Exhibit 10.5


 


LETTER AMENDMENT NO. 1 TO

SECOND AMENDMENT AND RESTATED MASTER SHELF AGREEMENT


 


November 21, 1997


 


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) (the “Agreement”) by and among the undersigned,
Western Gas Resources, Inc. (the “Company”),
The Prudential Insurance Company of America (“Prudential”)
and Pruco Life Insurance Company (“Pruco”).
Unless otherwise defined herein, the terms defined in the Agreement shall be
used herein as therein defined.


 


The Company
and Mountain Gas Resources, Inc., a wholly-owned Subsidiary of the
Company, have entered into an Option and Asset Purchase Agreement dated
November 14, 1997 with RIS (the “Option
Agreement”). The Option Agreement grants RIS an option to purchase a
portion (up to 50%) of the Company’s interests in Granger/Lincoln Road Complex
(such portion of such assets being the “Option
Assets”). The unadjusted option price of the Option Assets is
approximately $110,000,000.


 


The Company
has requested that you amend paragraphs 6C(4) and 6C(5)(v) relating to,
among other things, sales of assets by the Company or any Subsidiary. You have
indicated your willingness to so amend the Agreement. 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 6C(4). Sale of Stock and Debt of
Subsidiaries. 
Paragraph 6C(4) is hereby deleted in its entirety and replaced, in
lieu thereof, with the following:


 

















 


“6C(4). Sale of Stock and Debt of Subsidiaries.  (i) Sell or otherwise dispose of, or
part with control of, any shares of stock or Debt of any Subsidiary, except to
the Company or another Wholly Owned Subsidiary, and except that all shares of
stock and Debt of any Subsidiary at the time owned by or owed to the Company
and all Subsidiaries may be sold as an entirety for a cash consideration which
represents the fair value (as determined in good faith by the Board of
Directors of the Company) at the time of sale of the shares of stock and Debt
so sold, provided that (i) the assets of such Subsidiary together
with (ii) the assets of all other Subsidiaries the stock or Debt of which
was sold or otherwise disposed of in the preceding 12-month period and
(iii) the assets of the Company and its Subsidiaries sold, leased,
transferred or otherwise disposed of pursuant to clause (v) of
paragraph 6C(5) in the preceding 12-month period (in each transaction
measured by the greater of book value or Fair Market Value), do not represent
more than 15% of Consolidated Net Tangible Assets as reflected on the most
recent annual or quarterly consolidated balance sheet, and provided further
that, at the time of such sale, such Subsidiary shall not own, directly or
indirectly, any shares of stock or Debt of, or any other continuing investment
in any other Subsidiary (unless all of the shares of stock and Debt of such
other Subsidiary owned, directly or indirectly, by the Company and all
Subsidiaries are simultaneously being sold as permitted by this paragraph 6C(4)),
or any shares of stock or Debt of the Company.


 


(ii) Notwithstanding anything else contained in this
paragraph 6C(4), in the event that the Option (as hereinafter defined) is
exercised, then during the 12-month period following the end of the calendar
month in which the Option is exercised the Company shall be permitted to sell
or otherwise dispose of, or part with control of, any shares of stock or Debt
of any Subsidiary, provided that all shares of stock and Debt of any
Subsidiary at the time owned by or owed to the Company and all Subsidiaries may
be sold as an entirety for a cash consideration which represents the fair value
(as determined in good faith by the Board of Directors of the Company) at the
time of sale of the shares of stock and Debt so sold, provided that
(i) the assets of such Subsidiary together with (ii) the assets of
all other Subsidiaries the stock or Debt of which was sold or otherwise
disposed of in the preceding 24-month period and (iii) the assets of the
Company and its Subsidiaries sold, leased, transferred of


 


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pursuant to
clause (v) of paragraph 6C(5) in the preceding 24-month period (in
each transaction measured by the greater of book value or Fair Market Value),
do not represent more than 25% of Consolidated Net Tangible Assets as reflected
on the most recent annual or quarterly consolidated balance sheet, and provided
further that, at the time of such sale, such Subsidiary shall not own,
directly or indirectly, any shares of stock or Debt of, or any other continuing
investment in, any other Subsidiary (unless all of the shares of stock and Debt
of such other Subsidiary owned, directly or indirectly, by the Company and all
Subsidiaries are simultaneously being sold as permitted by this
paragraph 6C(4)), or any shares of stock or Debt of the Company.”


