LETTER AMENDMENT NO. 1
October 15, 1999
The Prudential Insurance Company
of America
c/o Prudential Capital Group
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Ladies and Gentlemen:
We refer to the Amended and Restated Subordinated Note and
Warrant Purchase Agreement dated as of June 8, 1999 (the "Agreement") among the
undersigned, Hallwood Energy Corporation, Hallwood Consolidated Resources
Corporation and you. Unless otherwise defined herein, the terms defined in the
Agreement shall be used herein as therein defined.
Paragraph 6B(6) of the Agreement requires that Indebtedness of
Subsidiaries of the Parent not exceed the greater of $1,000,000 or 2% of
Consolidated Net Worth of the Parent. As of June 30, 1999, Indebtedness of
Subsidiaries of the Parent, other than the Company, computed after marking to
market Hedging Transactions was $2,991,000. We request that you amend paragraph
6B(6) of the Agreement to allow for the exclusion of $10,000,000 of hedging
exposure for the period beginning June 30, 1999 and ending June 30, 2000. You
have indicated your willingness to so agree. Accordingly, it is hereby agreed by
you and us as follows:
The Agreement is, effective the date first above written,
hereby amended as follows:
(a) Paragraph 6B(6). Paragraph 6B(6) of the Agreement is
amended in full to read as follows:
"6B(6). Priority Debt. Permit Indebtedness of
Subsidiaries of the Parent, other than the Company and other
than Indebtedness that constitutes Senior Debt, plus (without
duplication) Indebtedness secured by ▇▇▇▇▇ permitted by clause
(v) of paragraph 6B(2) to exceed, at any time, the greater of
$1,000,000 or 2% of Consolidated Net Worth of the Parent. For
the purposes of this paragraph 6B(6), from the period of June
30, 1999 to June 30, 2000, "Indebtedness" of Subsidiaries will
not include up to $10,000,000 of Hedging Transactions of
Subsidiaries."
On and after the effective date of this Letter Amendment, each
reference in the Agreement to "this Agreement", "hereunder", "hereof", or words
of like import referring to the Agreement, and each reference in the Notes to
"the Agreement", "thereunder", "thereof", or words of like import referring to
the Agreement, shall mean the Agreement as amended by this Letter Amendment. The
Agreement, as amended by this Letter Amendment, is and shall continue to be in
full force and effect and is hereby in all respects ratified and confirmed. The
execution, delivery and effectiveness of this Letter Amendment shall not, except
as expressly provided herein, operate as a waiver of any right, power or remedy
under the Agreement nor constitute a waiver of any provision of the Agreement.
This Letter Amendment may be executed in any number of
counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same Letter Amendment. The
effectiveness of this Letter Amendment is conditioned upon the accuracy of the
factual matters described above and the execution of the Consent attached
hereto.
If you agree to the terms and provisions hereof, please
evidence your agreement by executing and returning at least a counterpart of
this Letter Amendment to Hallwood Energy Corporation, ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Legal Department. This Letter Amendment
shall become effective as of the date first above written when and if
counterparts of this Letter Amendment shall have been executed by us and you.
Very truly yours,
HALLWOOD ENERGY CORPORATION
By:______________________________
Title:
HALLWOOD CONSOLIDATED RESOURCES CORPORATION
By:______________________________
Title:
Agreed as of the date first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:______________________________
Vice President
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CONSENT
Hallwood Consolidated Partners, L.P., is a Guarantor under the
Senior Subordinated Guaranty Agreement dated as of December 23, 1997 and each of
the other undersigned entities are Guarantors under the Senior Subordinated
Guaranty Agreement dated as of June 8, 1999 (each being a "Guaranty") in favor
of The Prudential Insurance Company of America ("Prudential") with respect to
the obligations of Hallwood Consolidated Resources Corporation (the "Company")
under that certain ▇▇▇▇▇▇▇ and Restated Subordinated Note and Warrant Purchase
Agreement dated as of June 8, 1999 (the "Agreement"). Prudential and the Company
are entering into Letter Amendment No. 1 to the Agreement (the "Amendment").
Each of the undersigned hereby consents to the Amendment and each hereby
confirms and agrees that its Guaranty is, and shall continue to be, in full
force and effect and is hereby confirmed and ratified in all respects except
that, upon the effectiveness of, and on and after the date of this consent, all
references in the Guaranty of the undersigned to the "Agreement," "thereunder,"
"thereof," or words of like import referring to the Agreement shall mean the
Agreement as amended by the Amendment, as the same may be further amended or
modified from time to time.
Dated as of October 15, 1999
HALLWOOD CONSOLIDATED MAY ENERGY PARTNERS OPERATING
PARTNERS, L.P. PARTNERSHIP, LTD.
By: Hallwood Consolidated Resources By: HEC Acquisition Corp.
Corporation
Its: General Partner Its: General Partner
By:__________________________________ By:______________________________
Title: Title:
HALLWOOD ENERGY PARTNERS, L.P. CONCISE OIL & GAS PARTNERSHIP
By: HEC Acquisition Corp. By: HEC Acquisition Corp
Its: General Partner
By:__________________________________ By:______________________________
Title: Title:
LA PLATA ASSOCIATES, LLC EM NOMINEE PARTNERSHIP COMPANY
By: Hallwood Petroleum, Inc. By: HEC Acquisition Corp.
Its: Manager Its: General Partner
By:__________________________________ By:______________________________
Title: Title:
HALLWOOD LA PLATA, LLC
By: Hallwood Petroleum, Inc.
Its: Manager
By:__________________________________
Title:
