Exhibit 10.5

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of July 6,
2006, by and between WESTERN GAS RESOURCES, INC., a Delaware corporation (the
“Corporation”) and John C. Walter (“Employee”).

 

WITNESSETH:

 

WHEREAS, the Corporation, directly and indirectly through its subsidiaries,
affiliated companies, partnerships, joint ventures and other business
organizations (collectively, the “Western Companies” and individually, a
“Western Company”) acquire, design, construct and operate natural gas gathering
and processing facilities, market, store and transport natural gas and natural
gas liquids, and explore for, develop, and produce oil and gas.

 

WHEREAS, Employee has substantial experience in the Corporation’s business and
is currently the Corporation’s Executive Vice President and General Counsel.

 

WHEREAS, prior hereto, the Corporation and Employee entered into that Employment
Agreement, dated June 14, 2001 (the “Prior Agreement”)

 

WHEREAS, the parties desire to clarify certain portions of the Prior Agreement
and to modify certain of the benefits and obligations provided thereunder and
accordingly, the Prior Agreement shall be terminated upon execution of and
replaced in its entirety by this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:

 

1.                                      Definitions.

 

(a)                                  “Annual Bonus” means a cash bonus, as may
be determined pursuant to any bonus plan applicable to Employee for any fiscal
year of the Corporation, in an amount which has been approved by the
Corporation’s Board of Directors in its sole and absolute discretion to be
payable to Employee. For the purposes of Subsections 13(a) and 14(a)(i) of this
Agreement, Annual Bonus shall mean the average of the last three Annual Bonus
payments made to Employee prior to the Termination Date (annualized for any year
in which Employee was not employed for the full year if the bonus for such year
was pro rated and including any Annual Bonus determined by the Board of
Directors in any year to be zero). If Employee has been employed for a shorter
period than that required to obtain three Annual Bonus Payments, the amount of
Annual Bonus hereunder shall be the amount last paid to Employee or shall be the
averaged annual amount of the most recent Annual Bonus payments made if more
than one.

 

(b)                                 “Base Salary” means Employee’s current
annual base salary payable by the Corporation.

 

(c)                                  “Cause” means (i) Employee’s material
breach of this Agreement, or failure, neglect or refusal to perform his duties
hereunder (other than any such failure resulting from Employee’s disability or
from the assignment of duties that would constitute “Good Reason” as defined
herein), (ii) any act or omission by Employee constituting willful misconduct or
gross negligence which is, or could reasonably expected to become,

 

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materially injurious to the Corporation, monetarily or otherwise, (iii)
Employee’s material violation of any domestic or foreign securities law or
regulation, including those of the New York Stock Exchange or stock exchange
governing the listing of the Corporation’s securities (other than inadvertent
violations of reporting of beneficial ownership pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), (iv) any act
by Employee constituting a felony; (v) any act by Employee constituting a
misdemeanor involving moral turpitude, (vi) any theft or fraud by Employee which
results in a felony or misdemeanor conviction of Employee, (vii) any dishonesty
or knowing misrepresentation resulting or intended to result in personal benefit
or enrichment to Employee or harm to the Corporation, or (viii) Employee’s
material violation of any of the Corporation’s Board approved policies or any of
the Corporation’s policies regarding prohibited discriminatory or harassing
behavior.

 

(d)                                 “Change of Control” means as a result of one
transaction or a series of related transactions:

 

(i)                                     The acquisition by any individual,
entity or group (within the meaning of Section 12(d) (3) or 13(d) (2) of the
Exchange Act (a “Person”) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of more than thirty-five (35%) percent
of either (A) the then outstanding shares of common stock of the Corporation
(the “Outstanding Common Stock”) or (B) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors (the “Outstanding Voting Securities”); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change in Control: (A) any acquisition by the
Corporation, (B) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation controlled by the
Corporation, or (C) any acquisition by any entity pursuant to a transaction
which complies with Subsection 1(d)(iii); or

 

(ii)                                  Individuals who, as of the date hereof,
constitute the Board of Directors (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Corporation’s shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Incumbent Board; or

 

(iii)                               Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Corporation (a “Business Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Common Stock and Outstanding Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting

 

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securities entitled to vote generally in the election of directors, as the case
may be, of the entity resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Common Stock and Outstanding Voting Securities, as the case
may be, and (B) no person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 35% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Incumbent Board providing for
such Business Combination; or

 

(iv)                              Approval by the shareholders of the
Corporation of a complete liquidation or dissolution of the Corporation.

 

(e)                                  “Change of Control Event” means the earlier
of (i) a Change of Control, or (ii) the execution and delivery by the
Corporation of an agreement providing for a Change of Control.

 

(f)                                    “Change of Control Period” means the
period commencing ninety (90) days prior to the occurrence of a Change of
Control Event and ending 12 months after such Change of Control.

 

(g)                                 “Confidential Information” means all
nonpublic information and trade secrets (whether in paper or electronic form, or
contained in Employee’s memory or otherwise stored or recorded) relating to or
arising from the business, operations or properties of any of the Western
Companies, including, but not limited to, any information concerning the
business operations, business strategies, nonpublic policies or internal
structure of the Western Companies; Litigation Information; Confidential
Projects; proposed projects and areas of intended leasing activity and gathering
and processing activity; the customers, vendors, contractors, suppliers or
clients of any of the Western Companies; any acquisition strategies of any of
the Western Companies; the gas and other products, marketing or transportation
strategies of any of the Western Companies; the terms of any gas gathering,
processing, marketing, or transportation contracts entered into by any of the
Western Companies; past, present or future research by any of the Western
Companies in connection with the existing or proposed business or operations of
any of the Western Companies; personnel data of any of the Western Companies;
Employee’s work performed for, or relating to or for, any customer or client of
any of the Western Companies; the gas or other product pricing for any customer
or client of any of the Western Companies; any method or procedure relating or
pertaining to projects developed by any Western Companies or contemplated by any
Western Company to be developed; any gas gathering, processing, drilling,
marketing, transportation project which any of the Western Companies is
developing; all Technical and Engineering Information. Information shall not

 

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be deemed to be Confidential Information for purposes of this Agreement which:
(i) is or hereafter becomes publicly known through no improper or unauthorized
act or omission of Employee; (ii) is received by Employee without restriction on
disclosure from a third party who disclosed the information without, to the best
of Employee’s knowledge, violating any restriction on confidentiality or
disclosure; or (iii) is independently developed after the termination of
Employee’s employment with the Corporation by Employee without reference to the
Confidential Information and without violation of any confidentiality
restriction.

 

(h)                                 “Confidential Projects” means the activities
of or plans of any Western Company relating to the development, planning or
execution of new project, expansion or acquisition strategy or target relating
to areas of intended leasing activity and gathering and processing activity or
any other material business of any Western Company.

 

(i)                                     “Good Reason” means (i) any material
breach by the Corporation of its obligations under this Agreement, including the
failure of the Corporation to pay Employee the Base Salary or, if declared by
the Board, the Annual Bonus, or any other payment due Employee hereunder, or to
provide any benefits required pursuant to this Agreement; (ii) any action of
Corporation that results in any reduction in Employee’s title below an officer
title, (iii) any action of Corporation that results in any material diminishment
in Employee’s duties, functions, responsibilities or authority( provided however
that any changes in spending authority shall not be considered to be a material
diminishment in duties, functions, responsibilities or authority), (iv) any
reduction of Employee’s Base Salary, (v) any material reduction of benefits on a
basis different than other peer executives of the Corporation; or (vi) a
requirement that Employee be based anywhere other than within twenty-five (25)
miles of Employee’s current principal place of employment except for travel that
may be required of Employee in performing his employment duties hereunder;
provided, however, that if the Corporation suspends Employee from performing his
employment duties hereunder for the purposes of performing an internal
investigation potentially involving Employee or if the Employee is terminated
for Cause, then such suspension or termination shall not constituted Good
Reason.