 


B.                                     Paragraph 6C(5). 
Merger and Sale of Assets. Clause (v) of
paragraph 6C(5) is hereby deleted in its entirety and replaced, in lieu
thereof, with the following:


 


“(v) the
Company or any Subsidiary may sell, lease, transfer or otherwise dispose of any
of its assets to any Person, provided, that (a) such assets
together with (b) all other assets of the Company and its Subsidiaries
sold, leased, transferred or otherwise disposed of during the preceding
12-month period, and (c) the assets of all Subsidiaries the stock or Debt
of which has been sold or otherwise disposed of during the preceding 12-month
period pursuant to the first proviso of paragraph 6C(4)(i) (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; provided  further,
that, in the event that the first option to purchase certain assets (the “Option”) from the Company or its
Subsidiaries as defined in and pursuant to that certain Option and Asset
Purchase Agreement dated November 14, 1997, by and between Mountain Gas
Resources, Inc. and the Company and RIS (the “Option Agreement”) is exercised, then for any sales, leases,
transfers or other dispositions (including any sale pursuant to the Option
Agreement) of any of the assets of the Company or any Subsidiary during the
12-month period following the end of the calendar month in which the Option is
exercised, 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 24-month period, and (c) the assets of all Subsidiaries the
stock or Debt of which has been sold or otherwise disposed of during the


 


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preceding
24-month period pursuant to paragraph 6C(4)(iii)(in each transaction measured
by the greater of book value or Fair Market Value), does not represent more
than 25% of Consolidated Net Tangible Assets as reflected on the most recent
annual or quarterly consolidated balance sheet.”


 


II.                                     Waivers
under the Agreement. To the extent that granting the option to RIS
pursuant to the Option Agreement would be granting a “Lien” on property of the
Company and its Subsidiaries in violation of paragraph 6C(1) of the Agreement,
the Company has requested that you waive such violation. Prudential and Pruco
agree to waive any such violation of paragraph 6C(1) to the extent that
granting the option to purchase properties to RIS pursuant to the Option
Agreement constitutes a “Lien” provided the option granted to RIS expires, or
the option of RIS is exercised, on or before (a) July 1, 1998 with respect to
at least one-half of the Option Assets and (b) if the purchase pursuant to the
preceding clause (a) is not for the entire amount of the Option Assets, July 1,
1999 for the remaining one-half of the Option Assets.


 


III.                                 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. 1. 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. 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. 1 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. 1
to the Company at its address at 12200 N. Pecos Street, Denver, CO 80234,
Attention: Vice President-Finance.


 


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D.                                    This
Letter Amendment No. 1 shall become effective as of the date first above
written when and if (i) counterparts of this letter amendment shall have been
executed by us and you, (ii) the consent attached hereto shall have been
executed by each Guarantor, and (iii) Lance Oil & Gas Company, Inc. shall
have delivered to you a Guaranty.


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  WESTERN GAS
  RESOURCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William
  J. Krysiak

  	
   

  
	
   

  	
   

  	
  William J.
  Krysiak

  
	
   

  	
   

  	
  Vice
  President-Finance

  



 


Agreed as of the date first
above written:


 


	
  THE
  PRUDENTIAL INSURANCE COMPANY OF AMERICA

  
	
   

  
	
   

  
	
  By:

  	
  /s/ RIC ABEL

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
  PRUCO LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
  By:

  	
  /s/ RIC ABEL

  	
   

  
	
   

  	
  Vice
  President

  



 


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CONSENT TO AMENDMENT


 


Each of the
undersigned is a Guarantor (“Guarantor”
and, collectively, “Guarantors”)
under separate guaranties (each being a “Guaranty”)
in favor of The Prudential Insurance Company of America (“Prudential”) , for itself and on behalf 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) (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. 1 dated as of November 21, 1997 to the Agreement to which
this consent is attached (“Letter Amendment
No. 1”). Each of the undersigned hereby consents to Letter Amendment
No. 1 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
dated 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. 1.


 


Dated as of
November 21, 1997.


 


LANCE OIL & GAS COMPANY,
INC.


MGTC, INC.


MIGC, INC.


MOUNTAIN GAS RESOURCES, INC.


PINNACLE GAS TREATING, INC.


WESTERN GAS RESOURCES STORAGE,
INC.


WESTERN GAS RESOURCES - TEXAS,
INC.


WESTERN GAS RESOURCES OKLAHOMA,
INC.


WESTERN POWER SERVICES, INC.


WGR CANADA, INC.


 


	
  By:

  	
  /s/ William
  J. Krysiak

  	
   

  
	
   

  	
  William J.
  Krysiak, as Vice President-

  Finance of each of the above-named companies.