charges when due or any payment of Matured LC
Obligations when due. In addition, and without limiting the generality of the
foregoing, if any law, regulation or the interpretation thereof by any court or
administrative or governmental authority shall either impose, modify or deem
applicable any capital, reserve, insurance premium or similar requirement
against letters of credit issued by Issuing Bank and the result thereof shall be
to increase the cost to Issuing Bank of issuing or maintaining any letter of
credit; then, on demand by Issuing Bank, Borrower further promises to pay to
Issuing Bank, from time to time, additional amounts which shall be sufficient to
compensate Issuing Bank for the portion of such increased costs allocable to the
LCs. A written advice(s) setting forth in reasonable detail such costs incurred
by Issuing Bank, submitted by Issuing Bank to Borrower from time to time, shall
be conclusive, absent manifest error, as to the amount thereof.
(b) Reimbursement by Lenders. Issuing Bank irrevocably agrees to grant and
hereby grants to each Lender, and, to induce Issuing Bank to issue LCs
hereunder, each Lender irrevocably agrees to accept and purchase and hereby
accepts and purchases from Issuing Bank, on the terms and conditions hereinafter
stated, for such Lender's own account and risk an undivided interest equal to
such Lender's Percentage Share of Issuing Bank's obligations and rights under
each LC issued hereunder and the amount of each draft paid by Issuing Bank
thereunder. In the event that Borrower should fail to pay Issuing Bank on demand
the amount of any draft or other request for payment drawn under or purporting
to be drawn under a LC as provided in subsection (a) above, each Lender shall,
before 2:00 p.m. (Dallas Time) on the Business Day Issuing Bank shall have given
notice to Lenders of Borrower's failure to so pay Issuing Bank, if such notice
is given by 10:00 am., Dallas Time (or on the Business Day immediately
succeeding the day such notice is given after 10:00 am. Dallas Time), pay to
Issuing Bank at Issuing Bank's offices in Dallas, Texas, in legal tender of the
United States of America, in same day funds, such Lender's Percentage Share of
the amount of such draft or other request for payment from Borrower plus
interest on such amount from the date Issuing Bank shall have
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paid such draft or request for payment to the date of such payment by such
Lender at the Default Rate. Each Lender's obligation to make payment to Issuing
Bank pursuant to the terms of this Section 3.2(b) is irrevocable and
unconditional. If any such amount required to be paid by any Lender pursuant to
this Section 3.2(b) is not in fact made available by such Lender to Issuing Bank
within three Business Days after the date such payment is due, Issuing Bank
shall be entitled to recover from such Lender, on demand, such amount with
interest thereon calculated from such due date at the Default Rate. A written
advice(s) setting forth in reasonable detail the amounts owing under this
Section 3.2, submitted by Issuing Bank to Borrower from time to time, shall be
conclusive, absent manifest error, as to the amounts thereof. Whenever, at any
time after Issuing Bank has made payment under any LC, and has received from any
Lender its Percentage Share of such payment in accordance with this Section
3.2(b), Issuing Bank receives any payment related to such LC (whether directly
from Borrower or otherwise, including proceeds of collateral applied thereto by
Issuing Bank), or any payment of interest on account thereof, Issuing Bank will
distribute to such Lender its Percentage Share thereof; provided, however, that
in the event that any such payment received by Issuing Bank shall be required to
be returned by Issuing Bank, such Lender shall return to Issuing Bank the
portion thereof previously distributed by Issuing Bank to it.
Section III.3. Transferees of LCs. Borrower agrees that if any LC provides
that it is transferable, Issuing Bank is under no duty to determine the proper
identity of anyone appearing as transferee of such LC, nor shall Issuing Bank be
charged with responsibility of any nature or character for the validity or
correctness of any transfer or successive transfers. Payment by Issuing Bank to
any purported transferee or transferees as determined by Issuing Bank is hereby
authorized and approved, and Borrower further agrees to hold Issuing Bank and
each Lender harmless and indemnified against any liability or claim in
connection with or arising out of the foregoing or the circumstances described
in Section 3.6.
Section III.4. Extension of Maturity of LCs. Borrower agrees that in the
event of any extension of the maturity or time for presentation of drafts or
demands for payment or any other modification of the terms of any LC at the
request of Borrower or by order of any court or tribunal, with or without
notification to others, or in the event of any increase in the amount of any LC
at the request of Borrower or by order of any court or tribunal, this Agreement
shall be binding upon Borrower with respect to the LC so increased or otherwise
modified, with respect to drafts and demands for payment thereunder, and with
respect to any action taken in accordance with such extension, increase or other
modification by Issuing Bank or by any bank which is a confirming bank or an
advising bank with respect to any LC.
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Section III.5. Restriction on Liability. Neither Issuing Bank nor any bank
which is a confirming bank or an advising bank with respect to an LC (in this
section called a "correspondent") shall be responsible for (a) the use which may
be made of any LC or for any acts or omissions of the users of any LC; (b) the
existence or nonexistence of a default under any instrument secured or supported
by any LC or any other event which gives rise to a right to call upon any LC;
(c) the validity, sufficiency or genuineness of any document delivered in
connection with any LC, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged; (d) except as specifically
required by an LC, failure of any instrument to bear any reference or adequate
reference to any LC, or failure of documents to accompany any draft at
negotiation or failure of any person to note the amount of any draft on the
reverse of any LC or surrender or take up any LC; or (e) errors, omissions,
interruptions or delays in transmission or delivery of any messages by mail,
cable, telegraph, wireless or otherwise. Issuing Bank shall not be responsible
for any act, error, neglect or default, omission, insolvency or failure in the
business of any of the correspondents or any refusal by Issuing Bank or any of
the correspondents to pay or honor drafts drawn under any LC because of any
applicable law, decree or edict, legal or illegal, of any governmental agency
now or hereafter enforced or for any matter beyond the control of Issuing Bank.
The happening of any one or more of the contingencies referred to in the
preceding clauses of this paragraph shall not affect, impair or prevent the
vesting of any of the rights or powers of Issuing Bank and Lenders under this
Agreement, or the obligation of Borrower to make reimbursement. In furtherance
and extension and not in limitation of the specific provisions hereinabove set
forth Borrower agrees that any action taken or omitted to be taken by Issuing
Bank or any Lender or by any correspondent under or in connection with any LC
shall be binding on Borrower and shall not put Issuing Bank or any Lender or any
correspondent under any resulting liability to Borrower unless grossly negligent
or in breach of good faith.
Section III.6. No Duty to Inquire. Borrower agrees that Issuing Bank is
authorized and instructed to accept and pay drafts and demands for payment under
the LCs without requiring, and without responsibility for, either at the time of
acceptance or payment or thereafter, the determination as to the existence of
any event giving rise thereto or the proper identity or authority of anyone
appearing on behalf of the beneficiary of any LC.
Section III.7. LC Fees. In consideration of any issuance by Issuing Bank
of LCs hereunder and of Lender's incurrence of a reimbursement obligation with
respect to such LCs, Borrower agrees to pay (a) to Agent for pro rata
distribution to each Lender in accordance with its Percentage Share, a letter of
credit fee at a rate equal to the Tranche B Eurodollar Spread then in effect,
and (b) to such Issuing Bank for its own account, a letter of credit fronting
fee at a rate equal to one-eighth of one percent per annum. Each such fee will
be calculated on the term and face amount of such LC and the above applicable
rate and will be payable upon the issuance of such LC.
ARTICLE IV. - Conditions Precedent to Lending
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Section IV.1. Documents to be Delivered. No Lender has any obligation to
make its first Committed Loan and Issuing Bank has no obligation to issue the
first LC (whether or not otherwise agreed to by Issuing Bank) unless Agent shall
have received all of the following, at Agent's office in Dallas, Texas, duly
executed and delivered and in form, substance and date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders are to execute in
connection herewith.
(b) Each Note.
(c) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Vice President Finance and the
Secretary or an Assistant Secretary of Borrower, which shall contain the
names and signatures of the officers of Borrower authorized to execute
Loan Documents and which shall certify to the truth, correctness and
completeness of the following exhibits attached thereto: (1) a copy of
resolutions duly adopted by the Board of Directors of Borrower and in full
force and effect at the time this Agreement is entered into, authorizing
the execution of this Agreement and the other Loan Documents delivered or
to be delivered in connection herewith and the consummation of the
transactions contemplated herein and therein, (2) a copy of the charter
documents of Borrower and all amendments thereto, certified by the
appropriate official of Borrower's state of organization, and (3) a copy
of any bylaws of Borrower; and
(ii) A "Compliance Certificate" of the Chairman of the Board or
President and of the chief financial officer of Borrower, of even date
with such Loan, in which such officers certify to the satisfaction of the
conditions set out in subsections (a), (b), (c) and (d) of Section 4.2.
(d) A certificate (or certificates) of the due formation, valid existence
and good standing of Borrower in its state of organization, issued by the
appropriate authorities of such jurisdiction.
(e) A favorable opinion of John Walter counsel for Borrower, substantially
in the form set forth in Exhibit H, together with the certificate provided for
in such Exhibit.
(f) Each Security Document listed in the Security Schedule.
(g) Documents similar to those specified in subsections (c)(i) and (d) of
this section with respect to each Guarantor and the execution by it of its
guaranty of Borrower's Obligations.
(h) A Notice of Final Agreement in the form of the attached Exhibit O.
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Section IV.2. Additional Conditions Precedent. No Lender has any
obligation to make any Committed Loan (including its first) and Issuing Bank has
no obligation to issue any LC (including its first, whether or not otherwise
agreed to by Issuing Bank), unless the following conditions precedent have been
satisfied:
(a) All representations and warranties made by any Related Person in any
Loan Document shall be true on and as of the date of such Committed Loan or
issuance of such LC (except to the extent that the facts upon which such
representations and warranties are based have been changed by the extension of
credit hereunder) as if such representations and warranties had been made as of
the date of such Committed Loan or the issuance of such LC; provided, however,
that Borrower's only representations and warranties regarding any financial
projections delivered by Borrower shall be that at the time such projections
were made, Borrower made such projections in good faith, using assumptions that
Borrower believed were reasonable at the time made.
(b) No Default shall exist at the date of such Committed Loan or issuance
of such LC.
(c) No material adverse change shall have occurred to Borrower's
Consolidated financial condition or businesses since the date of this Agreement.
(d) Each Related Person shall have performed and complied with all
agreements and conditions required in the Loan Documents to be performed or
complied with by it on or prior to the date of such Committed Loan or issuance
of such LC.
(e) The making of such Committed Loan or issuance of such LC shall not be
prohibited by any law or any regulation or order of any court or governmental
agency or authority and shall not subject any Lender to any penalty or other
onerous condition under or pursuant to any such law, regulation or order.
(f) Agent shall have received all documents and instruments which Agent
has then requested, in addition to those described in Section 4.1 (including
opinions of legal counsel for the Related Persons and Agent; corporate documents
and records; documents evidencing governmental authorizations, consents,
approvals, licenses and exemptions; and certificates of public officials and of
officers and representatives of Borrower and other Persons), as to (i) the
accuracy and validity of or compliance with all representations, warranties and
covenants made by any of the Related Persons in this Agreement and the other
Loan Documents, (ii) the satisfaction of all conditions contained herein or
therein, and (iii) all other matters pertaining hereto and thereto. All such
additional documents and instruments shall be satisfactory to Agent in form,
substance and date.
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ARTICLE V. - Representations and Warranties
Section V.1. Borrower's Representations and Warranties. To confirm each
Lender's understanding concerning Borrower and Borrower's business, properties
and obligations and to induce Agent and each Lender to enter into this Agreement
and to make the Committed Loans and to induce the Issuing Bank to issue LCs,
Borrower represents and warrants to Agent, Issuing Bank, and each Lender that:
(a) No Default. Borrower is not in default in the performance of any of
the covenants and agreements contained herein. No event has occurred and is
continuing which constitutes a Default.
(b) Organization and Good Standing. Each Related Person which is a
corporation or partnership is duly organized, validly existing and in good
standing under the laws of its state of organization, having all corporate or
partnership powers required to carry on its business and enter into and carry
out the transactions contemplated hereby. Each such Related Person is duly
qualified, in good standing, and authorized to do business in all other
jurisdictions within the United States wherein the character of the properties
owned or held by it or the nature of the business transacted by it makes such
qualification necessary, except for jurisdictions in which the failure to
qualify or maintain such qualification would not have a Material Adverse Effect.
Each such Related Person has taken all actions and procedures customarily taken
in order to enter, for the purpose of conducting business or owning property,
each jurisdiction outside the United States wherein the character of the
properties owned or held by it or the nature of the business transacted by it
makes such actions and procedures desirable.
(c) Authorization. Each Related Person which is a corporation or
partnership has duly taken all corporate or partnership action necessary to
authorize the execution and delivery by it of the Loan Documents to which it is
a party and to authorize the consummation of the transactions contemplated
thereby and the performance of its obligations thereunder. Borrower is duly
authorized to borrow funds hereunder, and Borrower is duly authorized to apply
for the issuance of any LC requested hereunder.
(d) No Conflicts or Consents. The execution and delivery by the various
Related Persons of the Loan Documents to which each is a party, the performance
by each of its obligations under such Loan Documents, and the consummation of
the transactions contemplated by the various Loan Documents, do not and will
not, to the best of our knowledge, (i) conflict with any provision of (1) any
domestic or foreign law, statute, rule or regulation as in effect on the date
such representation and warranty is made, (2) the articles or certificate of
incorporation, bylaws, charter, or partnership agreement or certificate of any
Related Person, or (3) any agreement, judgment, license, order or permit
applicable to or binding upon any Related Person, (ii) result in the
acceleration of any Debt owed by any Related Person, or (iii) result in or
require the creation of any Lien upon any assets or properties of any Related
Person except as expressly contemplated in the Loan Documents. No consent,
approval, authorization or order of, and no notice to or filing with, any court
or governmental authority or third party is required in
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connection with the execution, delivery or performance by any Related Person of
any Loan Document or to consummate any transactions contemplated by the Loan
Documents.
(e) Enforceable Obligations. This Agreement is, and the other Loan
Documents when duly executed and delivered will be, legal, valid and binding
obligations of each Related Person which is a party hereto or thereto,
enforceable in accordance with their terms except as such enforcement may be
limited by bankruptcy, insolvency or similar laws of general application
relating to the enforcement of creditors' rights and as limited by general
equitable principles.
(f) Initial Financial Statements. The Initial Financial Statements fairly
present Borrower's Consolidated financial position at the date thereof and the
Consolidated results of Borrower's operations and Borrower's Consolidated cash
flows for the period thereof. Since the date of the Initial Financial Statements
no material adverse change has occurred in Borrower's financial condition or
businesses or in Borrower's Consolidated financial condition or businesses,
except as reflected in the Disclosure Schedule. All Initial Financial Statements
were prepared in accordance with GAAP.
(g) Other Obligations and Restrictions. No Related Person has any
outstanding Debt of any kind (including contingent obligations, tax assessments,
and unusual forward or long-term commitments) which is, in the aggregate,
material to Borrower or material with respect to Borrower's Consolidated
financial condition and not shown in the Initial Financial Statements or
disclosed in the Disclosure Schedule or a Disclosure Report. Except as shown in
the Initial Financial Statements or disclosed in the Disclosure Schedule or a
Disclosure Report, no Related Person is subject to or restricted by any
franchise, contract, deed, charter restriction, or other instrument or
restriction which can reasonably be expected to have a Material Adverse Effect.
(h) Full Disclosure. No certificate, statement or other information
delivered herewith or heretofore by any Related Person to Agent or any Lender in
connection with the negotiation of this Agreement or in connection with any
transaction contemplated hereby contains any untrue statement of a material fact
or omits to state any material fact known to any Related Person (other than
industry-wide risks normally associated with the types of businesses conducted
by the Related Persons) necessary to make the statements contained herein or
therein not misleading as of the date made or deemed made. There is no fact
known to any Related Person (other than industry-wide risks normally associated
with the types of businesses conducted by the Related Persons) that has not been
disclosed to Agent and each Lender in writing which can reasonably be expected
to have a Material Adverse Effect. Borrower has heretofore delivered to Agent
and each Lender true, correct and complete copies of the Initial Financial
Statements.
(i) Litigation. Except as disclosed in the Initial Financial Statements or
in the Disclosure Schedule or a Disclosure Report: (i) there are no actions,
suits or legal, equitable, arbitrative or administrative proceedings pending, or
to the knowledge of any Related Person threatened, against any Related Person
before any federal, state, municipal or other court, department, commission,
body, board, bureau, agency, or instrumentality, domestic or foreign,
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which do or can reasonably be expected to have a Material Adverse Effect, and
(ii) there are no outstanding judgments, injunctions, writs, rulings or orders
by any such governmental entity against any Related Person or, to the best of
Borrower's knowledge, against any Related Person's stockholders, partners,
directors or officers which have or may reasonably be expected to have a
Material Adverse Effect.
(j) Labor Disputes and Acts of God. Except as disclosed in the Disclosure
Schedule or a Disclosure Report, neither the business nor the properties of any
Related Person has been affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy or other casualty (whether or not covered by
insurance), which do or may reasonably be expected to have a Material Adverse
Effect.
(k) ERISA Liabilities. All currently existing ERISA Plans are listed in
the Disclosure Schedule or a Disclosure Report. Except as disclosed in the
Initial Financial Statements or in the Disclosure Schedule or a Disclosure
Report, no Termination Event has occurred with respect to any ERISA Plan and the
Related Persons are in compliance with ERISA in all material respects. No
Related Person is required to contribute to, or has any other absolute or
contingent liability in respect of, any "multiemployer plan" as defined in
Section 4001 of ERISA. Except as set forth in the Disclosure Schedule or a
Disclosure Report: (i) no "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) exists with
respect to any ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, and (ii) the current value of each ERISA Plan's
benefits does not exceed the current value of such ERISA Plan's assets available
for the payment of such benefits by more than $2,500,000.
(l) Environmental and Other Laws. Except as disclosed in the Disclosure
Schedule or a Disclosure Report: (i) the Related Persons are conducting their
businesses in material compliance with all applicable federal, state or local
laws, including Environmental Laws, and have and are in compliance with all
licenses and permits required under any such laws, in all material respects;
(ii) none of the operations or properties of any Related Person is the subject
of federal, state or local investigation evaluating whether any material
remedial action is needed to respond to a release of any Hazardous Materials
into the environment or to the improper storage or disposal (including storage
or disposal at offsite locations) of any Hazardous Materials; (iii) no Related
Person (and to the best knowledge of Borrower, no other Person) has filed any
notice under any federal, state or local law indicating that any Related Person
is responsible for the improper release into the environment, or the improper
storage or disposal, of any material amount of any Hazardous Materials or that
any Hazardous Materials have been improperly released, or are improperly stored
or disposed of, upon any property of any Related Person; (iv) no Related Person
has transported or arranged for the transportation of any Hazardous Material to
any location which is (1) listed on the National Priorities List under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, listed for possible inclusion on such National Priorities List by the
Environmental Protection Agency in its Comprehensive Environmental Response,
Compensation and Liability Information System List, or listed on any similar
state list or (2) to the best of our knowledge, the subject of
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federal, state or local enforcement actions or other investigations which may
lead to claims against any Related Person for clean-up costs, remedial work,
damages to natural resources or for personal injury claims (whether under
Environmental Laws or otherwise); and (v) no Related Person otherwise has any
known material contingent liability under any Environmental Laws or in
connection with the release into the environment, or the storage or disposal, of
any Hazardous Materials, except to the extent the matters described in the
foregoing clauses (i) through (v) would not have a Material Adverse Effect.
(m) Names and Places of Business. No Related Person has, during the
preceding five years, had, been known by, or used any other corporate, trade, or
fictitious name, except as disclosed in the Disclosure Schedule. Except as
otherwise indicated in the Disclosure Schedule or a Disclosure Report, the chief
executive office and principal place of business of the Related Persons are (and
for the preceding five years have been) located at the address of Borrower set
out in Section 10.3 or (if different) the address of each such Related Person
set out in the Disclosure Schedule. Except as indicated in the Disclosure
Schedule or a Disclosure Report, no Related Person has any other principal place
of business.
(n) Borrower's Subsidiaries. None of Borrower and its Subsidiaries
presently has any Subsidiary or owns any stock in any other corporation or
association except those listed in the Disclosure Schedule or a Disclosure
Report.
(o) Title to Properties; Licenses. Except as disclosed in the Disclosure
Schedule, each Related Person has good and defensible title to all of its
material properties and assets, free and clear of all Prohibited Liens and of
all impediments to the use of such properties and assets in such Related
Person's business, except that (i) with regard to easements and rights-of-way
relating to any Related Person's gathering systems, to the best of such Related
Person's knowledge, there exist no Liens that a reasonable and prudent operator
in the gas processing business would consider to be a material impairment of
title and such Related Person has such title as is reasonably necessary to
permit the use and enjoyment of such gathering systems, and (ii) no
representation or warranty is made with respect to any oil, gas or mineral
property or interest to which no proved oil or gas reserves are properly
attributed. Each Related Person possesses all licenses, permits, franchises,
patents, copyrights, trademarks and trade names, and other intellectual property
(or otherwise possesses the right to use such intellectual property without
violation of the rights of any other Person) which are necessary to carry out
its business as presently conducted and as presently proposed to be conducted
hereafter, and no Related Person is in violation in any material respect of the
terms under which it possesses such intellectual property or the right to use
such intellectual property.
(p) Government Regulation. Neither Borrower nor any other Related Person
owing Obligations except WPS is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940 (as any of the preceding acts have been amended) or, to the best of our
knowledge, any other statute, law, regulation or decree which regulates the
incurring by such Person of Debt, including statutes, laws, regulations
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or decrees relating to common contract carriers or the sale of electricity, gas,
steam, water or other public utility services.
(q) Insider. Neither Borrower, nor any other Related Person, nor, to the
best of our knowledge, any Person having "control" (as that term is defined in
12 U.S.C. ss. 375b(9) or in regulations promulgated pursuant thereto) of
Borrower, is a "director" or an "executive officer" or "principal shareholder"
(as those terms are defined in 12 U.S.C. ss. 375b(8) or (9) or in regulations
promulgated pursuant thereto) of Lender, of a bank holding company of which
Lender is a Subsidiary or of any Subsidiary of a bank holding company of which
Lender is a Subsidiary.
(r) Officers and Directors. With the exception of the Senior Vice
President - Engineering, the officers and directors of Borrower are those
persons disclosed in the definitive proxy statement prepared by Borrower and
filed with the Securities and Exchange Commission in connection with Borrower's
most recent annual meeting, copies of which proxy statement have been previously
furnished in connection with the negotiation hereof, except as set forth on the
Disclosure Schedule or a Disclosure Report.
(s) Year 2000 Compliance. Borrower has (i) initiated a review and
assessment of all areas within Related Persons' business and operations
(including those affected by suppliers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by Related Persons may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for addressing the
Year 2000 Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Borrower reasonably believes that all computer
applications (including those of Related Persons' suppliers and vendors) that
are material to any of Related Persons' business and operations will on a timely
basis be able to perform properly date-sensitive functions for all dates before
and after January 1, 2000 (that is, be "Year 2000 compliant"), except to the
extent that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
Section V.2. Representation by Lenders. Each Lender hereby represents that
it will acquire its Notes for its own account in the ordinary course of its
lending business; however, the disposition of such Lender's property shall at
all times be and remain within its control and, in particular and without
limitation, such Lender may sell or otherwise transfer its Notes, any
participation interest or other interest in its Notes, or any of its other
rights and obligations under the Loan Documents; provided that such sale or
transfer is made in substantial compliance with applicable law.
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ARTICLE VI. - Covenants of Borrower
Section VI.1. Affirmative Covenants. Borrower warrants, covenants and
agrees that until the full and final payment of the Obligations and the
termination of this Agreement, unless Majority Lenders have previously agreed
otherwise in writing:
(a) Payment and Performance. Borrower will pay all amounts owed by
it under the Loan Documents to which it is a party in accordance with the
terms thereof and will observe, perform and comply with every covenant,
term and condition expressed or implied in the Loan Documents. Borrower
will use its best efforts to cause each other Related Person to observe,
perform and comply with every term, covenant and condition of the Loan
Documents applicable to it.
(b) Books, Financial Statements and Reports. Each Related Person
will at all times maintain full and accurate books of account and records.
Borrower will maintain and will cause its Subsidiaries to maintain a
standard system of accounting and will furnish the following statements
and reports to Agent and each Lender at Borrower's expense:
(i) As soon as available, and in any event within 90 days
after the end of each Fiscal Year, complete Consolidated financial
statements of Borrower together with all notes thereto, prepared in
reasonable detail in accordance with GAAP, together with opinions,
based on audits using generally accepted auditing standards, by
PricewaterhouseCoopers, or other independent certified public
accountants selected by Borrower and acceptable to Majority Lenders,
stating that such Consolidated financial statements have been so
prepared. Such Consolidated financial statements shall contain a
balance sheet as of the end of such Fiscal Year and statements of
operations, of cash flows, and of changes in stockholders' equity
for such Fiscal Year, each setting forth in comparative form the
corresponding figures for the preceding Fiscal Year. In addition,
within 90 days after the end of each Fiscal Year Borrower will
furnish to Agent and each Lender (A) a certificate in the form of
Exhibit F signed by the chief financial officer, treasurer or
controller of Borrower confirming compliance (or failure to comply)
with the requirements of Sections 6.2(a), (b), (e), (f), (k), (l),
(m), and (n) and setting out in reasonable detail calculations
showing such compliance, if applicable, and (B) a report signed by
such accountants stating that they have reviewed such certificate
and this Agreement and further stating that, in making such review
and the examination and report on the Consolidated financial
statements described above, they did not obtain any knowledge that
there existed any condition or event related to the financial
covenants set forth in such sections relating to Borrower at the end
of such Fiscal Year or at the time of their report which constituted
an Event of Default or a Default, or, if they did obtain any such
knowledge, specifying the nature and period of existence of any such
condition or event.
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(ii) For each Guarantor which has EBITDA in any Fiscal Quarter
which constitutes ten percent (10%) or more of Borrower's
Consolidated EBITDA for such Fiscal Quarter or which has assets at
any time with a book value equal to or exceeding ten percent (10%)
of the book value of Borrower's Consolidated assets at such time, as
soon as available, and in any event within 90 days after the end of
each fiscal year of such Guarantor, complete Consolidated financial
statements of such Guarantor, together with all notes thereto,
prepared in reasonable detail in accordance with all regulations
applicable to such Guarantor or in accordance with accounting
methods acceptable to Agent. Such Consolidated financial statements
shall contain a balance sheet as of the end of such fiscal year and
a statement of operations for such fiscal year, each setting forth
in comparative form the corresponding figures for the preceding
fiscal year.
(iii) As soon as available, and in any event within 45 days
after the end of each Fiscal Quarter, (A) Borrower's Consolidated
balance sheet as of the end of such Fiscal Quarter and statements of
operations for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, all in reasonable
detail in accordance with GAAP, subject to changes resulting from
normal year-end adjustments, (B) for each Guarantor which has EBITDA
in any Fiscal Quarter which constitutes ten percent (10%) or more of
Borrower's Consolidated EBITDA for such Fiscal Quarter or which has
assets at any time with a book value equal to or exceeding ten
percent (10%) of the book value of Borrower's Consolidated assets at
such time, such Guarantor's consolidated balance sheet as of the end
of each fiscal quarter of such Guarantor and statements of
operations from the beginning of its then current fiscal year to the
end of such fiscal quarter, prepared in reasonable detail in
accordance with all regulations applicable to such Guarantor or in
accordance with accounting methods acceptable to Agent, subject to
changes resulting from normal year end adjustments, and (C) a
certificate in the form of Exhibit F signed by the chief financial
officer, treasurer or controller of Borrower, confirming compliance
(or failure to comply) with the requirements of Sections 6.2(a),
(b), (e), (f), (k), (l), (m), and (n) and setting out in reasonable
detail calculation showing such compliance, if applicable, stating
that such financial statements are materially complete, stating that
he has reviewed the Loan Documents and carried out or caused to be
carried out such further review as is necessary to enable him to
express an informed opinion as to compliance with the Loan
Documents, and further stating that to the best of his knowledge
there is no condition or event at the end of such Fiscal Quarter or
at the time of such certificate which constitutes an Event of
Default or a Default or specifying the nature and period of
existence of any such condition or event.
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(iv) Promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent by
Borrower to its shareholders and all registration statements,
periodic reports and other statements and schedules filed by any
Related Person with any securities exchange or any governmental
authority responsible for compliance with securities laws.
(v) By April 29 of each year, a projection of Borrower's cash
flows for such year in form and scope substantially similar to
Exhibit I hereto.
(vi) As soon as delivered to holders of the Debt Securities,
copies of all reports, statements and notices delivered generally to
holders of Debt Securities (excluding data which Borrower deems
duplicative, immaterial or inapplicable for delivery to Agent and
Lenders).
(c) Other Information and Inspections. Each Related Person will
furnish to Agent and each Lender any information which Agent may from time
to time request on behalf of itself or any Lender concerning any covenant,
provision or condition of the Loan Documents or any matter in connection
with the Related Persons' businesses and operations. Each Related Person
will permit representatives appointed by Agent on behalf of Lenders,
including independent accountants, agents, attorneys, appraisers and any
other persons, to visit and inspect any of such Related Person's property,
including its books of account, other books and records, and any
facilities or other business assets, and to make extra copies therefrom
and photocopies and photographs thereof, and to write down and record any
information such representatives obtain, and each Related Person shall
permit Agent or its representatives, on behalf of Lenders, to investigate
and verify the accuracy of the information furnished to Agent or any
Lender in connection with the Loan Documents and to discuss all such
matters with its officers, employees and representatives. Each of Agent
and Lenders agrees that, until the occurrence of a Default, it will take
all reasonable steps to keep confidential any proprietary information
regarding lists of customers of Borrower and its Subsidiaries and the
terms of contracts of Borrower and its Subsidiaries with purchasers and
producers; provided, however, that this restriction shall not apply to
information which (i) has at the time in question entered the public
domain, (ii) is required to be disclosed by law or by any order, rule or
regulation (whether valid or invalid) of any court or governmental agency,
or (iii) is furnished to purchasers or prospective purchasers of
participations or interests in the Loans or the Notes so long as such
purchasers and prospective purchasers have agreed to be subject to
restrictions identical to those imposed upon Agent and each Lender under
this sentence.
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(d) Notice of Material Events. Borrower will promptly notify Agent
and each Lender (i) of any material adverse change in Borrower's financial
condition or Borrower's Consolidated financial condition, (ii) of the
occurrence of a Default or Event of Default, (iii) of the acceleration of
the maturity of any indebtedness owed by any Related Person or of any
default by any Related Person under any indenture, mortgage, agreement,
contract or other instrument to which any of them is a party or by which
any of them or any of their properties is bound, if such acceleration or
default can reasonably be expected to have a Material Adverse Effect, (iv)
of any material adverse claim (or any claim of $10,000,000 or more)
asserted against any Related Person or with respect to any Related
Person's properties pursuant to which an adverse decision can reasonably
be expected to have a Material Adverse Effect, (v) of the occurrence of
any Termination Event or of any event or condition known to Borrower which
can reasonably be expected to have a Material Adverse Effect, and (vi) of
the filing of any suit or proceeding against any Related Person in which
an adverse decision can reasonably be expected to have a Material Adverse
Effect. Upon the occurrence of any of the foregoing the Related Persons
will take all necessary or appropriate steps to remedy promptly any such
material adverse change, Default, Event of Default or default, to protect
against any such adverse claim, to defend any such suit or proceeding, to
remedy any such Termination Event or event affecting enforceability, and
to resolve all controversies on account of any of the foregoing. Borrower
will also notify Agent and Agent's counsel in writing at least twenty
Business Days prior to the date that any Related Person changes its name
or the location of its chief executive office or principal place of
business, furnishing with such notice any necessary financing statement
amendments or requesting Agent and its counsel to prepare the same.
Borrower hereby represents that the address of the chief executive office
and principal place of business of each Related Person is the address of
Borrower set out in Section 10.3 hereof or (if different) the address of
each Related Person set out in the Disclosure Schedule.
(e) Maintenance of Properties. Each Related Person will maintain,
preserve, protect, and keep all property used or useful in the conduct of
its business in good condition and in compliance with all applicable laws,
rules and regulations, and will from time to time make all repairs,
renewals and replacements needed to enable the business and operations
carried on in connection therewith to be promptly and advantageously
conducted at all times, except to the extent that failure to do so would
not have a Material Adverse Effect.
(f) Maintenance of Existence and Qualifications. Each Related Person
which is a corporation or partnership will maintain and preserve its
corporate or partnership existence and its rights and franchises in full
force and effect and will qualify to do business as a foreign corporation
or partnership in all states or jurisdictions where required by applicable
law, except where the failure so to qualify will not have any material
adverse effect on such Related Person.
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(g) Payment of Trade Debt, Taxes, etc. Each Related Person (i) will
timely file all required tax returns; (ii) will timely pay all taxes,
assessments and other governmental charges or levies imposed upon it or
upon its income, profits or property; (iii) will within 90 days after the
same becomes due pay all Debt owed by it on ordinary trade terms to
vendors, suppliers, and other Persons providing goods and services used by
it in the ordinary course of its business; (iv) will pay and discharge
when due all other Debt now or hereafter owed by it; and (v) will maintain
appropriate accruals and allowance accounts for all such liabilities in a
timely fashion in accordance with GAAP. Each Related Person may, however,
delay paying or discharging any such taxes, charges, claims or liabilities
so long as the validity thereof is contested in good faith by appropriate
proceedings and it has set aside on its books adequate allowance accounts
therefor in accordance with GAAP.
(h) Insurance. Borrower and the Related Persons will keep or cause
to be kept adequately insured by financially sound and reputable insurers
all property of a character usually insured by corporations or
partnerships engaged in the same or similar businesses. Borrower and the
Related Persons shall maintain business interruption insurance in an
amount providing not less than $10,000,000 coverage for the covered
persons, taken as a whole. At all times adequate insurance against
liability on account of damages to Persons or property and workmen's
compensation insurance shall be maintained covering Borrower and the
Related Persons, which insurance shall be by financially sound and
reputable insurers.
(i) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will promptly
(and in any event, within 30 days after any invoice or other statement or
notice) pay all reasonable costs and expenses incurred by or on behalf of
NationsBanc Montgomery Securities LLC (including attorneys' fees) in
connection with the syndication of the Loans and by or on behalf of Agent
(including attorneys' fees) in connection with (i) the preparation,
execution and delivery of the Loan Documents, and any and all consents,
waivers or other documents or instruments relating thereto, (ii) the
filing, recording, refiling and re-recording of any Loan Documents and any
other documents or instruments or further assurances required to be filed
or recorded or refiled or re-recorded by the terms of any Loan Document,
(iii) the borrowings hereunder and other action reasonably required in the
course of administration hereof, and (iv) the enforcement, after the
occurrence of a Default, of the Loan Documents. In addition to the
foregoing, Borrower will pay the expenses of each Lender in connection
with the events described in clause (iv) above. In no event shall Borrower
pay any expenses incurred by Agent or any Lender in connection with the
physical loss of any Note.
(j) Performance on Borrower's Behalf. If any Related Person fails to
pay any taxes, insurance premiums, costs, expenses, or other amounts it is
required to pay under any Loan Document (including without limitation any
amounts required to be paid under Sections 6.1(i) and 8.3 of this
Agreement), Agent may pay the same on behalf of Lenders.
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Borrower shall immediately reimburse Agent for any such payments and each
amount paid shall constitute a part of the Obligations, shall be secured
by the Security Documents and shall bear interest at the Default Rate from
the date such amount is paid by Agent until the date such amount is repaid
to Agent).
(k) Compliance with Agreements and Law. Each Related Person will
perform all obligations which are material to Borrower's Consolidated
financial condition which such Related Person is required to perform under
the terms of each indenture, mortgage, deed of trust, security agreement,
lease, franchise, agreement, contract or other instrument or obligation to
which it is a party or by which it or any of its properties is bound
(subject to their rights to delay payment in the circumstances described
in Section 6.1(g)). Each Related Person will conduct its business and
affairs in material compliance with all laws, regulations, and orders
applicable thereto (including those relating to pollution and other
environmental matters) except where such failure would not have a Material
Adverse Effect.
(l) Evidence of Compliance. Each Related Person will furnish to each
Lender at such Related Person's or Borrower's expense all evidence which
Agent from time to time reasonably requests on behalf of Lenders,
including but not limited to the forms of evidence and assurance described
in Section 4.2(f) as to the accuracy and validity of or compliance with
all representations, warranties and covenants made by any Related Person
in the Loan Documents, the satisfaction of all conditions contained
therein, and all other matters pertaining thereto.
(m) Shareholder Rights Plan. Notwithstanding anything else contained
in this Agreement, Borrower may dividend, issue, redeem or otherwise sell
or acquire any Rights pursuant to a Shareholder Rights Plan.
(n) Year 2000 Compliance. Borrower will promptly notify Agent in the
event Borrower discovers or determines that any computer application
(including those of its suppliers and vendors) that is material to any of
Related Persons' business and operations will not be Year 2000 compliant
on a timely basis, except to the extent that such failure would not
present a material probability of having a Material Adverse Effect.
Section VI.2. Negative Covenants. To conform with the terms and conditions
under which each Lender is willing to have credit outstanding to Borrower, and
to induce Agent and each Lender to enter into this Agreement and make the Loans,
Borrower warrants, covenants and agrees that until the full and final payment of
the Obligations and the termination of this Agreement, unless Majority Lenders
have previously agreed otherwise in writing:
(a) Debt. No Related Person, Sandia, Westana, or Williston Gas Company
will in any manner owe or be liable for Debt except:
(i) the Obligations;
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(ii) unsecured Debt among Borrower and any Guarantor;
(iii) Obligations under leases, whether capital leases or operating
leases, entered into in the ordinary course of business in arm's-length
transactions at competitive market rates under competitive terms and
conditions considering all aspects thereof, provided that the obligations
payable over the lives of any such leases do not in the aggregate exceed
$20,000,000, and in addition, obligations under oil and gas leases, real
estate leases for office space used by Borrower, and leases for vehicles,
office equipment and data processing equipment;
(iv) Debt under the Debt Securities;
(v) unsecured Debt of Borrower not described in subsections (i)
through (iv) above which meets the following requirements: (A) the
documentation evidencing such Debt shall contain no terms, conditions or
defaults (other than pricing) which are more favorable to the third party
creditor than those contained in this Agreement are to Lenders, as
determined by Majority Lenders in their discretion (provided that Majority
Lenders shall make any such determination considering any amendments or
modifications to this Agreement existing at the time of the incurrence of
such Debt) and shall not contain any provision which attempts to modify,
amend or restrict any of the rights or remedies of Agent or Lenders
hereunder or under any of the other Loan Documents, (B) such Debt shall
have no scheduled principal payments due prior to the final maturity of
the Obligations, (C) at the time Borrower incurs such Debt, no Default or
Event of Default shall have occurred and be continuing hereunder and (D)
if such Debt is to be guaranteed by any Affiliate of Borrower, then such
third party lender(s) must enter into an inter-creditor agreement with
Lenders, in form, scope and substance which is acceptable to Majority
Lenders, as evidenced by their written consent;
(vi) Debt arising under Hedging Contracts permitted under Section
6.2(k);
(vii) Debt outstanding under the instruments or agreements described
on the Disclosure Schedule, excluding any renewals or extensions of such
Debt;
(viii) Debt under the Bridge Facility the principal amount of which
shall not exceed $37,000,000 at any one time outstanding;
(ix) Subordinated Debt; and
(x) miscellaneous items of Debt not described in subsections (i)
through (ix) of this subsection (a) which do not in the aggregate (taking
into account all Debt of all Related Persons) exceed $5,000,000 at any one
time outstanding.
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(b) Limitation on Liens. No Related Person will create, assume or permit
to exist any Lien upon any of the properties or assets which it now owns or
hereafter acquires, except, to the extent not otherwise forbidden by the
Security Documents:
(i) Liens and security interests at any time existing in favor of
Lenders to secure the Obligations;
(ii) statutory Liens for taxes and other sums which are not
delinquent or which are being contested as provided in Section 6.1(g);
(iii) mechanics' and materialmen's and similar statutory Liens with
respect to obligations which are not delinquent or which are being
contested as provided in Section 6.1(g);
(iv) minor defects and irregularities in title to any property which
do not materially impair the value of such property or the use thereof for
the purposes for which it is held;
(v) Liens listed on the Disclosure Schedule;
(vi) Liens on margin accounts established in connection with Hedging
Contracts securing Debt permitted under Section 6.2(a)(vii);
(vii) Liens securing capital leases permitted under Section
6.2(a)(iii); and
(viii) Liens securing purchase money indebtedness in an aggregate
amount not to exceed $1,000,000 encumbering only the assets financed
thereby.
(c) Limitation on Mergers, Issuances of Securities. Except as expressly
provided in this subsection no Related Person will merge or consolidate with or
into any other business entity. Borrower may, however, merge or consolidate with
or into any other business entity if Borrower is the surviving business entity;
any Subsidiary of Borrower which is a Guarantor may merge or consolidate with
another Subsidiary of Borrower so long as a Guarantor is the surviving business
entity; and any Subsidiary of Borrower which is not a Guarantor may merge or
consolidate with another Subsidiary of Borrower which is not a Guarantor;
provided that the surviving entity immediately becomes a Guarantor if required
to do so pursuant to the terms of Section 7.3 hereof. No Related Person will
issue partnership interests, stock, or other securities (other than shares of
its common stock or warrants to purchase its common stock), nor will any
Subsidiary of Borrower allow any diminution of Borrower's interest (direct or
indirect) therein.
(d) Limitation on Sales of Property. No Related Person will sell,
transfer, lease, exchange, alienate or dispose of any of its material assets or
properties or any material interest therein except:
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(i) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value;
(ii) inventory which is sold in the ordinary course of business;
(iii) sales of (A) all the issued and outstanding shares of stock of
WGRS so long as the Asset Sale Proceeds received by Borrower equal or
exceed $80,000,000 and the portion thereof required to be delivered to
Agent pursuant to Section 2.7 is so delivered and upon receipt thereof
Agent shall release WGRS from its guaranty of the Obligations on behalf of
Lenders, and (B) the Giddings Facility so long as the Asset Sale Proceeds
received by Borrower equal or exceed $30,000,000 and the portion thereof
required to be delivered to Agent pursuant to Section 2.7 is so delivered;
and
(iv) so long as no Default or Event of Default has occurred, other
assets or property which are sold in arm's length transactions to third
parties that are not Affiliates of Borrower and are sold for fair
consideration not in the aggregate in excess of $20,000,000 during any
Fiscal Year.
Neither Borrower nor any of Borrower's Subsidiaries will sell, transfer or
otherwise dispose of capital stock of any of Borrower's Subsidiaries except that
any Subsidiary of Borrower may sell or issue its own capital stock to the extent
not otherwise prohibited hereunder. No Related Person will discount, sell,
pledge or assign any notes payable to it, accounts receivable or future income
except to the extent expressly permitted under the Loan Documents.
(e) Limitation on Dividends, Redemptions and Prepayments on Senior
Unsecured Notes. No Related Person will:
(i) declare or pay any dividends on, or make any other distribution
in respect of any interest in it, other than dividends and distributions
by Borrower's Subsidiaries to Borrower if a Default has occurred and is
continuing, or will occur as a result thereof;
(ii) directly or indirectly make any capital contribution to or
purchase, redeem, acquire or retire any securities in any Related Person
(whether such interests are now or hereafter issued, outstanding or
created) other than contributions, purchases, redemptions, acquisitions,
retirements made by any Subsidiary with respect to any shares of its
capital stock owned by Borrower if a Default has occurred and is
continuing, or will occur as a result thereof;
(iii) purchase, repurchase, defease or make any prepayments on the
Debt Securities except (A) with proceeds from any issuance of common or
preferred stock of Borrower in an amount not to exceed ten percent (10%)
of such proceeds, (B) with Asset Sale Proceeds from any Asset Sale in an
amount not to exceed ten percent (10%) of the Asset Sale Proceeds arising
from such Asset Sale and (C) any such purchase, repurchase, defeasance or
prepayment (not described in (a) or (b) above) if at the time thereof the
Commitment is equal to or less than $250,000,000, the outstanding
principal balance of
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the Committed Loans is equal to or less than $150,000,000, and no Default
has occurred and is continuing, or will occur as a result thereof.
(f) Limitation on Investments and New Businesses. No Related Person will:
(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 clause (iii) or (iv) of this
Section 6.2(f);
(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 expenditures,
commitments, obligations and transactions permitted by clause (iii) or
(iv) of this Section 6.2(f);
(iii) make any acquisitions of or capital contributions to or other
investments except (A) capital contributions to and investments in
Williston Gas Company and Subsidiaries already wholly owned by such
Related Person and the joint ventures described on Schedule 4 hereto, (B)
deposits with any Lender, investments in obligations of any Lender or any
of such Lender's Affiliates, time deposits in other banking institutions
which, at the time such deposit is made, are rated "C" by Thomson
BankWatch, Inc. 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 (C) purchases of
open market commercial paper, maturing within 270 days after acquisition
thereof, with the highest or second highest credit rating given by either
Standard & Poor's Rating Services (a division of The McGraw-Hill
Companies, Inc.) or Moody's Investors Service, Inc. and investments in
money market mutual funds with equivalent ratings; or
(iv) make any significant acquisitions or investments in any
properties other than gas processing, treating, fractionation,
transmission, gathering and storage facilities, power generation
facilities, and domestic oil and gas properties and an office building
located in the State of Colorado and primarily used by the Related
Persons.
(g) Limitation on Credit Extensions. Except for investments permitted
under Section 6.2(f), no Related Person will extend credit, make advances or
make loans other than (i) normal and prudent extensions of credit to customers
buying goods and services in the ordinary course of business, which extensions
shall not be for longer periods than those extended by similar businesses
operated in a normal and prudent manner, and (ii) loans to Borrower or to any
Guarantor made in the ordinary course of business and (iii) loans made by
Borrower to its employees pursuant to the Stock Option Agreements; provided that
the aggregate outstanding amount of all such loans so made shall not exceed
$10,000,000, and (iv) to finance the purchase
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by Borrower's employees of certain real property, provided that the aggregate
outstanding amount of such loans shall not exceed $500,000.
(h) Transactions with Affiliates. Neither Borrower nor any of its
Subsidiaries will engage in any material transaction with any of its Affiliates
on terms which are less favorable to it than those which would have been
obtainable at the time in arm's-length dealing with Persons other than such
Affiliates, provided that such restriction shall not apply to transactions among
Borrower and its wholly owned Subsidiaries.
(i) Certain Contracts; Amendments; Multiemployer ERISA Plans. Except as
expressly provided for in the Loan Documents, no Related Person will, directly
or indirectly, enter into, create, or otherwise allow to exist any contract or
other consensual restriction on the ability of any Subsidiary of Borrower to:
(i) pay dividends or make other distributions to Borrower, (ii) to redeem equity
interests held in it by Borrower, (iii) to repay loans and other indebtedness
owing by it to Borrower, or (iv) to transfer any of its assets to Borrower,
provided that nothing contained in this sentence is intended to prohibit
Borrower's execution and delivery of the Debt Securities, as is in existence on
the date hereof, and the documents and instruments executed in connection
therewith. No Related Person will enter into, or amend or permit any amendment
to, any contract which releases, qualifies, limits, makes contingent or
otherwise detrimentally affects the rights of any Related Person in any joint
venture or partnership if such contract or amendment would have a Material
Adverse Effect. No Related Person will enter into, or amend or permit any
amendment to, any contract which releases, qualifies, limits, makes contingent
or otherwise detrimentally affects Agent or any Lender or the rights and
benefits of Agent or any Lender under or acquired pursuant to any Loan
Documents.
(j) Fiscal Year. No Related Person will change its fiscal year.
(k) Limitation for Net Products Exposure. No Related Person will enter
into, or otherwise be a party to) any Hedging Contract that does not comply with
the Risk Management Policy. Furthermore, the aggregate Net Product Exposure at
any time shall not exceed $10,000,000. "Net Products Exposure" means at the
close of any Business Day the sum of the following:
(i) the Related Persons' mark-to-market exposure of At Risk
Positions under the "Strategic Marketing Initiative" section of the Risk
Management Policy.
(ii) the Related Persons' mark-to-market exposure of At Risk
Positions under the "Risk Management Trading Program" section of the Risk
Management Policy.
(iii) the Related Persons' mark-to-market exposure of At Risk
Positions specifically approved by Borrower's Board of Directors which are
not covered by the Risk Management Policy.
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(iv) the Related Persons' mark-to-market net exposure under fixed
price sales contracts with terms in excess of 30 days and fixed price
purchase contracts with terms in excess of 30 days.
As used in this section, "At Risk Position" means net long or short position for
contracts purchased or sold in financial markets or over the counter.
(l) Debt to Capitalization Ratio. Borrower's Debt to Capitalization Ratio
will never be greater than 0.60 to 1.00 as of the end of any Fiscal Quarter
until and including December 31, 2000, and thereafter Borrower's Debt to
Capitalization Ratio will never be greater than 0.55 to 1.00 as of the end of
any Fiscal Quarter.
(m) Senior Debt to Capitalization Ratio. Borrower's Senior Debt to
Capitalization Ratio will never be greater than 0.40 to 1.00 as of the end of
any Fiscal Quarter, beginning with the Fiscal Quarter ending on September 30,
1999 until and including the Fiscal Quarter ending on December 31, 2001, and
thereafter Borrower's Senior Debt to Capitalization Ratio will never be greater
than 0.35 to 1.00 as of the end of any Fiscal Quarter.
(n) Fixed Charge Coverage Ratio. As of the end of each Fiscal Quarter,
Borrower's Fixed Charge Coverage Ratio for the four immediately preceding
consecutive Fiscal Quarters shall never be less than (i) 1.35 to 1.00 during the
period from and including June 30, 1999 until and including December 30, 1999,
(ii) 1.50 to 1.00 during the period from and including December 31, 1999 until
and including December 30, 2000, (iii) 1.80 to 1.00 during the period from and
including December 31, 2000 until and including December 30, 2001, (iv) 2.50 to
1.00 during the period from and including December 31, 2001 until and including
December 30, 2002 and (v) 3.25 to 1.0 at any time thereafter. For purposes of
this subsection, the term "Borrower's Fixed Charge Coverage Ratio" means for any
period, the ratio of (A) EBITDA, calculated excluding gains and losses on asset
sales and other extraordinary items, to (B) the sum of (1) the aggregate amount
of interest for such period treated as an expense or capitalized on Borrower's
consolidated financial statements plus (2) the aggregate amount of dividends
paid or declared by Borrower for such period in respect of the Preferred Stock,
not to exceed four regularly scheduled dividends and all special dividends.
ARTICLE VII. - Security
Section VII.1. The Security. The Obligations will be secured by the
Security Documents listed in the Security Schedule and any additional Security
Documents hereafter delivered by any Related Person and accepted by Agent.