 

(j)                                     “Litigation Information” means
information concerning possible or existing claims, investigations or litigation
involving any of the Western Companies.

 

(k)                                  “Material Competition” means that Employee
is involved in any business or investment activity, in any capacity, including,
but not limited to, as an employee, consultant, advisor, agent, shareholder
(other than as a shareholder of less than five (5%) percent of a publicly traded
corporation), independent contractor, investor, partner, member, owner or
otherwise, which activity directly competes with or has a material adverse
economic effect on any of the activities or business of any Western Company.
Material competition includes, but is not limited to, any activity involving the
gathering and processing business within 25 miles of one of the Western
Companies’ existing or planned gathering, processing or generation facilities;
any activity involving the purchase of oil or gas leases, the farming-in of such
leases or any similar arrangement, within five (5) miles of the boundaries of an
existing oil or gas lease of any Western Company; and, in relation to a
Confidential Project involving oil and gas exploration, development or
production, any activity, directly or indirectly, involving the purchase of oil
or gas leases or the farm-in or participation in operations under leases or any
similar arrangement within ten (10) miles of the boundaries of the target area
of such Confidential Project.

 

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(l)                                     “Short Term Disability Period” means the
period of ninety (90) days’ following determination of Employee’s disability as
that term is defined pursuant to the Corporation’s long-term disability
insurance plan.

 

(m)                               “Technical and Engineering Information” means
all nonpublic information, technical and engineering information associated with
or related to any oil, gas or mineral property and any gathering and/or
processing facility of any of the Western Companies or with respect to which any
of the Western Companies formed an intention to acquire, lease or form any other
business relationship prior to the termination of Employee’s employment
including, but not limited to, seismic data, engineering reports and methods,
geological matters, the results of expiration, drilling, drill cores, cuttings
and other samples, production, processing, gathering and drilling techniques and
water disposal techniques; or any plans or strategy related to the foregoing.

 

(n)                                 “Termination Date” means the effective date
of termination of employment under this Agreement.

 

2.                                      Employment. The Corporation hereby
employs Employee and Employee hereby accepts such employment with the
Corporation upon the terms and conditions hereinafter set forth. Employee’s
employment shall continue until it is terminated in accordance with the
provisions herein.

 

3.                                      Powers, Duties and Responsibilities.

 

(a)                                  Employee shall devote his full time,
attention and effort to the business of the Western Companies during the
Corporation’s normal business hours and during such other times as are
reasonably necessary for the proper performance of his responsibilities
hereunder; provided, however, that Employee may serve (i) on the board of any
charitable organization or industry group, and (ii) with the consent of the
Board of Directors, Employee may serve on the board of one (1) publicly traded
corporation; and provided further that in the case of both (i) and (ii) above
that such service does not significantly interfere with Employee’s duties
hereunder.

 

(b)                                 Employee’s primary duties shall be to act as
the Executive Vice President and General Counsel. Employee shall have such
powers, duties and responsibilities, and shall perform such other functions in
connection with the business of the Western Companies, as may be assigned from
time to time by the Corporation.

 

4.                                      Base Salary and Annual Bonus. For all of
the services rendered by Employee pursuant to this Agreement, the Corporation
shall pay Employee his Base Salary, payable in accordance with the Corporation’s
normal pay practices so long as employed under this Agreement. In no event shall
Employee’s Base Salary be decreased, but it may, from time to time be increased
at the discretion of the Corporation. In addition, the Corporation shall pay
Employee an Annual Bonus as determined by the Board of Directors from time to
time.

 

5.                                      Officer Insurance Coverage - Costs of
Defense. During the term of Employee’s employment and thereafter, to the extent
the Corporation maintains an insurance policy or policies providing directors’
and officers’ liability insurance, Employee shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage available for

 

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any officer of the Corporation provided that such insurance coverage is
available to the Corporation at a reasonable cost. Such coverage shall provide
to Employee officer liability insurance coverage to cover any claims that may be
made arising from his past, present, or future activities on behalf of the
Western Companies. Employee hereby represents that to his knowledge no
investigation, claim, or litigation is currently pending or threatened against
him at this time relating to or arising out of his activities as an employee of
any Western Company.

