Exhibit 10.35

 

WESTERN GAS RESOURCES, INC.

 

2002 STOCK INCENTIVE PLAN

 

 

This Plan is established by Western Gas Resources, Inc., a Delaware corporation,
for certain employees of the Corporation who qualify as participants, and shall
be known as the Western Gas Resources, Inc. 2002 Stock Incentive Plan (the
“Plan”).  The Plan provides for the grant of stock options for employees of the
Corporation.  It is intended that options granted under the Plan constitute
“incentive stock options” within the meaning of § 422 of the Code and the Plan
and any options granted hereunder shall be construed accordingly.

 

1.                                       Purpose.  The purpose of the Plan is to
enable certain of the Corporation’s employees to participate in the growth and
profitability of the Corporation by providing a method whereby such employees
may be encouraged to invest in the Corporation’s common stock on reasonable
terms, to increase incentives to contribute to the Corporation’s future success
and prosperity, and to allow them to acquire a proprietary interest in the
Corporation’s business.  Further, the availability and offering of stock options
under the Plan supports and encourages employees to remain in the employ of the
Corporation.

 

2.                                       Definitions.  The terms used herein
shall have the following meanings:

 

(a)                                  “Award Agreement” shall mean an agreement
between a Participant and the Corporation which evidences the Participant’s
grant of stock options and the Participant’s right to acquire Common Stock under
the Plan and which contains terms and conditions consistent with this Plan as
approved by the Board.

 

(b)                                 “Board” shall mean the Board of Directors of
the Corporation.

 

(c)                                  “Change in Control of the Corporation”
shall mean (i) the acquisition by any person or persons acting in concert
(including corporations, partnerships, associations or unincorporated
organizations), of legal ownership or beneficial ownership (within the meaning
of Rule 13d-3, promulgated by the Securities and Exchange Commission and now in
effect under the Securities Exchange Act of 1934 (as amended), of a number of
voting shares of capital stock of the Corporation greater than either 30% or the
number of voting shares of capital stock of the Corporation that are then owned,
beneficially (as defined above), by Brion G. Wise, Bill M. Sanderson, Walter L.
Stonehocker, Dean Phillips, Ward Sauvage, their immediate families and the
companies through which they and their immediate families hold ownership in the
Corporation (“the Founders”), whichever is higher; (ii) a merger or
consolidation of the Corporation or any of its subsidiaries other than a merger
or consolidation immediately following which the directors of the Corporation
prior thereto constitute a majority of the of the board of the surviving company
or parent thereof; (iii) a change in the majority of the Board pursuant to an
actual or threatened proxy contest; or (iv) a sale of substantially all of the
Corporation’s assets.

 

(d)                                 “Code” shall mean the Internal Revenue Code
of 1986, as amended.

 

(e)                                  “Common Stock” shall mean the $0.10 par
value common stock of the Corporation which shall be authorized and unissued
stock or treasury stock.

 

(f)                                    “Corporation” shall mean Western Gas
Resources, Inc., a Delaware corporation, and any subsidiary thereof.

 

(g)                                 “Disabled” shall mean an employee of the
Corporation found to be unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental

 

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impairment which can be expected to result in death, or which has lasted, or can
be expected to last, for a continuous period of not less than twelve (12)
months.

 

(h)                                 “Disqualified Employee” shall mean an
employee of the Corporation who, either directly or indirectly at the time an
option is granted, owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Corporation or any subsidiary or parent of
the Corporation.  For purposes of this determination, the employee shall be
considered as owning the stock owned, directly or indirectly, by or for his
spouse, brothers and sisters (whether by whole or half-blood), ancestors, and
lineal descendants; and stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust shall be considered as being owned
proportionally by or for a shareholder, partner, or otherwise as the case may
be.

 

(i)                                     “Fair Market Value” of stock shall mean
the New York Stock Exchange Composite Transactions average closing price for the
Common Stock reflected in The Wall Street Journal or another publication
selected by the Board for the ten (10) days preceding the day the Option is
granted to each eligible employee.  If Shares of Common Stock have not been
traded on the New York Stock Exchange for more than 10 days immediately
preceding the granting of an Option, or if deemed appropriate by the Board for
any other reason, the Fair Market Value of shares of Common Stock shall be as
determined by the Board in such other manner as it may deem appropriate.