Section VII.2. Offset. Borrower hereby grants to Agent and each Lender a
right of offset to secure the repayment of the Obligations, which right of
offset shall be upon and against (a) any and all moneys, securities or other
property (and the proceeds therefrom) of Borrower now or hereafter held or
received by or in transit to Agent or any Lender from or for the account
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of Borrower, whether for safekeeping, custody, pledge, transmission, collection
or otherwise, (b) any and all deposits (general or special, time or demand,
provisional or final) of Borrower with Agent or any Lender, and (c) any other
credits and claims of Borrower at any time existing against Agent or any Lender,
including claims under certificates of deposit. Upon the occurrence of any
Default, each of Agent and Lenders is hereby authorized to offset appropriate,
and apply, at any time and from time to time, without notice to Borrower, any
and all items hereinabove referred to against the Obligations.
Section VII.3. Guaranties of Borrower's Subsidiaries. Borrower shall
require each of the following Subsidiaries to immediately execute and deliver to
Agent an absolute and unconditional guaranty of the timely repayment of the
Obligations and the due and punctual performance of the obligations of Borrower
hereunder, which guaranty shall be satisfactory to Agent in form and substance:
(a) Each Subsidiary of Borrower which has EBITDA in any Fiscal Quarter
which constitutes ten percent (10%) or more of Borrower's Consolidated EBITDA
for such Fiscal Quarter or which has assets at any time with a book value equal
to or exceeding ten percent (10%) of the book value of Borrower's Consolidated
assets at such time;
(b) If the aggregate amount of Borrower's unconsolidated EBITDA for any
Fiscal Quarter plus the aggregate EBITDA of Guarantors during such Fiscal
Quarter does not constitute eighty- five percent (85%) or more of Borrower's
Consolidated EBITDA for such Fiscal Quarter or if the book value of Borrower's
individual assets at any time plus the aggregate book value of the assets of
Guarantors at such time does not exceed eight-five percent (85%) of the book
value of Borrower's Consolidated assets at such time, then Subsidiaries of
Borrower with aggregate assets and/or EBITDA necessary to comply with the
eighty-five percent (85%) tests contained in this subsection; and
(c) Upon request by Agent on behalf of Majority Lenders, any other
Subsidiary of Borrower.
Borrower will cause each of its Subsidiaries to deliver to Agent, simultaneously
with its delivery of such a guaranty, written evidence satisfactory to Agent and
its counsel that such Subsidiary has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery and performance
of such guaranty and any other documents which it is required to execute.
Section VII.4. Deposits
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(a) During the continuance of any Event of Default or if upon the Tranche
B Maturity Date any LC remains outstanding, Agent may, on behalf of Majority
Lenders, require Borrower to deposit funds with Agent under this section in an
amount up to the aggregate amount which Lenders might then or thereafter be
called upon to advance under all LCs then outstanding. Any funds deposited under
this section shall be held by Agent for the benefit of Lenders as collateral,
and Borrower will in connection therewith execute and deliver such Security
Documents as Majority Lenders may in their discretion require. As drafts or
demands for payment are presented under any LCs, Agent shall apply such funds to
satisfy Borrower's reimbursement obligations with respect thereto. Pending such
application Agent shall invest such funds as mutually agreed upon by Majority
Lenders and Borrower and, if no such agreement is made, in overnight eurodollar
deposits or time deposits with or certificates of deposit issued by Agent, with
maturities from one to sixty days as chosen by Agent and upon such other terms
and conditions as Agent chooses. All interest on such investments shall be
reinvested or applied to LC reimbursement obligations in the same manner as
funds originally deposited by Borrower or, if Borrower requests, released to
Borrower so long as no Default or Event of Default exists. When all LCs have
expired and Borrower's reimbursement obligations in connection therewith have
been satisfied, Agent shall, provided no Default or Event of Default then
exists, release to Borrower any remaining funds and interest deposited under
this section. Borrower shall in no event be obligated to make deposits under
this Section 7.4 whenever the funds and interest already deposited equal or
exceed the aggregate amount which Lenders might then or thereafter be called
upon to advance under all LCs then outstanding.
(b) Whenever Borrower is required to make deposits under this section and
fails to do so on the day such deposit is due, Agent and Lenders may without
notice to Borrower make such deposit (whether by transfers from other accounts
maintained with Lenders, or otherwise) using any funds then available to Agent
or any Lender of Borrower, any Guarantor, or any other person liable for all or
any part of Borrower's obligations hereunder or with respect to the LCs. Any
amounts which are required hereunder to be deposited pursuant to this section
and which are not deposited on the date due shall, for the purposes of each
Security Document, be considered past due debts owing hereunder, and Agent is
hereby authorized to exercise its rights under each Security Document to obtain
funds for deposit as contemplated in this section.
ARTICLE VIII. - Events of Default and Remedies
Section VIII.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
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(a) (i) Any Related Person fails to pay any principal when due and
payable, whether at a date for the payment of a fixed installment or
contingent or other payment to Agent, Issuing Bank or any Lender or as a
result of acceleration or otherwise, or (ii) any Related Person fails to
pay any interest or other Obligation other than principal when due and
payable, whether at a date for the payment of a fixed installment or
contingent or other payment to Agent, Issuing Bank or any Lender or as a
result of acceleration or otherwise, and such failure continues for ten
(10) Business Days after such payment is due; or
(b) Any default occurs under any Loan Document, any document
governing or evidencing the Debt Securities, or evidencing any interest
therein, or any event of default or termination event occurs under any
Hedging Contract to which a Lender is a party, and such default, event of
default or termination event is not remedied within the applicable period
of grace (if any) provided for in such document or an Event of Default
occurs under the Bridge Loan Agreement; or
(c) Any Related Person fails to duly observe, perform or comply with
any provision of Section 6.2, provided that no grace period shall be
applicable to such failure, or any Related Person fails to duly observe,
perform or comply with any other covenant, agreement, condition or
provision (except those referred to above in this subsection and in
subsections (a) and (b) above) of any Loan Document in any material
respect, and such failure is not remedied within thirty (30) days; or
(d) Any representation or warranty previously, presently or
hereafter made in writing by or on behalf of any Related Person in
connection with any Loan Document shall prove to have been false or
incorrect in any material respect on any date on or as of which made, and
such representation or warranty does not become true and correct within
thirty days; or
(e) Any Related Person fails to duly observe, perform or comply with
any agreement with any Person or any term or condition of any instrument,
if such agreement or instrument is materially significant to Borrower and
its Subsidiaries on a Consolidated basis, and such failure is not remedied
within the applicable period of grace (if any) provided in such agreement
or instrument; or
(f) Any Related Person (i) fails to duly pay any Debt constituting
principal or interest owed by it to any Person other than Agent, Issuing
Bank or any Lender with respect to borrowed money or money otherwise owed
under any note, bond, or similar instrument (including, but not limited
to, the Debt under the Debt Securities, the Bridge Loan Agreement or the
Subordinated Debt) unless such Related Person is contesting the validity
of such Debt by appropriate proceedings and has set aside on its books
adequate allowance accounts therefor in accordance with GAAP or (ii)
breaches or defaults in the performance of any agreement or instrument by
which any Debt described in the
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preceding clause (i) is issued, evidenced, governed, or secured, and any
such failure, breach or default continues beyond any applicable period of
grace provided therefor; or
(g) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) in excess
of $10,000,000 exists with respect to any ERISA Plan, whether or not
waived by the Secretary of the Treasury or his delegate, or (ii) any
Termination Event occurs with respect to any ERISA Plan and the then
current value of such ERISA Plan's benefits guaranteed under Title IV of
ERISA exceeds the then current value of such ERISA Plan's assets available
for the payment of such benefits by more than $1,000,000 (or in the case
of a Termination Event involving the withdrawal of a substantial employer,
the withdrawing employer's proportionate share of such excess exceeds such
amount); or
(h) Any Related Person:
(i) suffers the entry against it of a judgment, decree or
order for relief by a court of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar law of any jurisdiction now or hereafter
in effect, including the federal Bankruptcy Code, as from time to
time amended, or has any such proceeding commenced against it which
remains undismissed for a period of sixty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended;
or applies for or consents to the entry of an order for relief in an
involuntary case under any such law; or makes a general assignment
for the benefit of creditors; or fails generally to pay (or admits
in writing its inability to pay) its debts as such debts become due;
or takes corporate or other action to authorize any of the
foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets in a
proceeding brought against or initiated by it, and such appointment
or taking possession is neither made ineffective nor discharged
within thirty days after the making thereof, or such appointment or
taking possession is at any time consented to, requested by, or
acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $ 5,000,000 (not covered by effective
insurance), unless the same is discharged within sixty days after
the date of entry thereof or an appeal or appropriate proceeding for
review thereof is taken within such period and a stay of execution
pending such appeal is obtained; or
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(v) suffers a writ or warrant of attachment or any similar
process to be issued by any court against all or any substantial
part of its assets or any part of the collateral subject to a
Security Document, and such writ or warrant of attachment or any
similar process is not stayed or released within thirty days after
the entry or levy thereof or after any stay is vacated or set aside;
or
(i) Without the express prior written consent of Majority Lenders,
Borrower amends or modifies the terms of any of the documents or
instruments governing, or otherwise executed in connection with, any of
the Debt Securities including but not limited to, an amendment or
modification to (a) shorten the maturity of the Debt Securities, or (b)
increase the maximum principal amount of the Debt Securities; provided,
however, that Borrower may increase the interest rate or fees payable
under or with respect to the Debt Securities without the consent of any
Lender; or
(j) Without the express prior written consent of Majority Lenders,
Borrower amends or modifies the terms of any of the documents or
instruments governing, or otherwise executed in connection with, the
Subordinated Debt, including but not limited to, an amendment or
modification to (a) shorten the maturity of the Subordinated Debt, (b)
increase the maximum principal amount of the Subordinated Debt, or (c)
modify the terms of the subordination of the Subordinated Debt to the
Senior Debt; or
(k) Without the express prior written consent of Majority Lenders,
Borrower amends or modifies any term of the Preferred Stock; or
(l) A Change in Control occurs.
Upon the occurrence of an Event of Default described in subsection (h)(i),
(h)(ii) or (h)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Related Person who at any time
ratifies or approves this Agreement. Upon any such acceleration, any obligation
of any Lender to make any further Committed Loan or of Issuing Bank to issue LCs
shall be permanently terminated. During the continuance of any other Event of
Default, Agent at any time and from time to time may (and upon written
instructions from Majority Lenders, Agent shall), without notice to Borrower or
any other Related Person, do either or both of the following: (1) terminate any
obligation of Lenders to make the Committed Loans hereunder, (2) terminate any
obligation of Issuing Bank to issue LCs, and (3) declare any or all of the
Obligations immediately due and payable, and all such Obligations shall
thereupon be immediately due and payable, without demand, presentment, notice of
demand or of dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any other
notice or declaration of any kind, all of which are hereby expressly waived by
Borrower and each Related Person who at any time ratifies or approves this
Agreement.
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Section VIII.2. Remedies. If any Default shall occur and be continuing,
each Lender may protect and enforce its rights under the Loan Documents by any
appropriate proceedings, including proceedings for specific performance of any
covenant or agreement contained in any Loan Document, and each Lender may
enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers conferred
upon Agent and Lenders under the Loan Documents shall be deemed cumulative and
not exclusive of any other rights, remedies or powers available under the Loan
Documents or at law or in equity.
Section VIII.3. Indemnity. Borrower agrees to indemnify Agent, Issuing
Bank and each Lender, upon demand, from and against any and all liabilities,
obligations, claims, losses, damages, penalties, fines, actions, judgments,
suits, settlements, costs, expenses or disbursements (including reasonable fees
of attorneys, accountants, experts and advisors) of any kind or nature
whatsoever (in this section collectively called "liabilities and costs") which
to any extent (in whole or in part) may be imposed on, incurred by, or asserted
against Agent, Issuing Bank or such Lender growing out of, resulting from or in
any other way associated with the Loan Documents, any LC issued by Issuing Bank
and the transactions and events (including the enforcement or defense thereof)
at any time associated therewith or contemplated therein (including any
violation or noncompliance with any Environmental Laws by any Related Person or
any liabilities or duties of any Related Person, Agent, Issuing Bank or any
Lender with respect to Hazardous Materials found in or released into the
environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT, ISSUING BANK OR ANY LENDER.
Notwithstanding anything else contained in this Agreement, neither Agent,
Issuing Bank nor any Lender shall be entitled under this section to receive
indemnification for that portion, if any, of any liabilities and costs which is
proximately caused by its own individual gross negligence or willful misconduct,
as determined in a final judgment. If any Person (including Borrower or any of
its Affiliates) ever alleges such gross negligence or willful misconduct by
Agent, Issuing Bank or any Lender, the indemnification provided for in this
section shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. As used in this section the terms "Agent," "Issuing Bank"
and "Lender" shall refer not only to the Persons designated as such in Section
1.1 but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
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ARTICLE IX. - Agent
Section IX.1. Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Agent (which term as used in this sentence and in Section 9.5 and the
first sentence of Section 9.6 hereof shall include its affiliates and its own
and its affiliates' officers, directors, employees, and agents): (a) shall not
have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not
be responsible to Lenders for any recital, statement, representation, or
warranty (whether written or oral) made in or in connection with any Loan
Document or any certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any Loan Document,
or any other document referred to or provided for therein or for any failure by
any Related Person or any other Person to perform any of its obligations
thereunder; (c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by any Related Person or the satisfaction of any condition or to
inspect the property (including the books and records) of any Related Person or
any of its Subsidiaries or affiliates; (d) shall not be required to initiate or
conduct any litigation or collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted to be taken by it
under or in connection with any Loan Document, except for its own gross
negligence or willful misconduct. Agent may employ agents and attorneys-in-fact
and shall not be responsible for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care.
Section IX.2. Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telecopy) believed by it to be
genuine and correct and to have been signed, sent or made by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Related Person), independent accountants, and other
experts selected by Agent. Agent may deem and treat the payee of any Note as the
holder thereof for all purposes hereof unless and until Agent receives and
accepts an Assignment and Acceptance executed in accordance with Section 10.5
hereof. As to any matters not expressly provided for by this Agreement, Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Lenders,
and such instructions shall be binding on all of Lenders; provided, however,
that Agent shall not be required to take any action that exposes Agent to
personal liability or that is contrary to any Loan Document or applicable law or
unless it shall first be indemnified to its satisfaction by Lenders against any
and all liability and expense which may be incurred by it by reason of taking
any such action.
Section IX.3. Defaults. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless Agent has
received written notice from a
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Lender or Borrower specifying such Default or Event of Default and stating that
such notice is a "Notice of Default". In the event that Agent receives such a
notice of the occurrence of a Default or Event of Default, Agent shall give
prompt notice thereof to Lenders. Agent shall (subject to Section 9.2 hereof)
take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Majority Lenders, provided that, unless and until
Agent shall have received such directions, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
Lenders.
Section IX.4. Rights as Lender. With respect to its Commitment and the
Loans made by it, NationsBank (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include Agent in its individual capacity. NationsBank (and any
successor acting as Agent) and its affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to, make investments
in, provide services to, and generally engage in any kind of lending, trust, or
other business with any Related Person or any of its Subsidiaries or affiliates
as if it were not acting as Agent, and NationsBank (and any successor acting as
Agent) and its affiliates may accept fees and other consideration from any
Related Person or any of its Subsidiaries or affiliates for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.
Section IX.5. Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed under Section 8.3 hereof, but without limiting the
obligations of Borrower under such Section) ratably in accordance with their
respective Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
attorneys' fees), or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender) in
any way relating to or arising out of any Loan Document or the transactions
contemplated thereby or any action taken or omitted by Agent under any Loan
Document (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF AGENT);
provided that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any costs or
expenses payable by Borrower under Section 8.3, to the extent that Agent is not
promptly reimbursed for such costs and expenses by Borrower. The agreements
contained in this Section shall survive payment in full of the Loans and all
other amounts payable under this Agreement.
Section IX.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Related Persons and their Subsidiaries and
decision to enter into this Agreement and that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
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analysis and decisions in taking or not taking action under the Loan Documents.
Except for notices, reports, and other documents and information expressly
required to be furnished to Lenders by Agent hereunder, Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any
Related Person or any of its Subsidiaries or affiliates that may come into the
possession of Agent or any of its affiliates.
Section IX.7. Resignation of Agent. Agent may resign at any time by giving
notice thereof to Lenders and Borrower. Upon any such resignation, the Majority
Lenders shall have the right to appoint a successor Agent with the consent of
Borrower, which consent shall not be unreasonably withheld. If no successor
Agent shall have been so appointed by the Majority Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of
Lenders, appoint a successor Agent which shall be a commercial bank organized
under the laws of the United States of America having combined capital and
surplus of at least $1,000,000,000 and which shall have experience lending to
oil and gas companies. Upon the acceptance of any appointment as Agent hereunder
by a successor, such successor shall thereupon succeed to and become vested with
all the rights, powers, discretion, privileges, and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article IX shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
Section IX.8. Appointment and Authority. Each Lender hereby irrevocably
authorizes Agent, and Agent hereby undertakes, to receive payments of principal,
interest and other amounts due hereunder as specified herein and to take all
other actions and to exercise such powers under the Loan Documents as are
specifically delegated to Agent by the terms hereof or thereof, together with
all other powers reasonably incidental thereto. The relationship of Agent to
Lenders is only that of one commercial bank acting as administrative agent for
others, and nothing in the Loan Documents shall be construed to constitute Agent
a trustee or other fiduciary for any holder of any of the Notes or of any
participation therein nor to impose on Agent duties and obligations other than
those expressly provided for in the Loan Documents. With respect to any matters
not expressly provided for in the Loan Documents and any matters which the Loan
Documents place within the discretion of Agent, Agent shall not be required to
exercise any discretion or take any action, and it may request instructions from
Lenders with respect to any such matter, in which case it shall be required to
act or to refrain from acting (and shall be fully protected and free from
liability to all Lenders in so acting or refraining from acting) upon the
instructions of Majority Lenders (including itself), provided, however, that
Agent shall not be required to take any action which exposes it to a risk of
personal liability that it considers unreasonable or which is contrary to the
Loan Documents or to applicable law. Upon receipt by Agent from Borrower of any
communication calling for action on the part of Lenders or upon notice from any
Lender to Agent of any Default or Event of Default, Agent shall promptly notify
each Lender thereof.
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Section IX.9. Exculpation, Agent's Reliance, Etc. Neither Agent nor any of
its directors, officers, agents, attorneys, or employees shall be liable for any
action taken or omitted to be taken by any of them under or in connection with
the Loan Documents, INCLUDING THEIR NEGLIGENCE OF ANY KIND, except that each
shall be liable for its own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent (a) may treat the payee of any
Note as the holder thereof until Agent receives written notice of the assignment
or transfer thereof in accordance with this Agreement, signed by such payee and
in form satisfactory to Agent; (b) may consult with legal counsel (including
counsel for Borrower), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with the Loan Documents; (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of the Loan Documents on the part of any Related Person
or to inspect the property (including the books and records) of any Related
Person; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Loan Document or any instrument or document furnished in connection therewith;
(f) may rely upon the representations and warranties of the Related Persons and
Lenders in exercising its powers hereunder; and (g) shall incur no liability
under or in respect of the Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (including any telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
Person or Persons.
Section IX.10. Lenders' Credit Decisions. Each Lender acknowledges that it
has, independently and without reliance upon Agent or any other Lender, made its
own analysis of Borrower and the transactions contemplated hereby and its own
independent decision to enter into this Agreement and the other Loan Documents.
Each Lender also acknowledges that it will, independently and without reliance
upon Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents.
Section IX.11. Expenses; Indemnification.
(a) Borrower agrees to pay on demand all reasonable costs and expenses of
Agent in connection with the syndication, preparation, execution, delivery,
administration, modification, and amendment of this Agreement, the other Loan
Documents, and the other documents to be delivered hereunder, including, without
limitation, the reasonable fees and expenses of counsel for Agent (including the
cost of internal counsel) with respect thereto and with respect to advising
Agent as to its rights and responsibilities under the Loan Documents. Borrower
further agrees to pay on demand all costs and expenses of Agent and Lenders, if
any (including, without limitation, reasonable attorneys' fees and expenses and
the cost of internal counsel), in connection with the enforcement (whether
through negotiations, legal proceedings, or otherwise) of the Loan Documents and
the other documents to be delivered hereunder.
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(b) Borrower agrees to indemnify and hold harmless Agent and each Lender
and each of their affiliates and their respective officers, directors,
employees, agents, and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys' fees) that may be incurred
by or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation, or proceeding or preparation of
defense in connection therewith) the Loan Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the Loans
(INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED
PARTY), except to the extent such claim, damage, loss, liability, cost, or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct and except to the extent that such claim, damage, loss,
liability, cost, or expense arises in a suit by one Lender against another
Lender in each case solely in its capacity as a "Lender" hereunder and not in
its capacity as Agent or Issuing Bank. In the case of an investigation,
litigation or other proceeding to which the indemnity in this Section 9.11
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by Borrower, its directors, shareholders or
creditors or an Indemnified Party or any other Person or any Indemnified Party
is otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated.
(c) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section
9.11 shall survive the payment in full of the Loans and all other amounts
payable under this Agreement.
Section IX.12. Rights as Lender. In its capacity as a Lender, Agent shall
have the same rights and obligations as any Lender and may exercise such rights
as though it were not Agent. Agent may accept deposits from, lend money to, act
as Trustee under indentures of, and generally engage in any kind of business
with any of the Related Persons or their Affiliates, all as if it were not Agent
hereunder and without any duty to account therefor to any other Lender.
Section IX.13. Adjustments.
(a) If any Lender (a "benefitted Lender") shall at any time receive any
payment of all or part of the Loans owing to it, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Loans owing to it, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loans owing to it, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits
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returned, to the extent of such recovery, but without interest. The Borrower
agrees that any Lender so purchasing a participation from a Lender pursuant to
this Section 9.13 may, to the fullest extent permitted by law, exercise all of
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Person were the direct creditor of the
Borrower in the amount of such participation.
Section IX.14. Benefit of Article IX. The provisions of this Article
(other than Section 9.7) are intended solely for the benefit of Agent and
Lenders, and no Related Person shall be entitled to rely on any such provision
or assert any such provision in a claim or defense against Agent or any Lender.
Agent and Lenders may waive or amend such provisions as they desire without any
notice to or consent of Borrower or any Related Person.
Section IX.15. Agency/Administrative Fee. To compensate Agent for
performing its duties under the Loan Documents and for expenses incurred by
Agent in connection with such performance, Borrower shall pay to Agent an agency
and administrative fee in an amount mutually agreed upon by Borrower and Agent.
Section 9.16. Syndication Agent and Documentation Agent. The Lenders
identified on the facing page of this Agreement as "Syndication Agent" and
"Documentation Agent", respectively, have no right, power, obligation,
liability, responsibility, or duty under this Agreement other than those
applicable to all Lenders as such. Without limiting the foregoing, the Lenders
so identified as "Syndication Agent" and "Documentation Agent", respectively,
shall not have and shall not be deemed to have any fiduciary relationship with
any Lender. Each Lender acknowledges that it has not relied, and will not rely,
on taking or not taking action hereunder.
ARTICLE X. - Miscellaneous
Section X.1. Waivers and Amendments; Acknowledgments.
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(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by Agent, Issuing Bank or any Lender in exercising any
right, power or remedy which Agent, Issuing Bank or such Lender may have under
any of the Loan Documents shall operate as a waiver thereof or of any other
right, power or remedy, nor shall any single or partial exercise by Agent,
Issuing Bank or such Lender of any such right, power or remedy preclude any
other or further exercise thereof or of any other right, power or remedy. No
failure or delay (whether by course of conduct or otherwise) by Borrower in
exercising any right, power or remedy which Borrower may have under any of the
Loan Documents shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by Borrower of any such right,
power or remedy preclude any other or further exercise thereof or of any other
right, power or remedy. No waiver of any provision of any Loan Document and no
consent to any departure therefrom shall ever be effective unless it is in
writing and signed as provided below in this section, and then such waiver or
consent shall be effective only in the specific instances and for the purposes
for which given and to the extent specified in such writing. No notice to or
demand on any Related Person shall in any case of itself entitle any Related
Person to any other or further notice or demand in similar or other
circumstances.
(b) No waiver or supplement to this Agreement or the other Loan Documents
shall be valid or effective against any party hereto unless the same is in
writing and signed by (i) if such party is Borrower, by Borrower, (ii) if such
party is Agent, by Agent, (iii) if such party is Issuing Bank, by Issuing Bank,
and (iv) if such party is a Lender, by Majority Lenders or by Agent on behalf of
Lenders with the written consent of Majority Lenders (which consent has already
been given as to the termination of the Loan Documents as provided in Section
10.8). Notwithstanding the foregoing or anything to the contrary herein, no such
amendment or waiver shall, unless signed by all Lenders or by Agent on behalf of
all Lenders with the prior consent of each individual Lender, (1) waive any of
the conditions specified in Article IV (provided that Agent may in its
discretion withdraw any request it has made under Section 4.2(f)), (2) increase
the Percentage Share or Commitment of such Lender or subject such Lender to any
additional obligations, (3) reduce any fees hereunder, or the principal of, or
interest on, such Lender's Note, (4) postpone any date fixed for any payment of
any fees hereunder, or principal of, or interest on, such Lender's Note, (5)
amend the definition herein of "Majority Lenders" or otherwise change the
aggregate amount of Percentage Shares which is required for Agent, Lenders or
any of them to take any particular action under the Loan Documents, (6) release
Borrower from its obligation to pay such Lender's Note or any Guarantor from its
guaranty of such payment, or (7) release any Collateral except in accordance
with the express terms of any Loan Document.