 

6.                                      Cooperation With Respect to
Investigations, Claims or Litigation. During the term of Employee’s employment
and at all times thereafter, should a Western Company become involved in any
investigation, claim, or litigation relating to or arising out of Employee’s
past, present, or future duties with a Western Company or with respect to any
matters which Employee has knowledge, Employee agrees to fully, and in good
faith, cooperate with the Corporation with respect to such investigation, claim,
or litigation. The Corporation shall reimburse Employee for any and all expenses
in accordance with the Indemnification Agreement, as defined below.

 

7.                                      Indemnification Agreement. Exhibit “A”,
attached hereto and incorporated herein by reference, is an Indemnification
Agreement by and between the Corporation and Employee. The Corporation and
Employee each agree to execute and deliver such Indemnification Agreement
concurrently with the execution and delivery of this Agreement. To the extent
any provision set forth in the Indemnification Agreement is in conflict with any
provision set forth in this Agreement, the provision set forth in the
Indemnification Agreement shall govern.

 

8.                                      Employee Benefits. During the term of
employment hereunder, Employee shall be eligible to participate in the employee
benefit plans provided by the Corporation on the same basis as other similarly
situated executives at the level of Vice President and above, as such plans may
be changed from time to time, in accordance with the provisions of such plans,
including, but not limited to, the Corporation’s qualified retirement plans and
the Corporation’s stock incentive plan(s). Employee hereby agrees and
acknowledges that nothing in this Agreement guarantees him the right to any
grant of stock options, restricted stock or any other right under any stock
incentive plan, or other plan.

 

9.                                      Confidential Information and
Nondisclosure.

 

(a)                                  Employee acknowledges that pursuant to his
employment hereunder, Employee occupies a position of trust and confidence.
Accordingly, in the course of performing the employment obligations hereunder,
Employee will have access to and may develop or obtain certain Confidential
Information.

 

(b)                                 Employee agrees that all Confidential
Information shall remain the exclusive property of the Corporation during and
after Employee’s employment with the Corporation. Employee further agrees that
during and after the term hereof, he shall not, except for the benefit of the
Corporation pursuant to the exercise of his duties hereunder or with prior
written consent of the Corporation, use for any purpose or disclose to any third
party any of the Confidential Information.

 

(c)                                  All information, drawings, documents and
materials whether in writing, on computer disks, computer hard drive, on
magnetic tape or otherwise prepared by Employee in connection with his
employment are hereby assigned to the Corporation without reservation of any
rights by Employee, and all such information which Employee obtains in the
course of or as result of his employment by the Corporation in all cases shall

 

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be the sole and exclusive property of the Corporation and will be delivered to
the Corporation by Employee on the earlier of a demand by the Corporation or
promptly after the Termination Date, together with all written, computer,
magnetic tape or other evidence of the information, drawings, document and
materials, if any, furnished by any Western Company to Employee in connection
with Employee’s employment.

 

(d)                                 If Employee violates this agreement of
confidentiality, Employee agrees that the Western Companies shall, in addition
to any other remedy provided by law, be permitted to pursue an action for
injunctive relief, monetary damages, or both.

 

10.                               Non-Solicitation. During the term of this
Agreement and for a period of eighteen months (18) thereafter, Employee shall
not hire, offer to hire, solicit, or participate in the hiring or induce the
resignation of any officer or employee of any Western Company; provided,
however, nothing contained herein shall prevent Employee from hiring any officer
or employee of any Western Company that originates as a result of a general
solicitation in a publicly available publication, including the internet, as
long as there is no involvement or participation of any kind or nature, directly
or indirectly by Employee in (a) the solicitation of the officer or employee of
any Western Company, or (b) inducing the resignation of such officer or employee
of any Western Company. In the event Employee violates this non-solicitation
provision, the Western Company shall, in addition to any other remedy provided
by law, be permitted to pursue an action for injunctive relief, monetary
damages, or both.