 

(j)                                     “Incentive Stock Option” shall mean any
option which is intended to meet and comply with the term “incentive stock
option” as set forth in § 422 of the Code.

 

(k)                                  “Option” shall mean a stock option granted
by the Corporation under this Plan.

 

(l)                                     “ Participant” shall mean an eligible
employee of the Corporation who has been granted an Option under this Plan.

 

(m)                               “Plan” shall mean the 2002 Stock Incentive
Plan set forth in and by this document and all subsequent amendments thereto.

 

(n)                                 “Regulations” or “Regs.”  shall mean the
Treasury Regulations promulgated under the Code.

 

3.                                       Eligibility.  Employees of the
Corporation, upon commencement of employment, shall be eligible for selection to
participate in the Plan as determined from time to time by the Board.  No Option
shall be granted to a Disqualified Employee.

 

4.                                       Administration of Plan.

 

(a)                                  The Board of Directors of the Corporation
shall administer the Plan.  The Board shall have the authority to: (i) construe
and interpret the Plan; (ii) define the terms used herein; (iii) determine the
duration and purpose of leaves of absence which may be granted to Participants
without constituting a termination of their employment for the purposes of the
Plan; (iv) make all other determinations necessary or advisable for the
administration of the Plan; and (v) appoint a Committee to administer the Plan
and to delegate to that Committee all of the authority to administer the Plan in
accordance with its provisions.  The determination of the Board in the matters
referred to in this paragraph shall be conclusive.

 

(b)                                 The Board shall have power, subject to the
limitations contained herein, to fix the price, terms, and conditions for the
grant or exercise of any Option under the Plan.

 

(c)                                  The Board may at any time cancel any
unexercised Options awarded under the Plan, whether or not vested, if a
Participant engages in conduct which the Board determines to be detrimental to
the best interests of the Corporation.

 

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(d)                                 The Board may at any time and from time to
time amend, suspend, or terminate the Plan as set forth in Paragraph 9 and may
amend the form of the Award Agreement, in such respects as it shall deem
advisable; provided that such modification shall not change:  (1) the maximum
number of shares for which Options may be granted; (2) the Option price; (3) the
period during which Options may be granted or exercised; (4) the provisions
relating to the class of persons eligible to receive Options granted under the
Plan; or (5) the provisions relating to adjustments to be made upon changes in
capitalization of the Corporation.  No modification to the Plan shall, without
the consent of a Participant, adversely affect such Participant’s rights under
an Option previously granted to him.

 

(e)                                  If the provisions of the Code or
Regulations relating to Incentive Stock Options are changed during the term of
the Plan, the Board shall have the power to alter the Plan to conform to such
changes.  The Board shall have such authority without the necessity of obtaining
further stockholder approval unless such changes in the Code or Regulations
require such approval.

 

5.                                       Participants and Allotments.  The Board
may, from time to time, select Participants from the eligible class of employees
and determine the terms and provisions of the respective Award Agreements (which
need not be identical), the times at which such Options shall be granted, and
the number of shares subject to each Option.  Notwithstanding the generality of
the foregoing, the maximum number of shares with respect to which an Option or
Options may be granted to any eligible employee in any one fiscal year shall not
exceed One Hundred Twenty Five Thousand (125,000) shares.

 

6.                                       Shares Subject to Plan.  The maximum
number of shares from which Options may be granted under the Plan are One
Million Two Hundred Fifty Thousand (1,250,000) shares of the Corporation’s
authorized and unissued Common Stock.  If any Option granted under the Plan
shall terminate or expire prior to exercise, in whole or in part, the shares so
released from the Option may be made the subject of additional grants under the
Plan.  The Corporation shall reserve and keep available such number of shares of
stock as will satisfy the requirements of all outstanding grants of Options
under this Plan.

 

7.                                       Terms and Conditions of Stock Options

 

(a)                                  Option Price.  The purchase price of the
stock under each Option shall be the Fair Market Value of the stock subject to
the Option at the time the Option is granted.

 

(b)                                 Conditions for Exercise of Option.