(c) Acknowledgments and Admissions. Borrower hereby represents, warrants,
acknowledges and admits that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement and
the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Agent, Issuing Bank or any
Lender, whether written, oral or implicit, other than as expressly set out in
this Agreement or in another Loan Document delivered on or after the date
hereof, (iii) there are no representations, warranties, covenants, undertakings
or agreements by Agent, Issuing Bank or any Lender as to
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the Loan Documents except as expressly set out in this Agreement or in another
Loan Document delivered on or after the date hereof, (iv) neither Agent, Issuing
Bank nor any Lender has any fiduciary obligation toward Borrower with respect to
any Loan Document or the transactions contemplated thereby, (v) the relationship
pursuant to the Loan Documents between Borrower, on one hand, and Agent, Issuing
Bank and each Lender, on the other hand, is and shall be solely that of debtor
and creditor, respectively, (vi) no partnership or joint venture exists with
respect to the Loan Documents between any of Borrower, Agent, Issuing Bank and
Lenders, (vii) Agent is not Borrower's Agent, but Agent for Lenders, (viii)
should an Event of Default or Default occur or exist Agent and each Lender will
determine in its sole discretion and for its own reasons what remedies and
actions it will or will not exercise or take at that time, (ix) without limiting
any of the foregoing, Borrower is not relying upon any representation or
covenant by Agent or any Lender, or any representative thereof, and no such
representation or covenant has been made, that Agent or any Lender will, at the
time of an Event of Default or Default, or at any other time, waive, negotiate,
discuss, or take or refrain from taking any action permitted under the Loan
Documents with respect to any such Event of Default or Default or any other
provision of the Loan Documents, and (x) Agent and all Lenders have relied upon
the truthfulness of the acknowledgments in this section in deciding to execute
and deliver this Agreement and to make their Loans.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section X.2. Survival of Agreements; Cumulative Nature. All of the Related
Persons' various representations, warranties, covenants and agreements in the
Loan Documents shall survive the execution and delivery of this Agreement and
the other Loan Documents and the performance hereof and thereof, including the
making or granting of the Loans and the delivery of the Notes and the other Loan
Documents, and shall further survive until all of the Obligations are paid in
full and all of Agent's, Issuing Bank's and Lenders' obligations to Borrower are
terminated. All statements and agreements contained in any certificate or other
instrument delivered by any Related Person to Agent, Issuing Bank or any Lender
under any Loan Document shall be deemed representations and warranties by
Borrower or agreements and covenants of Borrower under this Agreement. The
representations, warranties, indemnities, and covenants made by the Related
Persons in the Loan Documents, and the rights, powers, and privileges granted to
Agent, Issuing Bank and Lenders in the Loan Documents, are cumulative, and,
except for expressly specified waivers and consents, no Loan Document shall be
construed in the context of another to diminish, nullify, or otherwise reduce
the benefit to Agent, Issuing Bank or any Lender of any such representation,
warranty, indemnity, covenant, right, power or privilege. In particular and
without limitation, no exception set out in this Agreement to any
representation, warranty, indemnity, or covenant herein contained shall apply to
any similar
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representation, warranty, indemnity, or covenant contained in any other Loan
Document, and each such similar representation, warranty, indemnity, or covenant
shall be subject only to those exceptions which are expressly made applicable to
it by the terms of the various Loan Documents.
Section X.3. Notices. All notices, requests, consents, demands and other
communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to Lenders), and shall be deemed
sufficiently given or furnished if delivered by personal delivery, by telecopy
or telex, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower and the Related
Persons at the address of Borrower specified on the signature pages hereto and
to Agent, Issuing Bank and the other Lenders at their addresses specified on the
signature pages hereto (unless changed by similar notice in writing given by the
particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery at the
address provided herein, (b) in the case of telecopy or telex, upon receipt, or
(c) in the case of registered or certified United States mail, three days after
deposit in the mail; provided, however, that no Borrowing Notice shall become
effective until actually received by Agent.
Section X.4. Joint and Several Liability; Parties in Interest;
Assignments. All Obligations which are incurred by two or more Related Persons
shall be their joint and several obligations and liabilities. All grants,
covenants and agreements contained in the Loan Documents shall bind and inure to
the benefit of the parties thereto and their respective successors and assigns;
provided, however, that no Related Person may assign or transfer any of its
rights or delegate any of its duties or obligations under any Loan Document
without the prior consent of Majority Lenders. Neither Borrower nor any
Affiliates of Borrower shall directly or indirectly purchase or otherwise retire
any Obligations owed to any Lender nor will any Lender accept any offer to do
so, unless each Lender shall have received substantially the same offer with
respect to the same Percentage Share of the Obligations owed to it. If Borrower
or any Affiliate (excluding members of Borrower's Board of Directors or
Affiliates of such members) of Borrower at any time purchases some but less than
all of the Obligations owed to Agent, Issuing Bank and all Lenders, such
purchaser shall not be entitled to any rights under the Loan Documents unless
and until Borrower or its Affiliates have purchased all of the Obligations.
Section X.5. Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Loans, its Note, and its Commitment);
provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
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<PAGE>
(ii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under this
Agreement, any such partial assignment shall be in an amount at least
equal to $10,000,000 or an integral multiple of $5,000,000 in excess
thereof;
(iii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under this
Agreement, each Lender's Percentage Share of the Commitments shall not be
less than the lesser of $10,000,000 or 5% of the aggregate amount of such
Commitments then outstanding;
(iv) each such assignment by a Lender shall be of a constant, and
not varying, percentage of all of its rights and obligations under this
Agreement and the Note; and
(v) the parties to such assignment shall execute and deliver to
Agent for its acceptance (A) an Assignment and Acceptance in the form of
Exhibit G hereto, together with any Note subject to such assignment and a
processing fee of $3,500 and (B) each such assignee shall agree in writing
to be bound to the terms and conditions of that certain Intercreditor
Agreement of even date herewith by and among Agent, Lenders, The
Prudential Insurance Company of America, the American General Group, and
other Persons that are or become parties thereto from time to time as the
same may be supplemented, amended or restated from time to time.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, Agent and
Borrower shall make appropriate arrangements so that, if required, new Notes are
issued to the assignor and the assignee. If the assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to Borrower and Agent certification as to exemption from deduction or
withholding of Taxes in accordance with Section 2.15(d).
(b) Agent shall maintain at its address set forth on its signature page
hereto a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from time
to time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrower, Agent and Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, Agent
-74-
<PAGE>
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit G hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and its Loans); provided, however, that (i) such
participant shall be an Eligible Assignee, (ii) such Lender's obligations under
this Agreement shall remain unchanged, (iii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iv) the participant shall be entitled to the benefit of the yield protection
provisions contained in Article II and the right of set-off contained in Section
7.2, and (v) Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of Borrower relating to its Loans and its Note and to approve any
amendment, modification, or waiver of any provision of this Agreement (other
than amendments, modifications, or waivers decreasing the amount of principal of
or the rate at which interest is payable on such Loans or Note, extending any
scheduled principal payment date or date fixed for the payment of interest on
such Loans or Note, or extending its Commitment).
(e) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time assign and pledge all or any portion of its Loans and its
Note to any Federal Reserve Bank as collateral security pursuant to Regulation A
and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning Borrower or any of
its Subsidiaries in the possession of such Lender from time to time to assignees
and participants (including prospective assignees and participants), subject,
however, to the provisions of Section 6.1(c) hereof.
(g) No Lender will request that a rating agency prepare a credit rating
for Borrower without giving prior notice to Borrower.
Section X.6. Governing Law; Submission to Process. Except to the extent
that the law of another jurisdiction is expressly elected in a Loan Document,
the Loan Documents shall be deemed contracts and instruments made under the laws
of the State of Texas and shall be construed and enforced in accordance with and
governed by the laws of the State of Texas and the laws of the United States of
America, without regard to principles of conflicts of law. Chapter 346 of the
Texas Finance Code (the "Texas Finance Code") as amended (which regulates
certain revolving credit loan accounts and revolving tri-party accounts) does
not apply to this Agreement or to the Notes. Borrower hereby irrevocably submits
itself and each other Related Person to the non-exclusive jurisdiction of the
state and federal courts sitting in the State of Texas and agrees and consents
that service of process may be made upon it or any of the
-75-
<PAGE>
Related Persons in any legal proceeding relating to the Loan Documents or the
Obligations by any means allowed under Texas or federal law.
Section X.7. Limitation on Interest. Agent, Issuing Bank, Lenders, the
Related Persons and any other parties to the Loan Documents intend to contract
in strict compliance with applicable usury law from time to time in effect. In
furtherance thereof such Persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by applicable
law from time to time in effect. Neither any Related Person nor any present or
future guarantors, endorsers, or other Persons hereafter becoming liable for
payment of any Obligation shall ever be liable for unearned interest thereon or
shall ever be required to pay interest thereon in excess of the maximum amount
that may be lawfully charged under applicable law from time to time in effect,
and the provisions of this section shall control over all other provisions of
the Loan Documents which may be in conflict or apparent conflict herewith.
Agent, Issuing Bank and Lenders expressly disavow any intention to charge or
collect excessive unearned interest or finance charges in the event the maturity
of any Obligation is accelerated. If (a) the maturity of any Obligation is
accelerated for any reason, (b) any Obligation is prepaid and as a result any
amounts held to constitute interest are determined to be in excess of the legal
maximum, or (c) Agent, Issuing Bank or any Lender or any other holder of any or
all of the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the Obligations to an amount in excess of that permitted to be charged by
applicable law then in effect, then all sums determined to constitute interest
in excess of such legal limit shall, without penalty, be promptly applied to
reduce the then outstanding principal of the related Obligations or, at Agent's,
Issuing Bank's or such Lender's or holder's option, promptly returned to
Borrower or the other payor thereof upon such determination. In determining
whether or not the interest paid or payable, under any specific circumstance,
exceeds the maximum amount permitted under applicable law, Agent, Issuing Bank,
Lenders and the Related Persons (and any other payors thereof) shall to the
greatest extent permitted under applicable law, (i) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread the total amount of interest throughout the entire
contemplated term of the instruments evidencing the Obligations in accordance
with the amounts outstanding from time to time thereunder and the maximum legal
rate of interest from time to time in effect under applicable law in order to
lawfully charge the maximum amount of interest permitted under applicable law.
In the event applicable law provides for an interest ceiling under Chapter 303
of the Texas Finance Code, as amended, for that day, the ceiling shall be the
"weekly ceiling" as defined in the Texas Finance Code, provided that if any
applicable law permits greater interest, the law permitting the greatest
interest shall apply and shall be used when appropriate in determining the
Highest Lawful Rate. As used in this section the term "applicable law" means the
laws of the State of Texas or the laws of the United States of America,
whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.
-76-
<PAGE>
Section X.8. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if no Obligations are then owing this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
any Related Person in any Loan Document, any Obligations under Sections 2.10
through 2.14, and any obligations which any Person may have to indemnify or
compensate Agent, Issuing Bank or any Lender shall survive any termination of
this Agreement or any other Loan Document. At the request and expense of
Borrower, Agent shall prepare and execute all necessary instruments to reflect
and effect such termination of the Loan Documents. Agent is hereby authorized to
execute all such instruments on behalf of all Lenders, without the joinder of or
further action by any Lender.
Section X.9. Severability. If any term or provision of any Loan Document
shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.
Section X.10. Confidentiality. Agent and each Lender (each, a "Lending
Party") agree to keep confidential any information furnished or made available
to it by Borrower pursuant to this Agreement that is marked confidential;
provided that nothing herein shall prevent any Lending Party from disclosing
such information (a) to any other Lending Party or any affiliate of any Lending
Party, or any officer, director, employee, agent, or advisor of any Lending
Party or affiliate of any Lending Party, (b) to any other Person if reasonably
incidental to the administration of the credit facility provided herein, (c) as
required by any law, rule, or regulation, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure by
any Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Agreement or any other Loan Document, and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.
With respect to clause (a) and (b) of this Section 10.10, the Lending
Party disclosing such confidential information shall advise the Person to whom
the information is disclosed of the confidential nature of such information and
that the Lending Party making such disclosure shall be responsible for any
violation of this Section 10.10 by any such Person, and with respect to clauses
(c), (d), (e) and (g) of this Section 10.10, prior to any such disclosure, the
Lending Party shall (unless such Lending Party is unable because of requirements
of law or the exigency of the request for such disclosure): (i) promptly notify
Borrower thereof; (ii) consult with Borrower on the advisability of taking steps
to resist or narrow such request; and (iii) cooperate with Borrower in any
attempt it may make to obtain a protective order or other appropriate remedy to
assure that
-77-
<PAGE>
confidential treatment will be afforded such confidential information. In the
event such protective order or other appropriate remedy is not obtained, the
Lending Party agrees to furnish only that portion of such confidential
information which the Lending Party is advised by its counsel is legally
required to be disclosed.
Section X.11. Counterparts. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
SECTION X.12. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. EACH OF
BORROWER, ISSUING BANK, AGENT AND LENDERS HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY (a) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED
BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR
ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY; (b) WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (c) CERTIFIES THAT NO
PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (d)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
Section X.13. Restatement. This Agreement restates and amends the Existing
Agreement in its entirety, and all of the terms and provisions hereof shall
supersede the terms and provisions thereof.
-78-
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
WESTERN GAS RESOURCES, INC.
Borrower
By:
-------------------------------
William J. Krysiak
Vice President - Finance
Address:
12200 N. Pecos Street
Denver, Colorado 80234
Attention: General Counsel
Telephone: 03/452-5603
Telecopy: 303/254-9794
<PAGE>
NATIONSBANK, N.A., as
Agent, Issuing Bank and Lender
By:
-------------------------------
Name:
Title:
Address:
NationsBank Plaza
901 Main Street
Dallas, Texas
Tel: 214/209-9452
Fax: 214/209-2881
with a copy to:
David C. Rubenking
NationsBank, N.A.
370 17th Street, Suite 3250
Denver, Colorado
Tel: 303/629-6969
Fax: 303/629-6303
<PAGE>
SOCIETE GENERALE SOUTHWEST AGENCY,
as a Lender
By:
-------------------------------
Name:
Title:
Address:
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Loan Administration
Tel: 214/754-0171
Fax: 214/979-2792
with a copy to:
1111 Bagby, Suite 2020
Houston, Texas 77002
Attention: Richard Erbert
Tel: 713/650-0824
Fax: 713/759-6318
<PAGE>
ABN AMRO BANK N.V., as a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
Address:
208 S. LaSalle Street
Chicago, Illinois 60604
Tel: 312/992-5110
Fax: 312/992-5111
with a copy to:
3 Riverway, Suite 1700
Houston, Texas 77056
Attention: Robert Cunningham
Tel: 713/964-3351
Fax: 713/961-1699
<PAGE>
CREDIT LYONNAIS, as a Lender
By:
-------------------------------
Name:
Title:
Address:
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attention: Darryl Stanley
Tel: 713/753-8734
Fax: 713/751-0307
<PAGE>
BANKBOSTON, N.A., as a Lender
By:
-------------------------------
Name:
Title:
Address:
100 Federal Street
Boston, Massachusetts 02110
Attention: Terrence Ronan
Tel: 617/434-5472
Fax: 617/434-3652
<PAGE>
UNION BANK OF CALIFORNIA, N.A., as
a Lender
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
Address:
500 N. Akard, Suite 4200
Dallas, Texas 75201
Attention: Gary Shekerjian
Tel: 214/922-4213
Fax: 214/922-4209
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By:
-------------------------------
Name:
Title:
Address:
One First National Plaza
Chicago, Illinois 60670
Tel: 312/732-3659
Fax: 312/732-4840
with a copy to:
Bank One Texas, N.A.
910 Travis Street
Houston, Texas 77002
Attention: Dixon Schultz
Tel: 713/751-3741
Fax: 713/751-3760
<PAGE>
U.S. BANK NATIONAL ASSOCIATION, as
a Lender
By:
-------------------------------
Name:
Title:
Address:
918 17th Street
Denver, Colorado 80202
Attention: Monte Deckerd
Tel: 303/585-4212
Fax: 303/585-4362
EXHIBIT 10.21
================================================================================
WESTERN GAS RESOURCES, INC.
$27,000,000
8.02% SENIOR NOTES
DUE DECEMBER 1, 2005
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
Dated as of April 28, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
THE NOTES................................................................- 2 -
1. The Notes....................................................- 2 -
[INTENTIONALLY OMITTED]..................................................- 2 -
CONDITIONS PRECEDENT.....................................................- 2 -
3A. Conditions to Effectiveness..................................- 2 -
3B. Certain Documents............................................- 2 -
3C. Representations and Warranties; No Default...................- 4 -
3D. Transactions Permitted by Applicable Laws....................- 4 -
3E. Legal Matters................................................- 4 -
3F. Proceedings..................................................- 4 -
3G. Amendment of Other Agreements................................- 5 -
3H. Fees Payable at Closing......................................- 5 -
PREPAYMENTS..............................................................- 5 -
4. Prepayments..................................................- 5 -
4A. Optional Prepayment With Yield-Maintenance Amount............- 5 -
4B. Notice of Optional Prepayment................................- 5 -
4C. Application of Prepayments...................................- 6 -
4D. Retirement of Notes..........................................- 6 -
4E. Offer to Prepay Notes or Post Letters of Credit Upon
Occurrence of a Required Offer Event.........................- 6 -
4E(1) Required Offers........................................- 6 -
4E(2) Required Reoffers......................................- 7 -
4E(3) Acceptance or Rejection................................- 7 -
4E(4) Required Prepayment....................................- 8 -
4F. Issuance of Letters of Credit................................- 9 -
4F(1) In Lieu of Prepayment..................................- 9 -
4F(2) Election by the Company at any Time....................- 9 -
4F(3) Terms of Letters of Credit.............................- 9 -
4F(4) Payments by the Company; Company Remains Liable...... - 10 -
AFFIRMATIVE COVENANTS...................................................- 10 -
5. Affirmative Covenants.......................................- 10 -
5A. Financial Statements........................................- 10 -
5B. Inspection of Property......................................- 13 -
- ii -
<PAGE>
5C. Covenant to Secure Notes Equally............................- 13 -
5D. Agreement Assuming Liability on Notes.......................- 13 -
5E. Notice of Material Events...................................- 14 -
5F. Maintenance of Properties...................................- 14 -
5G. Maintenance of Existence and Qualifications.................- 14 -
5H. Insurance...................................................- 15 -
5I. Compliance with Agreements and Law..........................- 15 -
5J. Compliance with Environmental Laws..........................- 15 -
5K. Information Required by Rule 144A...........................- 16 -
5L. ERISA.......................................................- 16 -
5M. Guaranties..................................................- 16 -
5N. Credit Fees.................................................- 17 -
5N(1) First Credit Fee.....................................- 17 -
5N(2) Second Credit Fee....................................- 17 -
5O. Purchase Offer Fees.........................................- 18 -
5O(1) 1995 Notes...........................................- 18 -
5O(2) 1993 Notes...........................................- 18 -
5P. Pledge of Subsidiary Stock..................................- 18 -
5Q. Year 2000...................................................- 18 -
NEGATIVE COVENANTS......................................................- 19 -
6. Negative Covenants..........................................- 19 -
6A. Financial Covenants...................................- 19 -
6A(1) Consolidated Tangible Net Worth.......................- 19 -
6A(2) Current Ratio.........................................- 19 -
6A(3) Total Debt Maintenance................................- 19 -
6A(4) Senior Debt Maintenance...............................- 19 -
6A(5) Total Fixed Charge Coverage Ratio.....................- 20 -
6A(6) Senior Fixed Charge Coverage Ratio....................- 20 -
6A(7) Senior Debt to EBITDA.................................- 21 -
6B. Dividend Limitation.........................................- 21 -
6C. Lien, Debt, and Other Restrictions..........................- 21 -
6C(1) Liens.................................................- 22 -
6C(2) Debt..................................................- 23 -
6C(3) Limitation on Investments and New Businesses..........- 23 -
6C(4) Sale of Stock and Debt of Subsidiaries................- 24 -
6C(5) Merger and Sale of Assets.............................- 25 -
6C(6) Lease Rentals.........................................- 26 -
6C(7) Limitation on Credit Extensions.......................- 27 -
6C(8) Contracts; Take-or-Pay Agreements.....................- 27 -
6C(9) Sale or Discount of Receivables.......................- 27 -
6C(10)Guaranties............................................- 27 -
6C(11)Transactions With Affiliates..........................- 28 -
- iii -
<PAGE>
6C(12)Panhandle Joint Venture Debt..........................- 29 -
6C(13)Certain Matters Relating to Subordinated Debt.........- 29 -
6D. Issuance of Stock by Corporate Subsidiaries.................- 29 -
6E. Other Agreements............................................- 29 -
EVENTS OF DEFAULT.......................................................- 31 -
7A. Acceleration................................................- 31 -
7B. Rescission of Acceleration..................................- 35 -
7C. Notice of Acceleration or Rescission........................- 35 -
7D. Other Remedies..............................................- 35 -
REPRESENTATIONS, COVENANTS AND WARRANTIES...............................- 35 -
8. Representations, Covenants and Warranties...................- 35 -
8A. Organization................................................- 35 -
8B. Financial Statements........................................- 36 -
8C. Actions Pending.............................................- 36 -
8D. Outstanding Debt............................................- 36 -
8E. Environmental Compliance....................................- 37 -
8F. Taxes.......................................................- 37 -
8G. Conflicting Agreements and Other Matters....................- 37 -
8H. [Intentionally omitted].....................................- 38 -
8I. [Intentionally omitted].....................................- 38 -
8J. ERISA.......................................................- 38 -
8K. Governmental Consent........................................- 38 -
8L. Title to Properties.........................................- 38 -
8M. Disclosure..................................................- 39 -
8N. Delivery of Other Agreements................................- 39 -
8O. Public Utility Holding Company Act; Federal Power Act.......- 39 -
8P. Investment Company Act......................................- 39 -
8Q. Rank of Notes...............................................- 39 -
8R. Year 2000 Programming.......................................- 39 -
8S. Receivables Purchase Agreement..............................- 40 -
8T. 1993 Note Purchase Agreement................................- 40 -
8U. Existing Guaranties.........................................- 40 -
8V. MONY Notes..................................................- 40 -
PARAGRAPH 9. [Intentionally omitted]...............................- 40 -
DEFINITIONS.............................................................- 40 -
10. Definitions.................................................- 40 -
10A. Yield-Maintenance Terms.....................................- 40 -
10B. Other Terms.................................................- 41 -
10C. Accounting Terms and Determinations.........................- 54 -
- iv -
<PAGE>
MISCELLANEOUS...........................................................- 54 -
11A. Note Payments...............................................- 54 -
11B. Expenses....................................................- 55 -
11C. Consent to Amendments.......................................- 56 -
11D. Solicitation of Noteholders.................................- 56 -
11E. Form, Registration, Transfer and Exchange of Notes; Lost
Notes.......................................................- 57 -
11F. Persons Deemed Owners; Participations.......................- 58 -
11G. Survival of Representations and Warranties; Entire
Agreement...................................................- 58 -
11H. Successors and Assigns......................................- 58 -
11I. Disclosure to Other Persons; Confidentiality................- 58 -
11J. Notices.....................................................- 59 -
11K. Payments Due on Non-Business Days...........................- 59 -
11L. Satisfaction Requirement....................................- 59 -
11M. GOVERNING LAW...............................................- 60 -
11N. Limitation on Interest......................................- 60 -
11O. Severability................................................- 60 -
11P. Descriptive Headings........................................- 60 -
11Q. Counterparts................................................- 60 -
11R. Binding Agreement...........................................- 60 -
- v -
<PAGE>
REMAINING HOLDER SCHEDULE
SCHEDULE 6C(2) EXISTING DEBT
SCHEDULE 6C(8) EXISTING COUNTERPARTIES
SCHEDULE 8A SUBSIDIARIES AND CERTAIN OTHER ENTITIES
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF OPINION OF COMPANY'S COUNSEL
EXHIBIT C LIST OF AGREEMENTS RESTRICTING DEBT
EXHIBIT D FORM OF CONFIDENTIALITY LETTER
EXHIBIT E FORM OF GUARANTY
EXHIBIT F FORM OF ANNUAL CASH FLOW PROJECTION
EXHIBIT G FORM OF CONSENT
EXHIBIT H FORM OF COMPANY PLEDGE AGREEMENT
EXHIBIT I FORM OF MIGC PLEDGE AGREEMENT
EXHIBIT J FORM OF LETTER OF CREDIT
- vi -
<PAGE>
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
This AMENDED AND RESTATED NOTE PURCHASE AGREEMENT (this "Agreement")
is entered into as of April 28, 1999, among WESTERN GAS RESOURCES, INC., a
Delaware corporation (the "Company"), and The Variable Annuity Life Insurance
Company ("VALIC"), American General Life Insurance Company ("American General"),
American General Life and Accident Insurance Company (as successor in interest
to Gulf Life Insurance Company, "AGLA"), First Allmerica Financial Life
Insurance Company ("First Allmerica") and Allmerica Financial Life Insurance and
Annuity Company ("Allmerica" and together with VALIC, American General, AGLA and
First Allmerica, the "Remaining Holders"). The parties hereto agree as follows:
RECITALS
WHEREAS, the Company, the Remaining Holders and Mutual Life
Insurance Company of New York ("MONY" and together with the Remaining Holders,
the "1995 Purchasers") entered into that certain Note Purchase Agreement dated
as of November 29, 1995 (the "1995 Note Purchase Agreement") pursuant to which
the Company issued and sold to the 1995 Purchasers the 1995 Notes (as
hereinafter defined); and
WHEREAS, the Company entered into those certain separate Note
Purchase Agreements each dated as of April 1, 1993 (collectively, the "1993 Note
Purchase Agreement") with each of the purchasers listed on Annex 1 thereto
(collectively, the "1993 Purchasers"), respectively, pursuant to which the
Company issued and sold to the 1993 Purchasers its 7.65% Senior Notes due April
30, 2003 in the aggregate original principal amount of $50,000,000
(collectively, the "1993 Notes" and individually, a "1993 Note"); and
WHEREAS, the Company and The Prudential Insurance Company of America
entered into that certain Second Amended and Restated Master Shelf Agreement,
dated as of December 19, 1991, as amended by Letter Agreement No. 1 dated
November 21, 1997 (as so amended, the "Existing Master Shelf Agreement"); and
WHEREAS, the Company entered into that certain Loan Agreement dated
as of May 30, 1997 with NationsBank, N.A., as Agent, and the lenders parties
thereto (the "Existing NationsBank Agreement"); and
WHEREAS, the Company entered into that certain Loan Agreement dated
as of February 17, 1999 with Nations Bank, N.A. (as the provisions thereof have
heretofore been amended or waived or may be from time to time amended or waived
in compliance with paragraph 6E, the "Bridge Facility"); and
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WHEREAS, the Company has proposed modifications to various of its
financings, pursuant to which, among other things, the Company will (1) prepay
and retire the 1993 Notes, (2) amend the Existing Master Shelf Agreement, and
(3) terminate the Existing NationsBank Agreement and enter into the NationsBank
Agreement; and
WHEREAS, the Company and the Remaining Holders have agreed that, in
furtherance of the foregoing, the 1995 Note Purchase Agreement will be amended
and restated in its entirety; and
NOW, THEREFORE, to accomplish the matters contemplated by the
immediately preceding recitals and in consideration of the mutual premises
herein contained and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the 1995 Note Purchase Agreement
is hereby amended and restated in its entirety as follows:
PARAGRAPH 1. THE NOTES.
1. The Notes. Pursuant to the 1995 Note Purchase Agreement, the
Company authorized, issued and delivered its 8.02% Senior Notes in the aggregate
original principal amount of $42,000,000 of which $27,000,000 is outstanding,
dated the date of issue thereof, to mature December 1, 2005, to bear interest on
the unpaid balance from the date thereof until the principal shall have become
due and payable at the rate of 8.02% per annum and on overdue payments at the
rate specified therein (collectively, the "1995 Notes" and individually, a "1995
Note"). The term "Notes" as used herein shall include each 1995 Note issued and
delivered pursuant to any provision of the 1995 Note Purchase Agreement, each
PIK Note issued and delivered pursuant to paragraph 5N(1) of this Agreement and
each Note deliv-ered in substitution or exchange for any 1995 Note or PIK Note
pursuant to any provision of this Agreement. The Company and each Remaining
Holder hereby agree that the Notes will be subject to the terms and conditions
of the 1995 Note Purchase Agreement as herein amended and restated. Each
Remaining Holder severally agrees that the aggregate principal amount of Notes
outstanding as of the Effective Date and held by such Remaining Holder is set
forth opposite such Remaining Holder's name in the Remaining Holder's Schedule
attached hereto.
PARAGRAPH 2. [INTENTIONALLY OMITTED]
PARAGRAPH 3. CONDITIONS PRECEDENT.
3A. Conditions to Effectiveness. This Agreement shall become
effective as of April 28, 1999 (the "Effective Date"), subject to the
satisfaction, on or before the Effective Date, of the following conditions:
3B. Certain Documents. Each Remaining Holder shall have received the
following, each dated the Effective Date unless otherwise indicated:
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(i) a Guaranty executed by Western Gas Wyoming, L.L.C., WGR Canada,
Inc., Lance Oil and Gas Company and Pinnacle Gas Treating, Inc. and a
Consent executed by each Guarantor;
(ii) the Company Pledge Agreement executed by the Company and the
MIGC Pledge Agreement executed by MIGC;
(iii) the Intercreditor Agreement executed by each party thereto;
(iv) 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 Agreement, the Company Pledge Agreement and all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the Company Pledge
Agreement, and (b) the names and true signatures of the officers of the
Company authorized to sign this Agreement, the Company Pledge Agreement
and the other documents to be delivered by the Company hereunder;
(v) 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;
(vi) 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;
(vii) a favorable opinion of John C. Walter, General Counsel of the
Company, reasonably satisfactory to such Remaining Holder and
substantially in the form of Exhibit B attached hereto and as to such
other matters as such Remaining Holder may reasonably request, and by its
execution and delivery hereof the Company hereby directs such counsel to
deliver such opinion and acknowledges and agrees that each Remaining
Holder receiving such opinion will and is hereby authorized to rely on
such opinion;
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(viii) a copy of the Bridge Facility, in form and substance
satisfactory to such Remaining Holder and certified by an Authorized
Officer of the Company as being true and complete;
(ix) a copy of the NationsBank Agreement, in form and substance
satisfactory to such Remaining Holder and certified by an Authorized
Officer of the Company as being true and complete, together with evidence
satisfactory to such Remaining Holder as to the ability of the Company to
satisfy the conditions precedent to the extension of credit thereunder;
(x) copies of all amendments and waivers relating to the Master
Shelf Agreement, in form and substance satisfactory to such Remaining
Holder and certified by an Authorized Officer of the Company as being true
and complete; and
(xi) copies of all pledge agreements for the benefit of the holders
of Debt under the Bridge Facility, the NationsBank Agreement or the Master
Shelf Agreement, in each case in form and substance satisfactory to such
Remaining Holder and certified by an Authorized Officer of the Company as
being true and complete.
3C. Representations and Warranties; No Default. The representations
and warranties contained in paragraph 8 hereof, in each Guaranty, in the Company
Pledge Agreement and in the MIGC Pledge Agreement shall be true on and as of the
Effective Date after giving effect to the transactions herein contemplated;
there shall exist on the Effective Date no Event of Default or Default and no
Default or Event of Default would result from the transactions contemplated by
this Agreement; and the Company shall have delivered to such Remaining Holder an
Officer's Certificate, dated the Effective Date, to both such effects.
3D. Transactions Permitted by Applicable Laws. The transactions to
be consummated on the terms and conditions as herein provided shall not violate
any applicable law or governmental regulation and shall not subject such
Remaining Holder to any tax, penalty, liability or other onerous condition under
or pursuant to any applicable law or governmental regulation, and such Remaining
Holder shall have received such certificates or other evidence as it may
reasonably request to establish compliance with this condition.
3E. Legal Matters. Counsel to such Remaining Holder, including any
special counsel retained in connection with the transactions contemplated by
this Agreement, shall be satisfied as to all legal matters relating to such
transactions.
3F. Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be reasonably satisfactory in substance and form to such
Remaining Holder, and such Remaining Holder shall have received all such
counterpart originals or certified or other copies of such documents as such
Remaining Holder may reasonably request.
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3G. Amendment of Other Agreements. Neither the NationsBank
Agreement, the Bridge Facility nor the Master Shelf Agreement shall require (or
if so required, such conditions shall simultaneously terminate) (i) the grant of
a Lien on any property of the Company or any Subsidiary (other than (a) Liens in
favor of NationsBank, as agent, and the lenders under the NationsBank Agreement
and in favor of NationsBank 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 described in clause (xi) of paragraph 3B and other 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) or (ii) the delivery of 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 such Remaining Holder shall have received
a guaranty from the same Guarantor, (b) the pledge agreements described in
clause (xi) of paragraph 3B and other 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 such Remaining
Holder 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.
3H. Fees Payable at Closing. Without limiting the generality of
paragraph 11B, the Company shall have paid on or before the Effective Date the
fees, charges and disbursements of Baker & Botts, L.L.P., the Remaining Holders'
special counsel, to the extent reflected in a statement of such counsel rendered
to the Company at least one Business Day prior to the Effective Date.
PARAGRAPH 4. PREPAYMENTS.
4. Prepayments. The Notes shall be subject to prepayment only with
respect to the prepayments permitted by paragraphs 4A, 4E and 4F.
4A. Optional Prepayment With Yield-Maintenance Amount. The Notes
shall be subject to prepayment on any Business Day, in whole at any time or from
time to time in part (in multiples of $1,000,000), at the option of the Company,
at 100% of the principal amount so prepaid plus interest and the Credit Fees
thereon to the prepayment date and the Yield-Maintenance Amount, if any, with
respect to each such Note.
4B. Notice of Optional Prepayment. The Company shall give the holder
of each Note to be prepaid pursuant to paragraph 4A irrevocable written notice
of such prepayment not less
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than 30 days, and not more than 60 days, prior to the prepayment date (which
shall be a Business Day), specifying such prepayment date, specifying the
aggregate principal amount of the Notes to be prepaid on such date, identifying
each Note held by such holder, and the principal amount of each such Note, to be
prepaid on such date, providing an estimate (utilizing a Reinvestment Yield
calculated as if the date of such notice were the Settlement Date) of the
Yield-Maintenance Amount, if any, to become due on such prepayment date and the
calculation of such estimate, and stating that such prepayment is to be made
pursuant to paragraph 4A. Notice of prepayment having been given as aforesaid,
the principal amount of the Notes specified in such notice, together with
interest and the Credit Fees thereon to the prepayment date and together with
the Yield-Maintenance Amount, if any, herein provided, shall become due and
payable on such prepayment date and, on the Business Day next preceding such
prepayment date, the Company shall transmit by facsimile and by overnight
courier to the holder of each Note to be so prepaid the calculation of the
Yield-Maintenance Amount, if any, to be due on such prepayment date.
4C. Application of Prepayments. In the case of each partial
prepayment pursuant to paragraph 4A of all outstanding Notes, the principal
amount to be prepaid shall be allocated to all Notes at the time outstanding in
proportion to the respective outstanding principal amounts thereof.
4D. Retirement of Notes. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their final maturities (other than by prepayment pursuant to
paragraph 4A, 4E or 4F or upon acceleration of such final maturity pursuant to
paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes
held by any holder unless the Company or such Subsidiary or Affiliate shall have
offered to prepay or otherwise retire or purchase or otherwise acquire, as the
case may be, the same proportion of the aggregate principal amount of Notes held
by each other holder of Notes at the time outstanding upon the same terms and
conditions. Any Notes so prepaid or otherwise retired or purchased or otherwise
acquired by the Company or any of its Subsidiaries or Affiliates shall not be
deemed to be outstanding for any purpose under this Agreement.
4E. Offer to Prepay Notes or Post Letters of Credit Upon Occurrence
of a Required Offer Event.
4E(1) Required Offers. At least 20 days before the anticipated
date of the closing of the transaction with respect to each Required Offer Event
other than a Small Asset Sale and the sale of the stock of WGRS and the Giddings
Facility (as to which sales no formal Required Offers shall be required but
shall be deemed nevertheless to have been given), and in the case of a Small
Asset Sale, as soon as possible and in any event at least four (4) Business Days
before the anticipated date of the closing of the transaction with respect
thereto, the Company shall make a written offer (a "Required Offer"), contingent
upon the closing of such transaction, to each holder of Notes (all such holders,
together with the lenders under the NationsBank Agreement, the lender under the
Bridge Facility and the holders of notes under the Master Shelf Agreement,
collectively, the "Senior Debt Holders") of its offer to prepay, or, in the case
of a Required Offer as to which the
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Delivery Date occurs on or before August 12, 2000 (but not thereafter), to cause
the issuance of a Letter of Credit in support of, a portion of the principal
amount of Notes held by such holder of Notes on the date of closing of such
transaction (the "Delivery Date"). The Required Offer shall specify whether the
Company intends to make the prepayment in respect of the Note as to which such
offer is accepted (and any additional prepayment or Letter of Credit issuance
that may result from the acceptance of any subsequent Required Reoffer relating
thereto) in cash or, within the time period described in the preceding sentence,
to cause the issuance of a Letter of Credit pursuant to paragraph 4F(1) as
support for the Secured Amount of such Note. The amount of the prepayment
required to be made by, or the Letter of Credit required to be issued for the
account of, the Company to each holder of Notes that has accepted the Required
Offer shall be equal to (x) the lesser of the Net Proceeds Amount with respect
to such Required Offer Event and the difference between $270,000,000 and the sum
of the Net Proceeds Amounts in respect of all other Required Offer Events, if
any, as to which a Required Prepayment has previously been made multiplied by
(y) 0.054 multiplied by (z) a fraction the numerator of which is the aggregate
outstanding principal amount of Notes held by such holder (or its predecessor in
interest) as of the Effective Date and the denominator of which is aggregate
outstanding principal amount of all Notes as of the Effective Date.
4E(2) Required Reoffers. Ten (10) days following the Required
Offer other than in the case of a Small Asset Sale (in which case, two (2)
Business Days following) and the sale of the stock of WGRS and the Giddings
Facility (as to which sales no formal Required Reoffers shall be required but
shall be deemed nevertheless to have been given), the Company shall notify the
holder of each Note whether any Senior Debt Holder, other than the holder of a
Note, is not to receive a prepayment in the amount of its Ratable Portion of the
Net Proceeds Amount in respect of the Senior Debt held by it. If any holder of
Senior Debt is not to receive such a prepayment (whether because no such
prepayment is required to be made to it by the terms of the document under which
such Senior Debt is issued, because such holder has declined an offer of
prepayment or otherwise), a portion of all such prepayments not made to other
Senior Debt Holders (the "Reoffered Amount") shall be offered by the Company (a
"Required Reoffer") in such notice, either for prepayment or the issuance of a
Letter of Credit in support of the Secured Amount thereof on the Delivery Date,
to the holder of each Note in an amount equal to (x) the Reoffered Amount
multiplied by (y) a fraction the numerator of which is 0.054 and the denominator
of which is 0.054 plus the Ratable Portions of all Senior Debt Holders that have
received a prepayment in respect of the Senior Debt held by them by application
of the Net Proceeds Amount with respect to the relevant Required Offer Event
multiplied by (z) a fraction the numerator of which is the principal amount of
the Note held by such holder (or its predecessor in interest) as of the
Effective Date and the denominator of which is the aggregate outstanding
principal amount of all Notes as of the Effective Date.
4E(3) Acceptance or Rejection. A holder of Notes may accept a
Required Offer by causing an irrevocable written notice of such acceptance to be
delivered to the Company, at the address provided by the Company pursuant to
paragraph 11J, during the period commencing with the date of such Required Offer
and ending two (2) Business Days prior to the date of the
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closing of the transaction in the case of a Required Offer Event arising from a
Small Asset Sale and ending ten (10) days after the receipt of such Required
Offer by such holder in all other cases. Two (2) Business Days prior to the
Delivery Date the Company shall deliver to the holder of each Note a certificate
of an Authorized Officer of the Company specifying: (i) the Delivery Date; (ii)
the amount of principal that is to be prepaid, or the Secured Amount of the
Letter of Credit that is to be delivered, to such holder on the Delivery Date;
(iii) the interest due on such principal amount (if any) that is to be prepaid,
accrued to the Delivery Date; (iv) the Credit Fees due on such principal amount
(if any) that is to be prepaid, accrued to the Delivery Date; (v) any applicable
Yield-Maintenance Amount due on such principal amount (if any) that is to be
prepaid, calculated as of the Delivery Date (to the extent Yield-Maintenance
Amount is required by paragraph 4E(4)(iii)); (vi) that the conditions of
paragraphs 4E(1) and 4E(2) have been fulfilled; and (vii) in reasonable detail,
the respective types of transactions, closing dates, Gross Proceeds Amounts and
Net Proceeds Amounts in respect of the Required Offer Event giving rise to the
Required Offer and, if applicable, the Required Reoffer. On the Business Day
next preceding the Delivery Date, the Company shall transmit by facsimile and by
overnight courier to the holder of each Note to be prepaid the calculation of
the Yield-Maintenance Amount, if any, to be due on such Delivery Date. In the
event that the holder of a Note shall reject a Required Offer or a Required
Reoffer, such Note shall continue to bear interest at the rate and to be subject
to the Credit Fees and Yield - Maintenance Amount to which outstanding principal
in respect of the Notes for all purposes is otherwise subject. A failure by any
holder of Notes to respond to any Required Offer shall be deemed to constitute
an acceptance of such Required Offer by such holder. A failure by any holder of
Notes to respond to any Required Reoffer shall be deemed to constitute a
rejection of such Required Reoffer by such holder. In case of the Required
Offers and Required Reoffers deemed to have been made in connection with the
sale of the stock of WGRS and the Giddings Facility (i) the Variable Annuity
Life Insurance Company, American General Life Insurance Company and American
General Life and Accident Insurance Company shall be deemed to have accepted
such Required Offers and to have rejected such Required Reoffers and (ii) First
Allmerica Financial Life Insurance Company and Allmerica Financial Life
Insurance and Annuity Company shall be deemed to have rejected such Required
Offers and such Required Reoffers.
4E(4) Required Prepayment. Each prepayment of principal in
respect of Notes that is to be made pursuant to any provision in this paragraph
4E (a "Required Prepayment") shall be at 100% of the principal amount of such
Notes, together with (i) the interest due thereon accrued to the Delivery Date,
(ii) the Credit Fees due thereon accrued to the Delivery Date and (iii) any
applicable Yield-Maintenance Amount calculated as of the Delivery Date (treating
the Delivery Date as the Settlement Date), except that any prepayment made
pursuant to a Required Reoffer shall be made without any Yield-Maintenance
Amount if and only if no other Senior Debt Holder that has received or is
receiving a prepayment in respect of the Senior Debt held by it as the result of
a Required Reoffer receives any premium, yield-maintenance, make-whole, breakage
costs, fees or other similar amounts. The Required Prepayment shall be made on
the Delivery Date.
4F. Issuance of Letters of Credit.
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4F(1) In Lieu of Prepayment. If the Delivery Date with respect
to any Required Offer Event is to occur on or prior to August 12, 2000, as
provided in paragraph 4E(1) the Company, instead of offering to make prepayments
in respect of the Notes, at its option may cause separate Letters of Credit to
be issued for the benefit of the holders of the Notes that have accepted such
offer. If the Company does not elect to cause the issuance of such Letters of
Credit or, after having made such election fails to cause the issuance of such
Letters of Credit on or prior to the Delivery Date, the Company itself shall pay
make the Required Prepayment on such Delivery Date together with all amounts
required to be paid by it on such date pursuant to paragraph 4E(4).
4F(2) Election by the Company at any Time. (a) At any time,
upon at least five (5) Business Days' notice, the Company may cause the issuance
to the holders of all Notes of Letters of Credit in stated amounts equal to the
respective principal amounts of the Notes or, in the case of each Note, and
subject to satisfaction of the remaining conditions of this paragraph 4F(2),
such lesser principal amount as is equal to the lesser of (x) the outstanding
principal amount of such Note and (y) $500,000 or any integral multiple of
$100,000 in excess thereof. If a Letter of Credit is issued as to any Note,
Letters of Credit shall be issued as to all Notes, in stated amounts that are in
the same proportion to one another as are the outstanding principal balances of
the Notes. No Letter of Credit may be issued pursuant to this paragraph 4F(2) in
place of a Letter of Credit issued, or to be issued, pursuant to paragraph
4F(1).
(b) If the Company shall desire to cause the issuance of Letters of Credit
in Stated Amounts that are less than the respective principal amounts of the
Notes, prior to the issuance of such Letters of Credit the Company shall execute
such documentation and to take such actions, in each case at the sole cost and
expense of the Company, as the Required Holders may request in order to create a
separate series of Notes to represent the aggregate principal amount of the
Notes that is equal to the aggregate Stated Amount of all such Letters of Credit
and to obtain a separate private placement number for such series.
4F(3) Terms of Letters of Credit. (a) Each Letter of Credit
issued for the account of the Company pursuant to paragraph 4F(1) shall be in
the amount determined pursuant to the last sentence of paragraph 4E(1).
(b) The Beneficiary shall be entitled to present a sight draft under the
Letter of Credit issued to it pursuant to paragraph 4F(1) or 4F(2) upon the
occurrence of any of the following events or conditions: (i) the issuing bank at
any time fails to satisfy the Required Ratings; (ii) a Default under either or
both of clauses (i) and (ii) of paragraph 7A occurs; (iii) an Event of Default
occurs; (iv) the date of such drawing is not more than 30 days prior to the then
current expiry date of the Letter of Credit; or (v) in the case of a Letter of
Credit issued prior to October 1, 2000 pursuant to paragraph 4F(1), at any time
on or after October 1, 2000.
(c) If the Beneficiary of any Letter of Credit shall desire to transfer
less than the entire Stated Amount thereof in connection with its transfer of
less than the entire principal amount of the Note that corresponds to such
Stated Amount and the issuer of such Letter of Credit will not permit
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a partial transfer thereof, upon request of such Beneficiary the Company, at its
sole cost and expense, shall promptly cause the issuance of separate Letters of
Credit to such Beneficiary and its designated transferee in order to effectuate
such partial transfer.
4F(4) Payments by the Company; Company Remains Liable. The
Company shall remain unconditionally liable for the payment of the Secured
Amount in respect of a Note until it is paid pursuant to a drawing under the
relevant Letter of Credit or is paid by the Company. The Secured Amount, to the
extent not paid under the Letter of Credit securing such Secured Amount or paid
by the Company itself to the Beneficiary, shall remain outstanding as principal
and shall continue to be entitled to the benefits of this Agreement, the Pledge
Agreements and the Guaranties and shall continue to bear interest at the rate,
and to be subject to the Second Credit Fee (but not the First Credit Fee) and
Yield-Maintenance Amount, to which outstanding principal in respect of the Notes
for all purposes is otherwise subject. So long as the Letter of Credit is
outstanding, the Company shall continue to pay interest and the Second Credit
Fee (but not the First Credit Fee) in respect of the Secured Amount at the times
and in the manner provided in this Agreement. In addition, if a draft drawn
under a Letter of Credit in accordance with paragraph 4F(3)(b) is not paid on
the date when payment of such draft is to be made pursuant to the terms of such
Letter of Credit, the Secured Amount shall be subject to the First Credit Fee
from and after such date. If a Beneficiary should draw the Secured Amount under
a Letter of Credit in accordance with paragraph 4F(3)(b) and regardless of
whether the issuer of the Letter of Credit shall honor such draft, such
Beneficiary shall be entitled to receive, and the Company shall pay to such
Beneficiary within three (3) Business Days following notice from such
Beneficiary, the unpaid accrued interest and Second Credit Fees and any
Yield-Maintenance Amount (which shall be determined as though the date of
payment by the Company were the Settlement Date with respect thereto) on the
Secured Amount to which such Beneficiary would be entitled pursuant to this
Agreement if a prepayment of the Secured Amount in respect of which such Letter
of Credit was established had been made by the Company on the date of such
payment by the Company and also, if the issuer of the Letter of Credit shall not
have honored such draft, the First Credit Fees with respect to such Secured
Amount for the period from and including the date of such drawing to but not
including the date of payment by the Company. Any amount paid to a Beneficiary
by the issuing bank under a Letter of Credit shall be applied by such
Beneficiary in satisfaction of the same amount of principal outstanding under
the Note held by such Beneficiary.
PARAGRAPH 5. AFFIRMATIVE COVENANTS.
5. Affirmative Covenants. So long as any Note shall remain unpaid,
the Company covenants that:
5A. Financial Statements. The Company will deliver to the holder of
each Note in duplicate:
(i) as soon as practicable and in any event within 45 days after the
end of each quarterly period (other than the last quarterly period) in
each fiscal year, a consolidating and consolidated statement of operations
and statement of cash flows
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of the Company and its Subsidiaries for such quarterly period and for the
period from the beginning of the current fiscal year to the end of such
quarterly period, and a consolidating and consolidated balance sheet of
the Company and its Subsidiaries as at the end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and certified by an authorized financial officer of the Company,
subject to changes resulting from year-end adjustments; provided, however,
that delivery pursuant to clause (iv) below of copies of the Quarterly
Report on Form 10-Q of the Company for such quarterly period filed with
the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (i) with respect to consolidated financial
statements if such Quarterly Report contains such financial statements;
(ii) as soon as practicable and in any event within 90 days after
the end of each fiscal year, a consolidating and consolidated statement of
operations and statement of cash flows of the Company and its Subsidiaries
for such year, and a consolidating and consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year, setting forth in
each case in comparative form corresponding consolidated figures from the
preceding annual audit, all in reasonable detail and reasonably
satisfactory in scope to the Required Holder(s) and, as to the
consolidated statements, certified to the Company by independent public
accountants of recognized national standing selected by the Company whose
certificate shall be in scope and substance reasonably satisfactory to the
Required Holder(s) and, as to the consolidating statements, certified by
an authorized financial officer of the Company; provided, however, that
delivery pursuant to clause (iv) below of copies of the Annual Report on
Form 10-K of the Company for such fiscal year filed with the Securities
and Exchange Commission shall be deemed to satisfy the requirements of
this clause (ii) with respect to consolidated financial statements if such
Annual Report contains such financial statements;
(iii) as soon as practicable, and in any event within 105 days after
the end of each fiscal year of MIGC, complete consolidated and
consolidating (if applicable) financial statements of each of MIGC, MGTC
and any other Subsidiary that owns or operates pipelines subject to state
or federal rate regulation and has annual revenues in excess of
$5,000,000, together with all notes thereto, prepared in reasonable detail
in accordance with regulations promulgated by the Federal Energy
Regulatory Commission in the case of MIGC and regulations promulgated by
the Wyoming Public Service Commission in the case of MGTC, together with
an opinion regarding MIGC, based on audits using generally accepted
auditing standards, of independent certified public accountants of
recognized national standing stating that such consolidated financial
statements have been so prepared; such consolidated financial statements
shall contain a balance sheet as of the end of such fiscal year and
statements of operations and cash flows, and of changes in
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stockholders' equity for such fiscal year, each setting forth in
comparative form the corresponding figures for the preceding fiscal year;
(iv) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, press releases, notices and
reports as it shall send to its public stockholders and copies of all
registration statements (without exhibits) and all reports which it files
with the Securities and Exchange Commission (or any governmental body or
agency succeeding to the functions of the Securities and Exchange
Commission);
(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 F attached hereto;
(vi) as soon as delivered to such Persons, all other reports,
statements and notices delivered to (a) the agent, or the other lenders
under the NationsBank Agreement or (b) if the NationsBank Agreement is no
longer in effect, the lenders under the Company's major bank credit
facility;
(vii) as soon as practicable after receipt thereof, a copy of each
other report submitted to the Company by independent accountants in
connection with any annual, interim or special audit made by them of the
books of the Company at any time during which the Company is not required
to file periodic reports with the Securities and Exchange Commission
pursuant to section 13 or 15(d) of the Exchange Act; and
(viii) with reasonable promptness, such other information as the
holder of any Note may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to the holder of each Note an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the provisions of paragraphs 6A(l), 6A(2),
6A(3), 6A(4), 6A(5), 6A(6), 6A(7), 6B, 6C(l), 6C(2), 6C(3), 6C(4), 6C(5), 6C(6)
and 6C(7), and each Financial Covenant incorporated herein by virtue of
paragraph 6E(3), and stating that there exists no Event of Default or Default,
or, if any Event of Default or Default exists, specifying the nature and period
of existence thereof and what action the Company proposes to take with respect
thereto. Together with each delivery of financial statements required by clause
(ii) above, the Company will deliver to the holder of each Note a certificate of
such accountants stating that, in making the audit necessary to the
certification of such financial statements, they have obtained no knowledge of
any Event of Default or Default, or, if they have obtained knowledge of any
Event of Default or Default, specifying the nature and period of existence
thereof. Such accountants, however, shall not be liable to anyone by reason of
their failure to obtain
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<PAGE>
knowledge of any Event of Default or Default which would not be disclosed in the
course of an audit conducted in accordance with generally accepted auditing
standards.
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 the holder of
each Note an Officer's Certificate specifying the nature and period of existence
thereof and what action the Company proposes to take with respect thereto.
5B. Inspection of Property. The Company will permit any Person
designated by the holder of any Note in writing, at such holder's expense, to
visit and inspect any of the properties of the Company and its Subsidiaries
while accompanied by personnel of the Company or a Subsidiary, to examine the
corporate or similar books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such persons with the principal
officers of the Company and its independent public accountants, all at such
reasonable times and as often as such holder may reasonably request, provided,
that each Person so designated by any holder to visit and inspect any properties
shall, by virtue of such designation, be deemed to have agreed to comply with
the Company's on-site safety procedures that are applicable to such properties.
If at the time of any such inspection a Default or an Event of Default exists,
the Company shall pay all reasonable out of pocket costs incurred by each holder
in connection with such inspection.
5C. Covenant to Secure Notes Equally. The Company covenants that, if
it or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6C(l) (unless prior written consent to the creation
or assumption thereof shall have been obtained pursuant to paragraph 11C), it
will make or cause to be made effective provision whereby the Notes will be
secured by such Lien equally and ratably with any and all other Debt thereby
secured so long as any such other Debt shall be so secured pursuant to such
agreements and instruments as shall be approved by the Required Holder(s), and
the Company will cause to be delivered to the holder of each Note an opinion of
independent counsel to the effect that such agreements and instruments are
enforceable in accordance with their terms, and in any such case the Notes shall
have the benefit, to the full extent that, and with such priority as, the
holders of Notes may be entitled under applicable law, of an equitable Lien on
such property or assets securing the Notes. A violation of paragraph 6C(1) will
constitute an Event of Default hereunder, whether or not any such provision is
made pursuant to this paragraph 5C.
5D. Agreement Assuming Liability on Notes. The Company covenants
that, if at any time any Person should become liable (as co-obligor, endorser,
guarantor or surety), on any other obligation of the Company or any obligation
of any Subsidiary (other than (i) obligations incurred in the ordinary course of
business evidencing guaranties of gas purchases, transportation fees and
construction contracts, (ii) surety bonds, appeal bonds and construction bonds
(including bonds necessary for right-of-way condemnation and bonds issuable upon
appeals of judgments or
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<PAGE>
in relation to injunctions or temporary restraining orders) incurred in the
ordinary course of business, (iii) letter of credit reimbursement obligations
with respect to letters of credit issued in the ordinary course of business but
not for borrowed money, and (iv) endorsements of negotiable instruments for
collection in the ordinary course of business), the Company will, at the same
time, cause such Person to deliver to the holder of each Note an agreement as
shall be approved by Required Holder(s) pursuant to which such Person becomes
similarly liable on the Notes.
5E. Notice of Material Events. The Company will promptly notify the
holder of each Note of (i) any material adverse change in the Company's
business, property or assets, financial condition or results of operations or
the Company's consolidated business, property or assets, financial condition or
results of operations, (ii) the acceleration of the maturity of any Debt owed by
the Company or any of its Subsidiaries or any default by the Company or any of
its Subsidiaries under any indenture, mortgage, agreement, contract or other
instrument to which any of them is a party or by which any of them or any of
their properties is bound, if such acceleration or default would have a material
adverse effect upon the Company's consolidated business, property or assets,
financial condition or results of operations, (iii) any material adverse claim
(or any claim of $5,000,000 or more) asserted against the Company or any of its
Subsidiaries or with respect to the Company's or any Subsidiary's properties,
(iv) the occurrence of any Termination Event or of any event or condition known
to the Company which might adversely affect the enforceability of this
Agreement, any Note, any Guaranty or any Pledge Agreement and (v) the filing of
any suit or proceeding against the Company or any of its Subsidiaries in which
an adverse decision could have a material adverse effect upon the Company's or
any Subsidiary's business, property or assets, financial condition or results of
operations. Upon the occurrence of any of the foregoing the Company will, and
will cause each such Subsidiary to, take all necessary or appropriate steps to
remedy promptly any such material adverse change, Default, Event of Default or
default, to protect against any such adverse claim, to defend any such suit or
proceeding, to remedy any such Termination Event or event affecting
enforceability, and to resolve all controversies on account of any of the
foregoing.
5F. Maintenance of Properties. The Company will, and will cause each
of its Subsidiaries to, maintain, preserve, protect and keep all material
property used or useful in the conduct of its business in good condition and in
compliance with all applicable laws, rules and regulations and will from time to
time make all repairs, renewals and replacements needed to enable the business
and operations carried on in connection therewith to be promptly and
advantageously conducted at all times.
5G. Maintenance of Existence and Qualifications. The Company will,
and will cause each of its Subsidiaries to, maintain and preserve its corporate
existence and its rights and franchises in full force and effect and will
qualify to do business as a foreign corporation in all states or jurisdictions
where required by applicable law, except where the failure so to qualify will
not have any material adverse effect on the business, property or assets,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.
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<PAGE>
5H. Insurance. The Company will, and will cause each of its
Subsidiaries and each of its Affiliates that is controlled by the Company or its
Subsidiaries to, maintain insurance with responsible and reputable insurance
companies or associations in such amounts covering such risks as is usually
carried by companies of similar size as the Company engaged in similar
businesses and owning similar properties in the same general areas in which the
Company or such Subsidiary or Affiliate operates.
5I. Compliance with Agreements and Law. The Company will, and will
cause each of its Subsidiaries and each of its Affiliates that is controlled by
the Company or its Subsidiaries to, perform all material obligations it is
required to perform under the terms of each indenture, mortgage, deed of trust,
security agreement, lease, franchise, agreement, contract or other instrument or
obligation to which it is a party or by which it or any of its properties is
bound. The Company will, and will cause each of its Subsidiaries and each of its
Affiliates that is controlled by the Company or its Subsidiaries to, conduct its
business and affairs in compliance with all laws, regulations, and orders
applicable thereto, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with generally accepted accounting principles except
where noncompliance would not materially adversely affect the business, property
or assets, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.
5J. Compliance with Environmental Laws. The Company will, and will
cause each of its Subsidiaries and each of its Affiliates that is controlled by
the Company or its Subsidiaries to, comply in a timely fashion with, or operate
pursuant to valid waivers of the provisions of, all applicable federal, state
and local environmental, or pollution-control laws, regulations, orders and
decrees governing, without limitation, the emission of wastewater effluent,
solid and hazardous waste and air pollution, and setting forth general
environmental conditions together with any other applicable requirements for
conducting, on a timely basis, periodic tests and monitoring for contamination
of ground water, surface water, air and land and for biological toxicity of the
aforesaid, and diligently comply with the applicable regulations (except to the
extent such regulations are waived by appropriate governmental authorities) of
the Environmental Protection Agency or other relevant federal, state or local
governmental authority except where noncompliance would not materially adversely
affect the business, property or assets, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole. The Company
shall not be deemed to have breached or violated the preceding sentence of this
paragraph 5J if the Company, any Subsidiary or any Affiliate of the Company is
challenging in good faith by appropriate proceedings diligently pursued the
application or enforcement of any such governmental requirements for which
adequate reserves have been established in accordance with generally accepted
accounting principles. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
COMPANY AGREES TO INDEMNIFY AND HOLD EACH HOLDER OF NOTES AND THEIR RESPECTIVE
OFFICERS, AGENTS AND EMPLOYEES HARMLESS FROM ANY LOSS, LIABILITY, CLAIM OR
EXPENSES
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<PAGE>
THAT SUCH HOLDER OR ANY SUCH OFFICER, AGENT OR EMPLOYEE MAY INCUR OR SUFFER AS A
RESULT OF A BREACH BY THE COMPANY, ITS SUBSIDIARIES OR AFFILIATES, AS THE CASE
MAY BE, OF THIS COVENANT.
5K. Information Required by Rule 144A. The Company will, upon the
request of the holder of any Note, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at such times as
the Company is subject to and in compliance with the reporting requirements of
section 13 or 15(d) of the Exchange Act. For the purpose of this paragraph 5K,
the term "qualified institutional buyer" shall have the meaning specified in
Rule 144A under the Securities Act.
5L. ERISA. The Company will promptly pay and discharge, and will
cause its Subsidiaries promptly to pay and discharge, all obligations and
liabilities arising under ERISA of a character which if unpaid or unperformed
might result in the imposition of a lien against any of its property and will
promptly notify the holder of each Note of (i) the occurrence of any reportable
event (as defined in ERISA) which might result in the termination by the PBGC of
any Plan covering any officers or employees of the Company or of any Subsidiary,
any benefits of which are, or are required to be, guaranteed by the PBGC, (ii)
receipt of any notice from the PBGC of its intention to seek termination of any
such Plan or appointment of a trustee therefor, and (iii) its intention to
terminate or withdraw from any Plan. The Company will not, and will not permit
any Subsidiary to, terminate any such Plan or withdraw therefrom unless it shall
be in compliance with all of the terms and conditions of this Agreement after
giving effect to any liability to the PBGC resulting from such termination or
withdrawal.
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 NationsBank Agreement, the Bridge Facility
or the Master Shelf 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.
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<PAGE>
5N. Credit Fees.
5N(1) First Credit Fee. The Company shall pay the holder of
each Note a credit fee equal to (a) 1.45% per annum of the outstanding principal
amount of such Note, excluding the Secured Amount (if any) in respect of such
principal amount, 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 and (b) 0.75% per
annum of the outstanding principal amount of such Note during the period
beginning the day after the Company provides such evidence through the day the
Company again shall cease to have 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 1.45% per
annum of the outstanding principal amount of such Note, excluding the Secured
Amount (if any) 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 first day of
March, June, September and December of each year commencing June 1, 1999 in
accordance with paragraph 11A (provided that the First Credit Fee that has
accrued from January 1, 1999 through March 31, 1999 shall be paid on the
Effective Date), and on the day on which the Company achieves the Minimum
Rating, except that if and only so long as the Second Credit Fee is not accruing
at the same time as the First Credit Fee, the Company may pay in kind 95 basis
points (which number of basis points shall be reduced by the number of basis
points by which the "First Credit Fee" payable pursuant to the Master Shelf
Agreement exceeds 50 basis points) of any such First Credit Fee that is
calculated at the 1.45% per annum level (any amount so paid in kind to the
holder of a Note is referred to a the "PIK Amount"). The PIK Amount shall
constitute an additional principal amount of Notes in respect of which the
Company shall issue and deliver to the holder of each Note a Note (a "PIK Note")
in the PIK Amount owing to such holder. If the Company elects to pay in kind any
such First Credit Fee that is subject to being paid in kind, the Company shall
pay all holders of the Notes in kind and shall pay in kind the entire amount of
the First Credit Fee so subject to being paid in kind.
5N(2) 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, which shall be in addition to the First Credit Fee, equal to 0.55%
per annum of the outstanding principal amount of such Note during the period
beginning July 1, 1999 and ending on the day on which 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 fees being referred to herein
as the "Second Credit Fee"). The Second Credit Fee shall be payable, in
accordance with paragraph 11A, quarterly in arrears on the first day of March,
June, September and December of each year, commencing June 1, 1999, and on the
day on which the Company delivers to the holders of the Notes evidence
satisfactory to the Required Holders that the 1999 Action Plan has been
completed.
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5O. Purchase Offer Fees.
5O(1) 1995 Notes. 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, other than the payments of principal at par described therein,
the Company shall pay, without duplication, ratably according to the respective
principal amounts of the 1995 Notes outstanding as of December 31, 1998, the
same such remuneration to the holder of each Note and upon the same terms and
conditions.
5O(2) 1993 Notes. 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 Purchase
Offers, other than the payments of principal at par described therein, the
Company shall pay, without duplication, ratably according to the respective
principal amounts of the 1993 Notes outstanding as of December 31, 1998, the
same such remuneration to the holder of each Note that was also the holder of a
1993 Note as of such date and upon the same terms and conditions.
5P. Pledge of Subsidiary Stock. 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 (10) 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 Remaining 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 NationsBank, as agent for the lenders under the NationsBank
Agreement, the lender under the Bridge Facility and the holders of the notes
under the Master Shelf 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.
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
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adverse effect on the business, property or assets, financial condition
or results of operations of the Company or any of its Subsidiaries.
PARAGRAPH 6. NEGATIVE COVENANTS.
6. Negative Covenants. So long as any Note shall remain unpaid, the
Company covenants that:
6A. Financial Covenants. The Company will not permit:
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
subsequent to December 31, 1998 (to the extent such amount is a positive number)
plus (iii) an amount equal to 75 % of the net cash proceeds received by the
Company from the sale by the Company of any shares of its stock 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 NationsBank Agreement, where "available" means, as of the
date of determination, the banks parties to the NationsBank Agreement are
committed to advance such funds, no default exists under the NationsBank
Agreement and all conditions to such banks advancing such funds would be
satisfied. The Remaining Holders acknowledge 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 January 1, 1999 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 NationsBank Agreement;
6A(4) Senior Debt Maintenance. Adjusted Consolidated Senior
Debt at any time to exceed (i) from January 1, 1999 through the earlier of
September 30, 1999 and the completion of the 1999 Action Plan, 60% of
Consolidated Net Tangible Assets, (ii) from the earlier of October 1, 1999 and
the 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(3), Adjusted Consolidated Senior Debt shall
include without limitation all indebtedness included in determining compliance
with the similar covenant in the NationsBank Agreement;
6A(5) Total Fixed Charge Coverage Ratio. For any fiscal
quarter, 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
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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 Net Earnings to (ii) the sum of (a) the Company's accrued
consolidated interest expense, excluding any prepayment premiums paid with
respect to Funded Debt of the Company prepaid in calendar years 1999 and 2000,
plus, (b) without duplication, capitalized interest, 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:
Period Fixed Charge Coverage Ratio
- -------------------------------------------------------------------------------
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 Net Earnings to
(ii) the sum of (a) the Company's accrued consolidated interest expense,
excluding any prepayment premiums paid with respect to Funded Debt of the
Company prepaid in calendar years 1999 and 2000, plus, (b) without duplication,
capitalized interest 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:
Period Senior Fixed Charge Coverage Ratio
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.
6B. Dividend Limitation. The Company will not make any Restricted
Payment except out of Consolidated Net Earnings Available for Restricted
Payments and unless n o 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.
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6C. Lien, Debt, and Other Restrictions. The Company will not and
will not permit any Subsidiary to:
6C(1) Liens. Create, assume or suffer to exist any Lien upon
any of its properties or assets, whether now owned or hereafter acquired
(whether or not provision is made for the equal and ratable securing of the
Notes in accordance with the provisions of Paragraph 5C), except
(i) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings,
(ii) other statutory Liens incidental to the conduct of its
business or the ownership of its property and assets (including
landlord liens) that are not incurred in connection with the
borrowing of money or the obtaining of advances or credit or
guaranteeing the obligations of a Person, and which do not in the
aggregate materially detract from the value of its property or
assets or materially impair the use thereof in the operation of its
business,
(iii) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or a Wholly Owned
Subsidiary,
(iv) Liens on property of the Company or any Subsidiary
described in Schedule 6C(2) attached hereto, existing as of November
29, 1995 and securing Debt permitted by subclause (a) of clause (ii)
of paragraph 6C(2),
(v) in the case of transactions that occur after the date
hereof, Liens existing on any real property of any corporation at
the time it becomes a Subsidiary, or existing prior to the time of
acquisition upon any property acquired by the Company or any
Subsidiary through purchase, merger or consolidation or otherwise,
whether or not assumed by the Company or such Subsidiary, or placed
on property at the time of acquisition by the Company or any
Subsidiary to secure all or a portion of (or to secure Debt incurred
to pay all or a portion of) the purchase price thereof, provided
that (a) such property is not or shall not thereby become encumbered
in any amount in excess of the lesser of the cost thereof or Fair
Market Value thereof and (b) any such Lien shall not encumber any
other property of the Company or such Subsidiary,
(vi) Liens on deposit and other bank accounts of the Company
created by the right of a lender party to the NationsBank Agreement
or the Bridge Facility to offset obligations of the Company owing
thereunder against such accounts, if, and only if, there is no
agreement between any such lender and the Company which requires the
Company to maintain any deposit or other funds in any account with
such lender other than as provided in clause (vii) below,
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(vii) Liens on deposits of the Company under the NationsBank
Agreement to secure the face amount of outstanding letters of credit
issued pursuant to the NationsBank Agreement,
(viii) other Liens on the property of the Company, and
(ix) Liens created pursuant to pledge agreements described in
paragraph 3G, but in each case only so long as the Intercreditor
Agreement is in effect and Pledge Agreements covering the same
collateral have been delivered to the holders of the Notes,
provided that the aggregate amount of Debt secured by Liens permitted by clauses
(iv), (v) and (viii), together with the amount of undrawn letters of credit
subject to the obligation to provide deposits referred to in clause (vii),
whether or not such deposits have been provided, does not exceed at any time an
amount in excess of 5% of Consolidated Tangible Net Worth.
6C(2) Debt. Create, incur, assume or suffer to exist any Debt,
except
(i) Debt of the Company represented by the Notes,
(ii) (a) Debt of the Company or any Subsidiary to third
parties described in Schedule 6C(2) attached hereto and existing as
of November 29, 1995, which shall not be renewed, extended or
permitted to remain outstanding after the stated maturities thereof,
(b) Debt of the Company or any Subsidiary to third parties secured
by Liens permitted by the provisions of clauses (v) and (viii) of
paragraph 6C(l) and (c) the amount of undrawn letters of credit
permitted by clause (vii) of paragraph 6C(1), provided that the
aggregate amount of the Debt described in this clause (ii) of
paragraph 6C(2) does not exceed at any time an amount equal to 5% of
Consolidated Tangible Net Worth,
(iii) Debt of any Subsidiary to the Company or any other
Wholly Owned Subsidiary, and Debt of the Company to any Subsidiary,
in each case arising from an extension of credit, advance or loan
permitted by clause (ii) of paragraph 6C(7),
(iv) other Debt of the Company not prohibited by 6A(3) or
6A(4), and
(v) Debt of the Guarantors represented by the Existing
Guaranties, the Guaranties, and Subordinated Debt Guaranties;
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,
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obligations and transactions permitted by 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 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 S&P or Moody's or B or better by Thompson 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.
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,
the Company shall make a Required Offer to the holders of the Notes in the
amount of at least 5.40% of such Net Proceeds Amount pursuant to paragraph
4E(1), 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
Giddings Facility, if the Giddings 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
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Consolidated Net Tangible Assets as reflected on the most recent annual or
quarterly consolidated balance sheet, 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 Giddings 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.
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 Giddings Facility if the Giddings 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, or for so long as such
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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 Giddings
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 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
11E 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 Giddings 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, the Company shall have made a
Required Offer to the holders of the Notes in the amount of at least
5.40% of such Net Proceeds Amount pursuant to paragraph 4E(1), and
no Default or Event of Default shall have occurred and be continuing
at the time of such sale or after giving effect thereto.
6C(6) Lease Rentals. Except for oil, gas and mineral leases or
permits or similar agreements entered into in the ordinary course of business,
and except for leases for transportation equipment, including over-the-road
trucks and tankers, data processing and other office equipment used in the
ordinary course of business, enter into or permit to remain in effect, any
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agreements to rent or lease (as lessee) any real or personal property for terms
(including options to renew or extend any term, whether or not exercised) of
more than three years if after giving effect thereto the aggregate amount of all
sums payable in any fiscal year by the Company and all Subsidiaries under all
such leases would exceed $4,000,000.
6C(7) Limitation on Credit Extensions. Extend credit, make
advances or make loans other than (i) normal and prudent extensions of credit in
the ordinary course of business, which extensions shall not be for longer
periods than those extended by similar businesses operated in a normal and
prudent manner, (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 (iii) loans made by the Company to its employees
pursuant to the Stock Option Agreements; provided that the aggregate amount of
all such loans permitted by this clause (iii) outstanding at any time shall not
exceed $10,000,000.
6C(8) Contracts; Take-or-Pay Agreements. Enter into any
"take-or-pay" contract or other contra ct 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
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.
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.
6C(10) Guaranties. Enter into or be party to:
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(i) any contract for the purchase of materials, supplies or
other property or services if such contract (or any related
document) requires that payment for such materials, supplies or
other property or services shall be made regardless of whether or
not delivery of such materials, supplies or other property or
services is ever made or tendered, or
(ii) any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document)
provides that the obligation to make payments thereunder is absolute
and unconditional under conditions not customarily found in
commercial leases then in general use or requires that the lessee
purchase or otherwise acquire securities or obligations of the
lessor, or
(iii) any contract for the sale or use of materials, supplies
or other property, or the rendering of services, if such contract
(or any related document) requires that payment for such materials,
supplies or other property, or the use thereof, or payment for such
services, shall be subordinated to any indebtedness (of the
purchaser or user of such materials, supplies or other property or
the Person entitled to the benefit of such services) owed or to be
owed to any Person, or
(iv) any other contract that is a guaranty, an endorsement or
another form of contingent liability in respect of the obligations,
stock or dividends of any Person or that, in economic effect, is
substantially equivalent to a guaranty (other than the guaranties
permitted by clause (v) of paragraph 6C(2)); provided, that the
foregoing provisions shall not apply to endorsements of negotiable
instruments for collection in the ordinary course of business;
provided, that, notwithstanding the foregoing, any contract of the type
specified in any of the provisions of this paragraph 6C(10) shall be permitted
if the obligations of the Company thereunder constitute Debt of the type
described in clause (iv) of the definition thereof and such Debt is permitted by
the Debt limitations contained in paragraphs 6A(3) and 6A(4).
6C(11) Transactions With Affiliates. Directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer or lease any
property to, or otherwise deal with, in the ordinary course of business or
otherwise (i) any Affiliate, (ii) any Person owning, beneficially or of record,
directly or indirectly, either individually or together with all other Persons
to whom such Person is related by blood, adoption or marriage, stock of the
Company (of any class having ordinary voting power for the election of
directors) aggregating 5% or more of such voting power or (iii) any Person
related by blood, adoption or marriage to any Person described or coming within
the provisions of clause (i) or (ii) of this paragraph 6C(11), provided that the
Company may sell to, or purchase (within the limitations of paragraph 6B) from,
any such Person shares of the Company's stock and except for transactions that
are otherwise permitted by this Agreement and that are in the ordinary course of
the Company's or a Subsidiary's business, and are also upon fair and reasonable
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terms no less favorable to the Company or such Subsidiary than it would obtain
in a comparable arm's-length transaction with a Person not an Affiliate.
6C(12) Panhandle Joint Venture Debt. Permit the Panhandle Joint
Venture to create, incur, assume or suffer to exist any Debt.
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 NationsBank
Agreement) at the time exists or would result therefrom.
6D. Issuance of Stock by Corporate Subsidiaries. The Company
covenants that it will not permit any Subsidiary to issue, sell or dispose of
any shares of its stock of any class except to the Company or a Wholly Owned
Subsidiary, and except to the extent that holders of minority interests may be
entitled to purchase stock by reason of preemptive rights.
6E. Other Agreements.
6E(1) Modifications. The Company will not amend or modify any
term or provision of the Master Shelf Agreement, the NationsBank 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 NationsBank Agreement so as to
shorten the duration or increase the amount of any commitment thereunder, or
(iii) any provision of the Master Shelf 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 Master Shelf Agreement, the Bridge Facility or the NationsBank 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
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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, (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. 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 Master Shelf Bank Agreement,
the NationsBank 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 Master Shelf Agreement, to any lenders party to the
NationsBank Agreement, to NationsBank 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 Master Shelf Agreement,
the NationsBank 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
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issue as to which no waiver is required hereunder because the applicable
provisions of this Agreement, on the one hand, and those of the Master
Shelf Agreement, the Bridge Facility or the NationsBank 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 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 NationsBank Credit 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.
PARAGRAPH 7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall occur for
any reason whatsoever and be continuing (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of or
Yield Maintenance Amount payable with respect to any Note when the
same shall become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any interest or
any Credit Fees on any Note for more than 10 Business Days after the
date due; or
(iii) the Company or any Subsidiary defaults (whether as
primary obligor or as guarantor or other surety) in any payment of
principal of or interest on any other Debt beyond any period of
grace provided with respect thereto, or the Company or any
Subsidiary fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such obligation
is created (or if any other event thereunder or under any such
agreement shall occur and be continuing) and the effect of such
failure or other event is to cause, or to permit the holder or
holders of such obligation (or a trustee on behalf of such holder or
holders) to cause, such obligation to become due (or to be
repurchased by the Company or any Subsidiary) prior to any stated
maturity, provided that the aggregate amount of all obligations as
to which such a payment default shall occur and be continuing or
such a failure or other event causing or permitting acceleration (or
resale to the Company or any Subsidiary) shall occur and be
continuing exceeds $10,000,000; or
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(iv) any representation or warranty made by the Company herein
or in the Company Pledge Agreement, by any Guarantor in a Guaranty,
a Consent 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
(v) the Company fails to perform or observe any term, covenant
or agreement contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, covenant, term or condition contained herein or in the
Company Pledge Agreement, or any Subsidiary that has executed a
Pledge Agreement fails to perform or observe any agreement, covenant
term or condition contained in such Pledge Agreement, and in any
case such failure shall not be remedied within 30 days after the
Chief Executive Officer, President, Chief Financial Officer, Vice
President-Finance, Treasurer or the Executive Vice President-General
Counsel of the Company obtains actual knowledge thereof; or
(vii) the Company or any Subsidiary makes an assignment for
the benefit of creditors or is generally not paying its debts as
such debts become due; or
(viii) any decree or order for relief in respect of the
Company or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (herein called the "Bankruptcy Law"), of any
jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official of the Company or any Subsidiary, or of any substantial
part of the assets of the Company or any Subsidiary, or commences a
voluntary case under the Bankruptcy Law of the United States of
America or any proceedings (other than proceedings for the voluntary
liquidation and dissolution of a Subsidiary) relating to the Company
or any Subsidiary under the Bankruptcy Law of any other
jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and
the Company or such Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an order,
judgment or decree is entered appointing any such trustee, receiver,
custodian, liquidator or similar official, or approving the petition
in any such proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 30 days; or
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(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a
split-up of the Company or such Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary whose assets represent a
substantial part, of the consolidated assets of the Company and its
Subsidiaries (determined in accordance with generally accepted
accounting principles) or which requires the divestiture of assets,
or stock of a Subsidiary, which shall have contributed a substantial
part of the Consolidated Net Earnings of the Company and its
Subsidiaries for any of the three fiscal years then most recently
ended, and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xiii) any judgment or order, or series of judgments or
orders, for the payment of money in an amount in excess of
$5,000,000 is rendered against the Company or any Subsidiary and
either (i) enforcement proceedings have been commenced by any
creditor upon such judgment or order or (ii) within 30 days after
entry thereof, such judgment is not discharged or execution thereof
stayed pending appeal, or within 30 days after the expiration of any
such stay, such judgment is not discharged; or
(xiv) (a) the Company or any other Person who is a member of
the Company's "control group" (as such term is defined under ERISA)
fails to make all or any portion of a required installment payment
under 29 U.S.C. '1082(e) with respect to any Plan, (b) the aggregate
unpaid balance of such installment together with the unpaid balance
of all prior installments and other payments due under 29 U.S.C.
'1082 (including any accrued interest on such amounts) exceeds
$1,000,000, and (c) such amounts remain unpaid for more than 30 days
after the due date of the installment referred to in clause (a); or
(xv) the Company or any of its Affiliates as employer under a
Multiemployer Plan shall have made a complete or partial withdrawal
from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer
that such employer has incurred a withdrawal liability in an annual
amount exceeding $1,000,000; or
(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 any Guarantor denies that it
has any further liability under its Guaranty, or any Guarantor shall
default in the performance or observance of any of its obligations
under its Guaranty, and such default shall not have been remedied
within 30 days; or
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(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 or any Subsidiary that is a
pledgor denies that it has any further liability under any Pledge
Agreement executed by it;
then (a) if such event is an Event of Default specified in clause (viii),
(ix) or (x) of this paragraph 7A with respect to the Company, all of the
Notes at the time outstanding shall automatically become immediately due
and payable together with interest and Credit Fees accrued thereon and, to
the extent permitted by applicable law, the Yield-Maintenance Amount, if
any, with respect to each such Note, without presentment, demand, protest
or notice of any kind (including, without limitation, notice of intent to
accelerate and notice of acceleration of maturity), all of which are
hereby waived by the Company, (b) if such event is an Event of Default
specified in clause (i) or (ii) of this paragraph 7A, the holder of any
Note (other than the Company or any of its Subsidiaries or Affiliates) as
to which such an Event of Default shall have occurred may at its option
during the continuance of such Event of Default, by notice in writing to
the Company, declare such Note to be, and such Note shall thereupon be and
become, immediately due and payable together with interest and Credit Fees
accrued thereon and together with, to the extent permitted by applicable
law, the Yield-Maintenance Amount, if any, with respect to each such Note,
without presentment, demand, protest or notice of any kind (including,
without limitation, notice of intent to accelerate), all of which are
hereby waived by the Company, (c) if such event is any other Event of
Default, the Required Holder(s) may at its or their option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes to be, and all of the Notes shall thereupon be
and become, immediately due and payable together with interest and Credit
Fees accrued thereon and together with, to the extent permitted by
applicable law, the Yield-Maintenance Amount, if any, with respect to each
Note, without presentment, demand, protest or notice of any kind
(including, without limitation, notice of intent to accelerate), all of
which are hereby waived by the Company, and (d) if any Note shall have
been declared to be due and payable pursuant to clause (b) above, any
holder of any other Note may at any time thereafter, so long as the Event
of Default described in clause (b) above shall at such time be continuing,
by notice in writing to the Company, declare all of the Notes held by such
holder to be, and all of the Notes held by such holder shall thereupon be
and become, immediately due and payable together with interest and Credit
Fees accrued thereon and together with, to the extent permitted by
applicable law, the Yield-Maintenance Amount, if any, with respect to each
such Note, without presentment, demand, protest or notice of any kind
(including, without limitation, notice of intent to accelerate), all of
which are hereby waived by the Company. The Company acknowledges and the
parties hereto agree, that the holder of each Note has the right to
maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and the provisions for
payment of the Yield-Maintenance Amount by the Company in the event that
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the Notes are prepaid or are accelerated as a result of an Event of
Default, are intended to provide compensation for the deprivation of such
right under such circumstances.
7B. Rescission of Acceleration. At any time after any or all of the
Notes are declared immediately due and payable and have not been paid in full,
the Required Holder(s) 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, (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.
7C. Notice of Acceleration or Rescission. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
7D. Other Remedies. If any Event of Default or Default shall occur
and be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
PARAGRAPH 8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
8. Representations, Covenants and Warranties. The Company represents,
covenants and warrants as of the Effective Date as follows:
8A. Organization. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Delaware, each
Subsidiary is duly organized and existing in good standing under the laws of the
jurisdiction in which it is incorporated, and the Company has and each
Subsidiary has the corporate power to own its respective property and to carry
on its respective business as now being conducted. The execution, delivery and
performance by the Company of this Agreement, the Pledge Agreement and the Notes
are within the Company's corporate powers and have been duly authorized by all
necessary corporate action, and the execution,
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delivery and performance by each Guarantor of its respective Guaranty, Consent
and Pledge Agreement (if any) are within such Guarantor's company powers and
have been duly authorized by all necessary corporate or similar action. Schedule
8A attached hereto sets forth the name and jurisdiction of organization of each
Subsidiary and each entity, organization and enterprise that would constitute a
Subsidiary but for the final proviso in the definition of "Subsidiary" and the
percentage of the Company's ownership interest in each such Subsidiary, entity,
organization or enterprise and identifies each Subsidiary that is a Guarantor,
all as of the Effective Date.
8B. Financial Statements. The Company has furnished each Remaining
Holder with the following financial statements, identified by a principal
financial officer of the Company: a consolidated balance sheet of the Company
and its Subsidiaries as at December 31, 1998 and consolidated statements of
operations and cash flows of the Company and its Subsidiaries for the fiscal
year that ended, all certified by PriceWaterhouse Coopers LLP. Such financial
statements (including any related schedules and/or notes) are true and correct
in all material respects, have been prepared in accordance with generally
accepted accounting principles consistently followed (except as set forth in the
notes thereto if consistent with generally accepted accounting principles and
generally accepted auditing standards) throughout the periods involved and show
all liabilities, direct and contingent, of the Company and its Subsidiaries
required to be shown in accordance with such principles. The balance sheet
fairly presents the consolidated financial condition of the Company and its
Subsidiaries as at the date thereof, and the statements of operations and cash
flows fairly present the results of the consolidated operations of the Company
and its Subsidiaries for the period indicated. There has been no material
adverse change in the business, property or assets, financial condition or
results of operations (financial or otherwise) of the Company and its
Subsidiaries taken as a whole since December 31, 1998.
8C. Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company, any of its Subsidiaries, any of its Affiliates that is controlled by
the Company or any joint venture in which the Company or any of its Subsidiaries
has an investment, or any properties or rights of the Company, any of its
Subsidiaries, any of its Affiliates that is controlled by the Company or any
joint venture in which the Company or any of its Subsidiaries has an investment,
by or before any court, arbitrator or administrative or governmental body which
is reasonably likely to result in any material adverse change in the business,
property or assets, financial condition or results of operations of the Company
and its Subsidiaries taken as a whole. There is no action, suit, investigation
or proceeding pending or threatened against the Company or any of its
Subsidiaries, any of its Affiliates that is controlled by the Company or any
joint venture in which the Company or any of its Subsidiaries has an investment
which purports to affect the validity or enforceability of this Agreement, any
Pledge Agreement, any Note or any Guaranty.
8D. Outstanding Debt. Neither the Company nor any of its
Subsidiaries has outstanding any Debt except as permitted by paragraph 6C(2).
After giving effect to the execution and delivery of this Agreement and the
NationsBank Agreement, and the contemporaneous amendment of the Master Shelf
Agreement, there exists no default (and no waiver of any default that
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is conditional or is limited in duration) under the provisions of any instrument
evidencing such Debt, or any Debt of any joint venture in which the Company or
any Subsidiary has an investment, or of any agreement relating thereto.
8E. Environmental Compliance. The Company, each of its Subsidiaries,
each of its Affiliates that is controlled by the Company and each joint venture
in which the Company or any of its Subsidiaries has an investment and all of
their respective properties and facilities have complied at all times and in all
respects with all federal, state, local and regional statutes, laws, ordinances
and judicial and administrative orders, judgments, rulings and regulations
relating to protection of the environment except, in any such case, where
failure to comply would not result in a material adverse effect on the business,
property or assets, financial condition or results of operations (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole.
8F. Taxes. The Company has and each of its Subsidiaries has filed
all Federal, State and other income tax returns which, to the best knowledge of
the officers of the Company and its Subsidiaries, are required to be filed, and
each has paid all taxes as shown on such returns and on all assessments received
by it to the extent that such taxes have become due, except such taxes as are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with generally accepted accounting
principles. The Federal income tax liabilities of the Company and its
Subsidiaries have been determined by the Internal Revenue Service (or the
applicable statute of limitations has run) and such liabilities have been paid
for all fiscal years up to and including the fiscal year ended December 31,
1991.
8G. Conflicting Agreements and Other Matters. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction which materially and adversely
affects its business, property or assets, or financial condition. Neither the
execution nor delivery of this Agreement, the Pledge Agreements, the Guaranties
and the Consents nor fulfillment of nor compliance with the terms and provisions
hereof and thereof and of the Notes 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 Lien, upon any of the
properties or assets of the Company or any of its Subsidiaries pursuant to, the
charter or by-laws of the Company or any of its Subsidiaries, any award of any
arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Company or any of its Subsidiaries is subject. Neither the Company nor any
of its Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness of the Company or such
Subsidiary, any agreement relating thereto or any other contract or agreement
(including its charter) which imposes restrictions on the performance any of the
obligations and covenants of the Company under this Agreement or limits the
amount of, or otherwise imposes restrictions on the incurring of, Debt of the
Company of the type evidenced by the Notes or the Guaranties except as set forth
in the agreements listed in Exhibit C attached hereto.
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8H. [Intentionally omitted]
8I. [Intentionally omitted]
8J. ERISA. No accumulated funding deficiency (as defined in section
302 of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the PBGC
has been or is expected by the Company to be incurred with respect to any Plan
(other than a Multiemployer Plan) by the Company or any of its Subsidiaries
which is or would be materially adverse to the business, property or assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole. Neither the Company nor any of its Subsidiaries has incurred
or presently expects to incur any withdrawal liability under Title IV of ERISA
with respect to any Multiemployer Plan which is or would be materially adverse
to the business, property or assets, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole. No Plan
providing welfare benefits to retired former employees of the Company or any of
its Subsidiaries has been established or is maintained for which the present
value of future benefits payable, in excess of irrevocably designated funds for
such purpose, is materially adverse to the business, property or assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole. The transactions contemplated by this Agreement will not
constitute a "prohibited transaction" (as such term is defined in section 406 of
ERISA or section 4975 of the Code). Neither the Company or any ERISA Affiliate,
nor any "employee benefit plan" (as such term is defined in section 3 of ERISA)
of the Company or any ERISA Affiliate or any trust created thereunder or any
trustee or administrator thereof, has engaged in any "prohibited transaction"
that could subject any such Person, or any other party dealing with such
employee benefit plan or trust, to such penalty or tax.
8K. Governmental Consent. Neither the nature of the Company or of
any Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the transactions contemplated by this Agreement
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 or regulatory body (other than routine filings after the Effective
Date with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of this Agreement,
any Pledge Agreement or any Guaranty, or fulfillment of or compliance with the
terms and provisions hereof, of any Pledge Agreement, of any Guaranty or of the
Notes.
8L. Title to Properties. The Company has and each of its
Subsidiaries has good and defensible title to its respective real properties
(other than properties which it leases) and good title to all of its other
respective properties and assets, including the properties and assets reflected
in the most recent audited balance sheet referred to in paragraph 8B (other than
properties and assets disposed of in the ordinary course of business), subject
to no Lien of any kind except Liens permitted by paragraph 6C(1) except that (i)
with respect to easements and rights of way associated with the Company's gas
gathering systems: (a) the Company has such title as is customary and
appropriate
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in accordance with applicable industry standards and (b) the costs of curing
defects in such title, if any, would not exceed $10,000,000 in the aggregate and
(ii) no representation or warranty is made with respect to any gas or mineral
property or interest to which no proved oil or gas reserves are properly
attributed. All leases necessary in any material respect for the conduct of the
respective businesses of the Company and its Subsidiaries are valid and
subsisting and are in full force and effect.
8M. Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to the Remaining Holders by or on behalf of
the Company or any Guarantor in connection herewith contain any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading. There is no fact
peculiar to the Company or any of its Subsidiaries which materially adversely
affects or in the future is reasonably likely (so far as the Company can now
foresee) to materially adversely affect the business, property or assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole and which has not been set forth in this Agreement. The
financial projections provided to the Remaining Holders prior to the Effective
Date are reasonable based on the assumptions stated therein and the best
information available to the officers of the Company.
8N. Delivery of Other Agreements. The Company has delivered to each
Remaining Holder on or prior to the date hereof a true, correct and complete
copy of each of the NationsBank Agreement, the Bridge Facility and the Master
Shelf Agreement, including all amendments and waivers of any provision thereof,
and each pledge agreement relating thereto.
8O. Public Utility Holding Company Act; Federal Power Act. Neither
the Company nor any Subsidiary is a "holding company" or a "subsidiary company"
of a "holding company" or a "public utility company" as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended, or, except for
Western Gas Resources Power Marketing, Inc., a "public utility" as such term is
defined in the Federal Power Act, as amended.
8P. Investment Company Act. Neither the Company nor any Subsidiary
is, or is directly or indirectly controlled by, or acting on behalf of any
Person that is, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
8Q. Rank of Notes. The Notes rank at least pari passu in right of
payment with all other senior unsecured Debt of the Company, including without
limitation the Debt with respect to the NationsBank Agreement, the Bridge
Facility and the Master Shelf Agreement.
8R. Year 2000 Programming. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the Company's or any
of its Subsidiaries' computer systems and (ii) material equipment containing
embedded microchips and the testing of all such systems and equipment, as so
reprogrammed, will be completed by October 31, 1999. The reasonably foreseeable
cost to the Company and its Subsidiaries of such reprogramming and testing and
of the reasonably foreseeable consequences of the year 2000 to the Company and
its Subsidiaries
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will not result in an Event of Default or a have a material adverse effect on
the Company or its Subsidiaries. The Company and its Subsidiaries have delivered
notice to each Remaining Holder of any material problems (to the extent of the
knowledge of the Company and its Subsidiaries) related to the proper functioning
in and following the year 2000 of systems with which the Company or any of its
Subsidiaries interface.
8S. Receivables Purchase Agreement. The Receivable Purchase
Agreement has been terminated.
8T. 1993 Note Purchase Agreement. The 1993 Note Purchase Agreement
has been terminated and all 1993 Notes have been paid in full.
8U. 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.
8V. MONY Notes. All 1995 Notes held by MONY have been paid in full
and retired pursuant to the Offer to Acquire Notes.
PARAGRAPH 9. [Intentionally omitted]
PARAGRAPH 10. DEFINITIONS.
10. Definitions. For the purpose of this Agreement, the terms
defined in the introductory paragraph and recitals shall have the respective
meanings specified therein, and the following terms shall have the meanings
specified with respect thereto below (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
10A. Yield-Maintenance Terms.
"Called Principal" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to paragraphs 4A, 4E or 4F
or is declared to be immediately due and payable pursuant to paragraph 7A, as
the context requires.
"Discounted Value" shall mean, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on a quarterly
basis) equal to the Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called
Principal of any Note, the yield to maturity implied by (a) the yields reported,
as of 10:00 A.M. (New York City local time)
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on the Business Day next preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page 500" on the Telerate
Service (or such other display as may replace page 500 on the Telerate Service)
for actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date, plus
0.50%, or if such yields shall not be reported as of such time or the yields
reported as of such time shall not be ascertainable (including by use of the
methods provided in the last sentence of this definition), (b) the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date, plus
0.50%. All implied yields under either clause (a) or (b) of this definition
shall be determined, (i) if necessary, by (x) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (y) interpolating linearly between yields reported for various
maturities, and (ii) by converting all such implied yields to a quarterly
payment basis in accordance with accepted financial practice.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and interest
that would accrue thereon on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid pursuant
to paragraphs 4A, 4E or 4F or is declared to be immediately due and payable
pursuant to paragraph 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over such Called Principal. The Yield-Maintenance Amount
shall in no event be less than zero.
10B. Other Terms.
"Adjusted Consolidated Debt" shall mean Consolidated Debt plus
Excess Working Capital Deficit.
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"Adjusted Consolidated Senior Debt" shall mean Adjusted Consolidated
Debt less all Subordinated Debt.
"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with, the
Company, except a Subsidiary. A Person shall be deemed to control another Person
that is an entity if such first-mentioned Person directly or indirectly, the
power to direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting securities, by contract or
otherwise.
"Asset Sale" means 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.
"Authorized Officer" shall mean, in the case of the Company, its
Chief Executive Officer, its Chief Financial Officer, its Treasurer, its
President or the Executive Vice President-General Counsel or the Vice
President-Finance of the Company. Any action taken under this Agreement on
behalf of the Company by any individual who on or after the date of this
Agreement shall have been an Authorized Officer of the Company and whom any
holder of a Note in good faith believes to be an Authorized Officer of the
Company at the time of such action shall be binding on the Company even though
such individual shall have ceased to be an Authorized Officer of the Company.
"Bankruptcy Law" shall have the meaning specified in clause (viii)
of paragraph 7A.
"Beneficiary" shall mean the holder of a Note that is the
beneficiary under a Letter of Credit.
"Bridge Facility" shall have the meaning specified in the recitals
to this Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which commercial banks in New York City are required or authorized to
be closed.
"Capitalized Lease Obligation" shall mean any rental obligation
which, under generally accepted accounting principles, is or will be required to
be, capitalized on the books of the Company or any Subsidiary, taken at the
amount thereof accounted for as indebtedness (net of interest expenses) in
accordance with such principles.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Company Pledge Agreement" shall mean that certain Pledge Agreement,
dated as of the Effective Date, by the Company in favor of 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.
"Confidential Information" shall mean any material non-public
information regarding t he Company and its Subsidiaries that is provided to any
holder of any Note, any Person who purchases a participation in a Note and any
offeree of a Note or participation therein pursuant to this Agreement other than
information (i) which was publicly known or otherwise known to such holder, such
Person or such offeree at the time of disclosure, (ii) which subsequently
becomes publicly known through no act or omission of such holder, such Person or
such offeree or (iii) which otherwise becomes known to such holder, such Person
or such offeree, other than through disclosure by the Company or any Subsidiary.
"Consent" shall mean a Consent substantially in the form of Exhibit
G hereto.
"Consolidated Current Assets" shall mean the consolidated current
assets of the Company and its Subsidiaries, as determined in accordance with
generally accepted accounting principles.
"Consolidated Current Liabilities" shall mean the consolidated
current liabilities of the Company and its Subsidiaries, as determined in
accordance with generally accepted accounting principles.
"Consolidated Debt" shall mean the consolidated Debt of the Company
and its Subsidiaries, determined in accordance with generally accepted
accounting principles.
"Consolidated Net Earnings" shall mean consolidated gross revenues
of the Company and its Subsidiaries excluding any gains (net of expenses and
taxes applicable thereto) 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 all 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.
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"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.
"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 value 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.
"Consolidated Tangible Net Worth" shall mean consolidated
stockholders' equity of the Company and its Subsidiaries, less goodwill,
trademarks, brand names, patents, organizational expenses and any other
intangible assets of the Company and its Subsidiaries, all as determined in
accordance with generally accepted accounting principles; provided, however,
that the term "Consolidated Tangible Net Worth" 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.
"Counterparty" shall mean (i) those Persons listed on Schedule 6C(8)
attached hereto, (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 or Moody's
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
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(b) the Company has such agreements outstanding with no more than nine other
such Persons at any time.
"Credit Fees" shall mean the First Credit Fee and the Second Credit
Fee.
"Debt" shall mean, without duplication:
(i) any obligation that, under generally accepted accounting
principles, is shown on the balance sheet as a liability (including,
without limitation, any obligation for borrowed money, any notes
payable and drafts accepted representing extensions of credit,
whether or not representing obligations for borrowed money, and
Capitalized Lease Obligations but excluding accounts payable and
accrued expenses in the ordinary course of business, reserves for
deferred income taxes and other reserves to the extent that such
reserves do not constitute an obligation),
(ii) any obligation secured by a Lien on, or payable out of
the proceeds of production from, property, whether or not the
obligation secured thereby shall have been assumed by the owner of
such property,
(iii) liabilities in respect of unfunded vested benefits under
Plans and liabilities in respect of postretirement benefits that,
under generally accepted accounting principles in effect at the time
in question, are shown on the balance sheet as a liability, and
(iv) any obligation described in paragraph 6C(10) for which a
maximum amount is quantifiable.
"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 NationsBank Agreement or in the
form of a Capitalized Lease Obligation shall not be considered a Debt Offering.
"Delivery Date" shall have the meaning specified in paragraph 4E(1).
"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.
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"Effective Date" shall have the meaning specified in paragraph 3.
"Equity Offering" shall mean the issuance of any common or preferred
stock by the Company or any other Related Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any corporation or trade or business
that:
(i) is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as the Company,
or
(ii) is under common control (within the meaning of Section
414(c) of the Code) with the Company.
"Event of Default" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "Default" shall mean
any of such events, whether or not any such requirement has been satisfied.
"Excess Working Capital Deficit" shall mean (i) if the Company's
Working Capital is greater than or equal to negative $10,000,000, zero, or (ii)
if the Company's Working Capital is less than negative $10,000,000, the product
of (A) the amount of such Working Capital plus $10,000,000 multiplied by (B)
negative one (for example, if Working Capital equals negative $15,000,000, the
Excess Working Capital Deficit would equal $5,000,000). For purposes of this
definition, "Working Capital" means the remainder of the Company's Consolidated
Current Assets minus the Company's Consolidated Current Liabilities, excluding
current maturities of Funded Debt.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Existing Guaranty" shall mean each guaranty of a Guarantor in favor
of NationsBank as agent for the lenders parties to the NationsBank Agreement,
NationsBank as lender under the Bridge Facility or the holders of the Notes
issued pursuant to the Master Shelf Agreement, in each case, for which a similar
guaranty shall have been issued to each holder of Notes.
"Existing Master Shelf Agreement" shall have the meaning specified
in the recitals to this Agreement.