 

11.                               Agreement Not to Compete. The parties hereto
recognize that Employee is retained by the Corporation as part of a
professional, management and executive staff of the Corporation whose duties
include the formulation and execution of corporate strategy. Therefore,

 

(a)                                  Employee hereby agrees that while Employee
is employed pursuant to this Agreement he shall not act or engage in Material
Competition; and

 

(b)                                 for a period of one (1) year following the
Termination date:

 

(i)                                     In the event that this Agreement is
terminated by the Corporation for Cause or by Employee without Good Reason, he
shall not act or engage in Material Competition with respect to the business or
activities of any Western Company as they exist on the date of termination of
Employee’s employment; or

 

(ii)                                  In the event that this Agreement is
terminated by the Corporation without Cause or by the Employee for Good Reason,
he shall not act or engage in Material Competition with respect to any
Confidential Projects as they existed up to and including the Termination Date
in any State in which any Western Company engages or plans to engage in
business.

 

In the event that Employee violates this agreement not to compete, the
Corporation shall, in addition to any other remedies provided by law, be
permitted to pursue an action for injunctive relief (preliminary or permanent),
monetary damages, or both.

 

12.                               Termination of Employment. Employee’s
employment and this Agreement shall terminate upon the first to occur of the
following events:

 

(a)                                  Employee’s death.

 

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(b)                                 The end of the Short Term Disability Period
if Employee is unable to return to work at the end of such Short Term Disability
Period; provided, however, that during such Short Term Disability Period,
Employee shall be entitled to 100% of Employee’s Base Salary reduced by any
other Corporation-provided salary-related benefits to which Employee may be
entitled with respect to the Short Term Disability Period which benefits are
payable solely on account of such disability (including, but not limited to,
benefits under any disability insurance policy, worker’s compensation law or any
other benefit program or arrangement).

 

(c)                                  Employee’s written election to terminate
employment, with or without Good Reason, to be effective ninety (90) days
thereafter unless an earlier effective date is specified by the Corporation.

 

(d)                                 The Corporation’s written election to
terminate Employee’s employment with or without Cause, effective as of the date
set forth by the Corporation in such election.

 

13.                               Employee’s Rights and Obligations Upon Death
or Disability. If Employee’s employment is terminated as a result of death or
disability, then Employee shall be entitled to the following in full
satisfaction of all of his rights under this Agreement or at law:

 

(a)                                  Employee’s Right to Base Salary and
Benefits. Employee shall be entitled to the following: (i) Base Salary and
employee benefits, if any, which have been earned but not paid through the
Termination Date, and (ii) an Annual Bonus, equal to the product of (A) the
Annual Bonus, and (B) a fraction, the numerator of which is the number of days
in the current fiscal year through the date of termination and the denominator
of which is 365.

 

(b)                                 Employee’s Obligations. Notwithstanding such
termination of employment, if Employee is terminated as a result of disability,
Employee shall remain bound by the provisions of Sections 6, 9, 10 and 11
hereof.

 

14.                               Employee’s Rights and Obligations Upon
Termination of Employment By The Corporation Without Cause or By Employee for
Good Reason. If Employee’s employment is terminated by the Corporation without
Cause or by Employee for Good Reason, then Employee shall be entitled to the
following in full satisfaction of his rights under this Agreement or at law:

 

(a)                                  Severance Pay.

 

(i)                                     Employee shall be entitled to severance
pay in an amount equal to:

 

(A) the sum of (1) Employee’s Base Salary, if any, which has been earned but not
paid through the Termination Date, (2) the product of (x) the Annual Bonus and
(y) a fraction, the numerator of which is the number of days in the current
fiscal year through the Termination Date and the denominator of which is 365,
and (3) any accrued vacation or other pay pursuant to the Corporation’s vacation
or Paid Time Off policy, to the extent not previously paid; and

 

(B) an amount equal to the sum of (1) Employee’s Base Salary and (2) the Annual
Bonus; provided, however, that in the event that Employee’s

 

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employment has been terminated, as set forth above in this Section 14, at any
time during a Change of Control Period, then this amount shall be multiplied by
a factor of 2 and Employee shall receive such increased amount less any amount
previously paid to Employee under this sub-section (B).

 

(ii)                                  Employee shall be entitled to continue to
receive group health and dental insurance coverage equivalent to the coverage to
which he would have been entitled under such plans if he had continued working
for the Corporation in the position held on the Termination Date for a period of
12 months following the Termination Date, which period shall be increased to 24
months in the event that Employee has been terminated at any time during a
Change of Control Period. In addition, the Corporation shall continue to pay the
premiums on any supplemental term life and long term disability policies
obtained by the Corporation for Employee’s benefit on or before the Termination
date for a period of 12 months following the Termination Date, which period
shall be increased to 24 months in the event that Employee has been terminated
at any time during a Change of Control Period.

 

(b)                                 Certain Additional Payments by the
Corporation. The Corporation shall be responsible for the payment of taxes to
the extent applicable as set forth in Exhibit “B” hereto. Any payments made
hereunder as a result of a Change of Control shall be subject to the provisions
of Exhibit “B”.

 

(c)                                  Employee’s Obligations. Notwithstanding
such termination of employment, Employee shall remain bound by the provisions of
Sections 6, 9, 10 and 11 hereof.

 

15.                               Employee’s Rights and Obligations Upon
Termination of Employment by the Corporation With Cause or Termination of
Employment by Employee Without Good Reason. If Employee’s employment is
terminated by the Corporation with Cause or by Employee without Good Reason,
then Employee shall be entitled to the following in full satisfaction of all of
his rights under this Agreement or at law:

 

(a)                                  Severance Pay. Employee shall not be
entitled to any severance pay.

 

(b)                                 Employee’s Right to Base Salary and
Benefits. Employee shall only be entitled to the Base Salary and employee
benefits, if any, earned but not paid through the Termination Date. Employee
shall only be entitled to such additional Annual Bonus, if any, which has been
previously authorized by the Board of Directors, but has not been paid as of the
Termination Date.

 

(c)                                  Employee’s Obligations. Notwithstanding
such termination of employment, Employee shall remain bound by the provisions of
Sections 6, 9, 10 and 11 hereof.

 

16.                               Payment Dates; Section 409A of the Internal
Revenue Code.

 

(a)                                  Subject to the provisions of Sections
16(b), (c) and (d) below, any payments required to be made to Employee pursuant
to Sections 13, 14 or 15 hereunder shall be made within thirty (30) days’ of the
Termination Date.

 

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(b)                                 Anything in this Agreement to the contrary
notwithstanding, if (i) on the Termination Date any of the Corporation’s stock
is publicly traded on an established securities market or otherwise (within the
meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code, as amended
(the “Code”)) and (B) as a result of such termination, Employee would receive
any payment that, absent the application of this Section 16, would be subject to
interest and additional tax imposed pursuant to Section 409A(a) of the Code as a
result of the application of Section 409A(2)(B)(i) of the Code, then no such
payment shall be payable prior to the date that is the earliest of six (6)
months after the Termination Date or such other date as will cause such payment
not to be subject to such interest and additional tax.

 

(c)                                  It is the intention of the parties that
payments or benefits payable under this Agreement not be subject to the
additional tax imposed pursuant to Section 409A of the Code. To the extent such
potential payments or benefits could become subject to such Section, the parties
shall cooperate to amend this Agreement with the goal of giving Employee the
economic benefits described herein in a manner that does not result in such tax
being imposed.

 

(d)                                 Notwithstanding anything to the contrary in
the Agreement, payment to Employee upon termination shall be conditioned upon
Employee’s execution of a legal release in a form satisfactory to Company in its
discretion and drafted and executed to, among other things, ensure a final,
complete and enforceable release of all claims that Employee has or may have
against Company relating to or arising in any way from Employee’s employment
with Company and/or the termination thereof (but excepting claims for
indemnification or defense, whether under contract, the Articles of
Incorporation, By-Laws, or otherwise), and complete and continuing
confidentiality of Company’s proprietary information and trade secrets, and, at
the Company’s discretion, the circumstances of Executive’s separation from
Company and/or compensation received by Executive in connection with that
separation.