"Existing NationsBank Agreement" shall have the meaning specified in
the recitals to this Agreement.
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"Fair Market Value" shall mean, at any time with respect to any
property of any kind or character, the sale value of such property that would be
realized in an arm's length sale at such time between an informed and willing
buyer and an informed and willing seller, under no compulsion to buy or sell,
respectively.
"Financial Covenant" means, 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).
"Funded Debt" shall mean any Debt payable more than one year from
the date of creation thereof.
"Giddings 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" means, (i) with respect to any Asset Sale by
the Company or any other Related Person, the aggregate amount of the
consideration (v)lued 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.
"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;
WGR Canada, Inc., a New Brunswick corporation; Lance Oil & Gas Company, Inc., a
Delaware corporation; Pinnacle Gas Treating, Inc., a Texas corporation; Western
Gas Wyoming, L.L.C., a Wyoming limited liability company, and each other
Subsidiary of the Company (or entity that would be a Subsidiary but for the fact
that it is organized in a jurisdiction outside the United States of America)
that issues a Guaranty to the holders of the Notes.
"Guaranty" shall mean each guaranty of a Guarantor in substantially
the form of Exhibit E hereto.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated as of the Effective Date among NationsBank, as agent for the
lenders parties to the NationsBank
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Agreement, such lenders, NationsBank as lender under the Bridge Facility, The
Prudential Insurance Company of America and the Remaining Holders, as the
provisions thereof may be from time to time amended or waived in compliance with
the terms thereof.
"Letter of Credit" shall mean an irrevocable, transferable, direct
pay letter of credit that (a) is in the form of Exhibit J attached hereto, (b)
is issued by a bank having the Required Ratings at the time of issuance, and (c)
has an expiry date no earlier than September 30, 2000, and no more than 18
months, after the date of issuance thereof, provided, that in no event may the
expiry date be later than December 31, 2005.
"Lien" shall mean any mortgage, pledge, priority, security interest,
encumbrance, de posit arrangement, lien (statutory or otherwise) or charge of
any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature thereof, and
the filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction) or any other type of preferential
arrangement for the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an obligation.
"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.
"Master Shelf Agreement" shall mean the Existing Master Shelf
Agreement, as the provisions thereof have heretofore been amended or waived or
may be from time to time amended or waived in compliance with paragraph 6E.
"MGTC" shall mean MGTC, Inc., a Wyoming corporation.
"MIGC" shall mean MIGC, Inc., a Delaware corporation.
"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 ratings for the senior unsecured Debt of
the Company similar to the Notes (if unsecured) of at least BBB- from S&P and
Baa3 from Moody's.
"MONY" shall have the meaning specified in the recitals to this
Agreement.
"Moody's" shall mean Moody's Investors Service, Inc.
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"Multiemployer Plan" shall mean any plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NationsBank" shall mean NationsBank, N.A., and its successors and
assigns.
"NationsBank 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.
"Natural Gas Inventory" shall mean at the time in question, the
Company's and its Subsidiaries' inventory of natural gas in storage.
"Net Proceeds Amount" means, (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" means, 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.
"1995 Note Purchase Agreement" shall have the meaning specified in
the recitals to this Agreement.
"1995 Notes" shall have the meaning specified in the recitals to
this Agreement.
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"1995 Purchasers" shall have the meaning specified in the recitals
to this Agreement.
"1999 Action Plan" shall mean the completion of all of the following
after January 1, 1999 : (i) the sale by the Company and other Related Persons of
assets the Net Proceeds Amount of which exceeds $50,000,000 in the aggregate,
(ii) completion of a public offering of Subordinated Debt by the Company the
Gross Proceeds Amount of which is at least $150,000,000, and (iii) (a) the offer
to prepay, or to post Letters of Credit with respect to an aggregate Secured
Amount, of at least $14,580,000 aggregate principal amount of the Notes pursuant
to paragraph 4E(1) or paragraph 4F(1), respectively, and (b) the prepayment, or
the posting of Letters of Credit in the Stated Amount, of the amounts required
with respect to the Notes the holders of which have accepted the offer in the
foregoing clause (iii)(a).
"1993 Note Purchase Agreement" shall have the meaning specified in
the recitals to this Agreement.
"1993 Notes" shall have the meaning specified in the recitals to
this Agreement.
"1993 Purchasers" shall have the meaning specified in the recitals
to this Agreement.
"Notes" shall have the meaning specified in paragraph 1.
"Offer to Acquire Notes" shall mean that certain Offer to Acquire
Notes, dated February 12, 1999, by the Company and accepted by MONY.
"Officer's Certificate" shall mean a certificate signed in the name
of the Company by an Authorized Officer of the Company.
"Panhandle Joint Venture" shall mean the joint venture formed
between the Company and Panhandle Eastern Pipe Line Company.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor entity serving a similar function.
"Person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"PIK Amount" shall have the meaning specified in paragraph 5N(1).
"PIK Note" shall mean a Note issued by the Company pursuant to
paragraph 5N(1) in lieu of payment in cash of a portion of the First Credit Fee.
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"Plan" shall mean an "employee pension benefit plan" (as defined in
section 3 of ERISA) that is or has been established or maintained, or to which
contributions are or have been made, by the Company or by any trade or business,
whether or not incorporated, that, together with the Company, is under common
control, as described in section 414(b) or (c) of the Code.
"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 5P, 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.
"Ratable Portion" shall mean (a) as to the Notes, 5.40%, (b) as to
the Notes outstanding under the Master Shelf Agreement, 38.0%, and (c) as to the
obligations owing under the Bridge Facility and the NationsBank Agreement,
collectively, 56.6%.
"Receivables Purchase Agreement" shall mean that certain Receivables
Purchase Agreement dated as of February 28, 1995, among the Company, Receivables
Capital Corporation and Bank of America National Trust and Savings Association.
"Related Person" shall mean any of the Company, each Guarantor and
each other Subsidiary with the exception of Westana, Williston Gas Company and
Sandia.
"Reoffered Amount" shall have the meaning specified in paragraph
4E(2).
"Required Holder(s)" shall mean, with respect to the Notes, at any
time, the holder or holders of at least 66 2/3% of the aggregate principal
amount of the Notes outstanding at such time.
"Required Offer" shall have the meaning specified in paragraph
4E(1).
"Required Offer Event" shall mean the consummation of an Asset Sale,
a Debt Offering or an Equity Offering.
"Required Prepayment" shall have the meaning specified in paragraph
4E(4).
"Required Ratings" shall mean, with respect to the issuer of any
Letter of Credit, that such issuer (a) has a senior unsecured debt rating of at
least A+ by S&P and A1 by Moody's and (b) has not been placed, with negative
implications, on Creditwatch or a similar listing by S&P or Moody's.
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"Required Reoffer" shall have the meaning specified in paragraph
4E(2).
"Restricted Agreement" shall have the meaning specified in paragraph
6E(3).
"Restricted Payment" shall mean (a) any dividend paid or declared by
the Company or any Subsidiary on any class of the Company's stock (other than a
dividend payable in shares of stock of the Company), or any other distribution
made by the Company or any Subsidiary on account of any class of the Company's
stock, or (b) any cash or other consideration applied, directly or indirectly,
by the Company or any Subsidiary to the redemption, purchase or other
acquisition of any shares of the Company's capital stock or (c) any payment of
principal of, or retirement, redemption, purchase or other acquisition of any
Subordinated Debt.
"Sandia" shall mean Sandia Energy Resources Joint Venture.
"S&P" shall mean Standard & Poor's Ratings Group, a division of the
McGraw Hill Companies.
"Second Credit Fee" shall have the meaning specified in paragraph
5N(2).
"Secured Amount" shall mean the principal amount of a Note that is
supported by a Letter of Credit.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Debt" shall mean all Debt other than Subordinated Debt.
"Senior Debt Holders" shall have the meaning specified in paragraph
4E(1).
"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.
"Small Asset Sale" shall mean an Asset Sale the Net Proceeds of
which is less than $5,000,000.
"Stock Option Agreements" shall mean, collectively those certain
Agreements to Provide Loan(s) to exercise key employees' Stock Options by and
among the Company and certain key employees.
"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 at par earlier than January 31, 2008 and that is
subordinated in right of payment to the payment of
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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).
"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.
"Termination Event" shall mean (i) a "reportable event" described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
reportable event not subject to the provision for 30-day notice to the PBGC
under such regulations), or (ii) the withdrawal of the Company or any of its
ERISA Affiliates from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of proceedings
to terminate a Plan by the PBGC, or (v) any other event or condition that might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"Transferee" shall mean any direct or indirect transferee of all or
any part of any Note purchased by any Remaining Holder under this Agreement.
"Voting Stock" shall mean, with respect to any corporation,
association, partnership, joint venture, limited liability company or other
business or corporate entity, enterprise or organization, any shares of stock of
or other similar equity interest in such entity, enterprise or organization or
whose holders are entitled under ordinary circumstances to vote for the election
of
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directors or other similar management of such entity, enterprise or organization
(irrespective of whether at the time stock or other similar equity interests of
any other class or classes shall have or might have voting power by reason of
the happening of any contingency).
"Westana" shall mean the general partnership formed between Western
Gas Resources - Oklahoma, Inc. and Panhandle Gathering Company, a wholly-owned
subsidiary of Panhandle Eastern Pipeline Company.
"WGRS" shall mean Western Gas Resources Storage, Inc. a Texas
corporation.
"Wholly Owned Subsidiary" shall have the meaning specified in the
definition of "Subsidiary."
10C. Accounting Terms and Determinations. All references in this
Agreement to "generally accepted accounting principles" shall be deemed to refer
to generally accepted accounting principles in effect in the United States at
the time of application thereof, subject to the next sentence. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles, applied on a basis consistent with the
audited consolidated financial statements of the Company and its Subsidiaries
delivered pursuant to clause (ii) of paragraph 5A or, if no such statements have
been delivered, the most recent audited financial statements referred to in
clause (i) of paragraph 8B.
PARAGRAPH 11. MISCELLANEOUS.
11A. Note Payments. The Company agrees that, so long as any
Remaining Holder shall hold any Note, it will make payments of principal of,
interest on, and any Credit Fee and/or Yield-Maintenance Amount payable with
respect to such Note, which comply with the terms of this Agreement, by wire
transfer of immediately available funds for credit (not later than 12:00 noon,
New York City time, on the date due) to each Remaining Holder's account or
accounts, if any, as are specified in the Remaining Holder Schedule attached
hereto, or, in the case any Remaining Holder wishes to change the account
specified for such Remaining Holder in the Remaining Holder Schedule such
account or accounts in the United States as such Remaining Holder may from time
to time designate in writing, notwithstanding any contrary provision herein or
in any Note with respect to the place of payment. Notwithstanding anything in
this paragraph 11A to the contrary, certain portions of the First Credit Fee may
be payable in kind pursuant to paragraph 5N(1) with the result that the
aggregate outstanding principal amount of the Notes may increase from time to
time. Each Remaining Holder agrees that, before disposing of any Note, such
Remaining Holder will make a notation thereon (or on a schedule attached
thereto) of all principal payments previously made thereon and of the date to
which interest and Credit Fees thereon have been paid. The Company agrees to
afford the benefits of this paragraph 11A to any Transferee which shall have
made the same agreement as the Remaining Holders have made in this paragraph
11A.
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11B. Expenses.
(i) Generally. Whether or not the transactions contemplated hereby
shall be consummated, the Company will promptly (and in any event within thirty
(30) days after receiving any statement or invoice therefor) pay, and save each
Remaining Holder and any Transferee harmless against liability for the payment
of, all reasonable fees, expenses and costs relating hereto, including, but not
limited to:
(a) the cost of reproducing this Agreement and the Notes;
(b) the fees and disbursements of any special counsel engaged
by the Remaining Holders;
(c) the fees, expenses and costs incurred complying with each
of the conditions to closing set forth in paragraph 3 hereof;
(d) the fees, expenses and costs of any broker or investment
banker, if any, incurred by the Company in connection with the
transactions contemplated hereby;
(e) the fees, expenses and costs relating to the
consideration, negotiation, preparation, duplication or execution of
any amendments, waivers or consents pursuant to the provisions
hereof (including, without limitation, fees and disbursements of any
special counsel or other professional advisors engaged by such
Remaining Holder and the allocated cost of each Remaining Holder's
or Transferee's counsel who are such Remaining Holder's or such
Transferee's employees or such Remaining Holder's or such
Transferee's affiliates' employees), whether or not any such
amendments, waivers or consents are executed;
(f) the fees, expenses and costs incurred by any Remaining
Holder or any Transferee in enforcing (or determining whether or how
to enforce) any rights under this Agreement, the Notes, the Pledge
Agreements or the Guaranties or in responding to any subpoena or
other legal process or informal investigative demand issued in
connection with this Agreement or the transactions contemplated
hereby or by reason of any Remaining Holder's or any Transferee's
having acquired any Note (other than costs and expenses incurred in
acquiring or merely holding a Note or interest therein), including
without limitation fees, expenses and costs incurred in any
bankruptcy case; and
(g) Any fees or other charges imposed by the issuer of a
Letter of Credit upon the transfer in whole or in part, thereof,
which payment shall be made by the Company not later than three (3)
Business Days after notice from the holder of the Note that is the
Beneficiary of such Letter of Credit.
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<PAGE>
(ii) Counsel. Without limiting the generality of the foregoing, it
is agreed and understood that the Company will pay, at the time of the
execution of this Agreement, the statement, rendered as set forth in
paragraph 3G, for reasonable fees and disbursements of any special counsel
engaged by the Remaining Holders incurred up to that time, and the Company
will also pay, upon receipt of any statement thereof, each additional
statement for reasonable fees and disbursements of any special counsel
engaged by the Remaining Holders rendered after the Effective Date in
connection with matters referred to in paragraphs 11B(i)(e) or 11B(i)(f)
hereof.
(iii) Survival. The obligations of the Company under this paragraph
11B and under the final sentence of paragraph 5J shall survive the
transfer of any Note or portion thereof or interest therein by any
Remaining Holder or any Transferee, the payment or prepayment of the Notes
and the termination hereof.
11C. Consent to Amendments. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) of the
Notes except that, (i) with the written consent of the holders of all Notes at
the time outstanding (and not without such written consents), the Notes may be
amended or the provisions thereof waived to change the maturity thereof, to
change the principal thereof, or to change the rate or time of payment of
interest on or any Credit Fees or Yield-Maintenance Amount payable with respect
to the Notes, and (ii) without the written consent of the holder or holders of
all Notes at the time outstanding, no amendment to or waiver of the provisions
of this Agreement shall change the provisions of paragraph 7A or this paragraph
11C insofar as such provisions relate to proportions of the principal amount of
the Notes, or the rights of any individual holder of Notes, required with
respect to any declaration of Notes to be due and payable or with respect to any
consent. Each holder of any Note at the time or thereafter outstanding shall be
bound by any consent authorized by this paragraph 11C, whether or not such Note
shall have been marked to indicate such consent, but any Notes issued thereafter
may bear a notation referring to any such consent. No course of dealing between
the Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein and in the Notes, the term "this Agreement"
and references thereto shall mean this Note Purchase Agreement as it may from
time to time be amended or supplemented.
11D. Solicitation of Noteholders.
(i) Solicitation. Neither the Company nor any Guarantor shall
solicit, request or negotiate for or with respect to any proposed waiver
or amendment of any of the provisions hereof or of the Notes, the Pledge
Agreement or the Guaranties unless each holder of the Notes (irrespective
of the amount of Notes then owned by it) shall be informed thereof by the
Company with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any
waiver or consent effected
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<PAGE>
pursuant to the provisions of this paragraph 11D shall be delivered by the
Company to each holder of outstanding Notes forthwith following the date
on which the same shall have been executed and delivered by all holders of
outstanding Notes required to consent or agree to such waiver or consent.
(ii) Payment. Neither the Company nor any Guarantor shall, directly
or indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, or grant any
security, to any holder of Notes as consideration for or as an inducement
to the entering into by any holder of Notes of any waiver or amendment of
any of the terms and provisions hereof or of the Notes or the Pledge
Agreement or the Guaranties unless such remuneration is concurrently paid,
or security is concurrently granted, on the same terms, ratably to the
holders of all Notes then outstanding.
(iii) Scope of Consent. Any consent made pursuant to this paragraph
11D by a holder of Notes that has transferred or has agreed to transfer
its Notes to the Company, any Subsidiary or any Affiliate and has provided
or has agreed to provide such written consent as a condition to such
transfer shall be void and of no force and effect except solely as to such
holder, and any amendments effected or waivers granted or to be effected
or granted that would not have been or would not be so effected or granted
but for such consent (and the consents of all other holders of Notes that
were acquired under the same or similar conditions) shall be void and of
no force and effect, retroactive to the date such amendment or waiver
initially took or takes effect, except solely as to such holder.
11E. Form, Registration, Transfer and Exchange of Notes; Lost Notes.
The Notes are issuable as registered notes without coupons in denominations of
at least $500,000, except as may be necessary to reflect any PIK Amount with
respect to a PIK Note or any principal amount not evenly divisible by $100,000.
The Company shall keep at its principal office a register in which the Company
shall provide for the registration of Notes and of transfers of Notes. Upon
surrender for registration of transfer of any Note at the principal office of
the Company, the Company shall, at its expense, execute and deliver one or more
new Notes of like tenor and of an aggregate principal amount, registered in the
name of such transferee or transferees; provided that the Company shall not be
required to register any transfer that was made in violation of the legend
appearing on such Note. At the option of the holder of any Note, such Note may
be exchanged for other Notes of like tenor and of any authorized denominations,
of a like aggregate principal amount, upon surrender of the Note to be exchanged
at the principal office of the Company. Whenever any Notes are so surrendered
for exchange, the Company shall, at its expense, execute and deliver the Notes
which the holder making the exchange is entitled to receive. Each installment of
principal payable on each installment date upon each new Note issued upon any
such transfer or exchange shall be in the same proportion to the unpaid
principal amount of such new Note as the installment of principal payable on
such date on the Note surrendered for registration of transfer or exchange bore
to the unpaid principal amount of such Note. No reference need be made in any
such new Note to any installment or installments of principal previously due and
paid upon the Note surrendered for registration of transfer or exchange. Every
Note surrendered for registration of transfer or exchange shall be duly
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endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer thereof shall
be entitled to the benefits of any Letter of Credit in support of such Note so
exchanged (and the holder of such Note shall execute a transfer instruction in
the form attached as Annex A to the form of Letter of Credit attached as Exhibit
J, or in a form otherwise acceptable to such holder, in order to effect the
transfer thereof) shall carry the rights to unpaid interest and Credit Fees and
interest and Credit Fees to accrue which were carried by the Note so exchanged
or transferred, so that neither gain nor loss of interest or Credit Fees shall
result from any such transfer or exchange. Upon receipt of written notice from
the holder of any Note of the loss, theft, destruction or mutilation of such
Note and, in the case of any such loss, theft or destruction, upon receipt of
such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note.
11F. Persons Deemed Owners; Participations. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest on and any Credit Fees and
Yield-Maintenance Amount payable with respect to such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the Company
shall not be affected by notice to the contrary. Subject to the preceding
sentence, the holder of any Note may from time to time grant participations in
all or any part of such Note to any Person on such terms and conditions as may
be determined by such holder in its sole and absolute discretion.
11G. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Remaining Holder
of any Note or portion thereof or interest therein and the payment of any Note,
and may be relied upon by any Transferee, regardless of any investigation made
at any time by or on behalf of any Remaining Holder or any Transferee. Subject
to the preceding sentence, this Agreement, the Company Pledge Agreement and the
Notes embody the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.
11H. Successors and Assigns. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
11I. Disclosure to Other Persons; Confidentiality. Except as
provided in this paragraph 11I, each holder and each Person who purchases a
participation in a Note or any part thereof agrees that, prior to the occurrence
of a Default, it will use its best efforts to hold in confidence and not to
disclose the Confidential Information. The Company acknowledges that the holder
of any Note may deliver copies of any financial statements and other documents
delivered
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to such holder, and disclose any other information disclosed to such holder, by
or on behalf of the Company or any Subsidiary in connection with or pursuant to
this Agreement to (i) such holder's directors, officers, employees, agents and
professional consultants, (ii) any other holder of any Note, (iii) any Person to
which such holder offers to sell such Note or any part thereof, (iv) any Person
to which such holder sells or offers to sell a participation in all or any part
of such Note, (v) any federal or state regulatory authority having jurisdiction
over such holder, (vi) the National Association of Insurance Commissioners or
any similar organization or (vii) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with any law, rule,
regulation or order applicable to such holder, (b) in response to any subpoena
or other legal process or informal investigative demand, (c) in connection with
any litigation to which such holder is a party or (d) in order to protect such
holder's investment in such Note; provided that prior to disclosing Confidential
Information to any offeree referred to in clauses (iii) and (iv) above, such
holder will use its best efforts to have such offeree deliver to the Company a
confidentiality agreement substantially in the form of Exhibit D hereto.
11J. Notices. All written communications provided for hereunder
shall be sent by first class mail or nationwide overnight delivery service (with
charges prepaid) and (i) if to any Remaining Holder, addressed to such Remaining
Holder at the address specified for such communications in the Remaining Holder
Schedule, or at such other address as such Remaining Holder shall have specified
in writing to the Person sending such communication, and (ii) if to any other
holder of any Note, addressed to it at such address as it shall have specified
in writing to the Person sending such communication or, if any such holder shall
not have so specified an address, then addressed to such holder in care of the
last holder of such Note which shall have so specified an address to the Person
sending such communication, and (iii) if to the Company, addressed to it at
12200 N. Pecos Street, Denver, Colorado 80234, Attention: John C. Walter,
Executive Vice President-General Counsel, Telecopy No. (303) 252-3362 or at such
other address as the Company shall have specified to the holder of each Note in
writing; provided, however, that any such communication to the Company may
also, at the option of the Person sending such communication, be delivered by
any other means either to the Company at its address specified above or to any
Authorized Officer of the Company.
11K. Payments Due on Non-Business Days. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of or
interest or Credit Fees on any Note that is due on a date other than a Business
Day shall be made on the next succeeding Business Day. If the date for any
payment is extended to the next succeeding Business Day by reason of the
preceding sentence, the period of such extension shall be included in the
computation of the interest and Credit Fees payable on such Business Day.
11L. Satisfaction Requirement. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to any Remaining Holder, to any holder of
Notes or to the Required Holder(s), the determination of such satisfaction shall
be made by such Remaining Holder, such holder or the Required Holder(s), as the
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case may be, in the sole and exclusive judgment (exercised in good faith) of the
Person or Persons making such determination.
11M. GOVERNING LAW. THIS AGREEMENT 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.
11N. Limitation on Interest. The Company and the Remaining Holders
specifically intend and agree to limit contractually the amount of interest
payable in connection with this Agreement and the Notes to the maximum amount of
interest lawfully permitted to be charged under applicable law. Therefore, none
of the terms of this Agreement or the Notes shall ever be construed to create a
contract to pay interest at a rate in excess of the maximum rate permitted to be
charged under applicable law, and neither the Company nor any Guarantor nor any
other party liable or to become liable hereunder or under the Notes shall ever
be liable for interest in excess of the amount determined at such maximum rate.
11O. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11P. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11Q. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
11R. Binding Agreement. When this Agreement is executed and
delivered by the Company and each Remaining Holder, it shall become a binding
agreement between the Company and the Remaining Holders.
[Remainder of page intentionally left blank. Signature pages follow.]
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IN WITNESS HEREOF, the parties hereto have caused their duly
authorized officers to execute this Agreement as of the date first above
written.
WESTERN GAS RESOURCES, INC.
----------------------------------------
Vice President-Finance
THE VARIABLE ANNUITY
LIFE INSURANCE COMPANY
AMERICAN GENERAL LIFE
INSURANCE COMPANY
AMERICAN GENERAL LIFE AND ACCIDENT
INSURANCE COMPANY
By:
-------------------------------------
[Title]
FIRST ALLMERICA FINANCIAL
LIFE INSURANCE COMPANY
By:
-------------------------------------
[Title]
ALLMERICA FINANCIAL LIFE
INSURANCE AND ANNUITY COMPANY
By:
-------------------------------------
[Title]
J-1
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
2200 Ross Avenue, Suite 4200E
Dallas, Texas 75201
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. Paragraph 4C of the
Agreement is amended by deleting the phrase "together with interest" and
substituting therefor the phrase "together with interest and the Credit Fees".
<PAGE>
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.
2
<PAGE>
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."
3
<PAGE>
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
4
<PAGE>
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
5
<PAGE>
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 Giddings Facility, if the Giddings 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 Giddings 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 Giddings
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
Giddings Facility if the Giddings 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 Giddings 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 Giddings 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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<PAGE>
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 Giddings 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.
Paragraph 6C 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
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<PAGE>
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".
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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.
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'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; Lance 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.
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'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.
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'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).
'Giddings 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
<PAGE>
'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 Moody's 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 Moody's 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
<PAGE>
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
<PAGE>
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 12200 N. Pecos Street, Denver,
CO 80234, 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
<PAGE>
(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 John C. Walter, 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 grant a Lien 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
<PAGE>
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:
---------------------------
William J. Krysiak
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
<PAGE>
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.
LANCE 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
-----------------------------------------------
William J. Krysiak, as Vice President-
Finance of each of the above-named companies.
<PAGE>
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. 021-000-018
For Credit to the Account of: The Prudential Insurance Company of
America
Account No. 890-0304-391
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. 021-000-018
For Credit to the Account of: Pruco Life Insurance Company
Account No. 890-0304-421
Re: Western Gas Structuring Fee
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