 

17.                               Survival. In the event that this Agreement is
terminated by either party, Sections 5, 6, 9, 10, and 11 shall survive for the
periods of time specified therein or if no period is specified, in perpetuity.

 

18.                               Benefit. This Agreement shall inure to the
benefit of and be binding upon the Corporation, its successors and assigns,
including, but not limited to (a) any entity which may acquire all or
substantially all of the Corporation’s assets and business, (b) any entity with
or into which the Corporation may be consolidated or merged, or (c) any entity
that is the successor corporation in a share exchange, and Employee, his heirs,
guardians and personal and legal representatives. Employee and the Corporation
also agree that each Western Company shall be deemed to be a third-party
beneficiary to this Agreement.

 

19.                               Notices. All notices and communications
hereunder shall be in writing and shall be deemed given when sent postage
prepaid by registered or certified mail, return receipt requested, and, if
intended for the Corporation, shall be addressed to it, to the attention of its
President, at:

 

Western Gas Resources, Inc.

1099 18th Street, Suite 1200

Denver, Colorado 80202

 

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or at such other address which the Corporation shall have given notice to
Employee in the manner herein provided, and if intended for Employee, shall be
addressed to him at his last known residence, or at such other address at which
Employee shall have given notice to the Corporation in the manner provided
herein:

 

 

John C. Walter

 

 

 

 

 

20.                               Miscellaneous.

 

(a)                                  Governing Law and Venue. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Colorado. Resolution of any disputes under this Agreement shall only be held in
courts in Denver County, Colorado, and the parties expressly consent to personal
jurisdiction in courts in Denver County, Colorado and waive any objections to
such jurisdiction.

 

(b)                                 Severability. In the event one or more of
the provisions contained in this Agreement, or any application thereof, shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or any other
application or modification thereof, shall not in any way be affected or
impaired. The parties further agree that any such invalid, illegal or
unenforceable provision or restriction shall be deemed modified so that it shall
be enforced to the greatest extent permissible under law, and to the extent that
any court of competent jurisdiction determines any provision or restriction
herein to be overly broad, or unenforceable, such court is hereby empowered and
authorized to limit such provisions or restriction so that it is enforceable for
the longest duration of time, within the largest geographical area and with the
broadest scope.

 

(c)                                  Counterparts. This Agreement may be
executed in more than one copy, each copy of which shall serve as an original
for all purposes, but all copies shall constitute but one and the same
Agreement.

 

(d)                                 Assignment. Except as provided in Section
18, this Agreement is personal to each of the parties hereto, and neither party
may assign nor delegate any of such party’s rights or obligations hereunder
without first obtaining the written consent of the other party.

 

(e)                                  Headings. All headings set forth in this
Agreement are intended for convenience only and shall not control or affect the
meaning, construction or effect of this Agreement or of any of the provisions
hereof.

 

(f)                                    Waiver of Breach. The waiver by any party
hereto of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by any party.

 

(g)                                 Entire Agreement. Except for the
Indemnification Agreement, this Agreement contains all agreements,
understandings, and arrangements between the parties hereto and no other exists.
Except for the Indemnification Agreement, all previous agreements,
understandings, and arrangements between the parties relating to

 

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employment are terminated by this Agreement. This Agreement may be amended,
waived, changed, modified, extended or rescinded only by a writing signed by the
party against whom such amendment, waiver, change, modification, extension or
rescission is sought.

 

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IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date
first written above.

 

 

 

CORPORATION:

 

 

 

WESTERN GAS RESOURCES, INC.

 

 

 

 

 

By:

 /s/ Peter A. Dea

 

 

Name:

Peter A. Dea

 

Title:

President and Chief Executive Officer

 

 

 

 

 

EMPLOYEE:

 

 

 

 

 

By:

/s/ John C. Walter

 

 

Name: John C. Walter

 

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