 

(i)                                     Notwithstanding anything to the
contrary, no Option or portion thereof granted under this Plan may be exercised
after the earlier of (1) five (5) years from the date the Participant has the
right to exercise such Option or portion thereof as provided in Paragraph
7(b)(ii), below; or (2) ten (10) years from the date the Option is granted.

 

(ii)                                  Except as expressly provided in Paragraphs
7(b)(v) and 7(b)(vi) below, a Participant shall become entitled to exercise the
Option or portion thereof as determined by the Board and as set forth in each
Participant’s Award Agreement.  The vesting schedule determined by the Board may
be based on the period of time during which the Participant remains employed
following the date of grant or on performance measures determined by the Board
in its sole discretion.

 

The Participant’s right to purchase the Common Stock subject to the Option,
shall be cumulative, so that as of the end of the vesting period specified in
his Award Agreement, or as of the date on which the designated performance
measures are achieved, as the case may be, the Participant shall be entitled to
exercise one hundred percent (100%) of the Option and to purchase all of the
Common Stock covered by the Option, subject to all of the provisions of this
Plan.

 

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(iii)                               Except as provided in Paragraphs 7(b)(iv)
and (v), a Participant may exercise an Option only if, at the time such Option
is exercised, such Participant is an employee of and has continuously since the
grant of the Option been an employee of the Corporation.

 

(iv)                              If a Participant’s employment with the
Corporation is terminated for any reason other than (i) his or her death or
disability or (ii) his or her discharge for dishonesty or commission of a crime,
the Participant may, within sixty (60) days thereafter and subject to the
provisions of Sections 7(b)(i), (ii) or (iii), exercise the Option or portion
thereof to the extent it was exercisable as of the date of termination of his or
her employment.  All unexercised Options, or portions thereof, shall terminate,
be forfeited, and shall lapse upon expiration of said sixty (60) day period, or
immediately if the Participant’s employment is terminated for any of the reasons
set forth in clause (ii) above.

 

(v)                                 If a Participant dies or becomes Disabled
while employed by the Corporation, all of the Options granted to such
Participant shall become one hundred percent (100%) exercisable, without regard
to the provisions of Paragraph 7(b)(ii), above.  In such event, the Options may
be exercised by the Disabled Participant, or the person or persons to whom the
deceased Participant’s rights under the Option shall pass by will, or by the
applicable laws of descent and distribution; provided, however, that no such
Option may be exercised after one hundred eighty days (180) days from such
Participant’s date of death, or termination of employment as a result of
Disability, whichever is applicable.  Upon expiration of said period, all
unexercised Options, or portions thereof, shall terminate, be forfeited, and
shall lapse.

 

(vi)                              As of the date of a Change in Control of the
Corporation, all of the Options granted under the Plan which have not otherwise
been terminated or forfeited shall become one hundred percent (100%)
exercisable, without regard to the provisions of Paragraph 7(b)(ii), above.

 

(c)                                  Method of Exercise.

 

(i)                                     To exercise an Option, the Participant,
or his or her successors, shall give written notice to the Corporation’s
Treasurer at the Corporation’s principal office accompanied by full payment of
the Common Stock being purchased and a written statement that the shares are
purchased for investment and not with a view to distribution.  However, this
statement shall not be required in the event the Common Stock subject to the
Option is registered with the Securities and Exchange Commission.  If the Option
is exercised by the successor of the Participant, following his or her death,
proof shall be submitted, satisfactory to the Board, of the right of the
successor to exercise the Option.

 

(ii)                                  Common Stock issued pursuant to this Plan
which has not been registered with the Securities and Exchange Commission shall
bear the following legend:

 

“The securities represented by this Stock Certificate have not been registered
under the Securities act of 1933 (the “Act”) or applicable state securities laws
(the “State Acts”), and shall not be sold, pledged, hypothecated, donated or
otherwise transferred (whether or not for consideration) by the holder, except
upon the issuance to the Corporation of a favorable opinion of its counsel and
submission to the Corporation of such other evidence as may be satisfactory to
the Corporation to the effect that any such transfer shall not be in violation
of the Act and the State Acts.”

 

(iii)                               The Corporation shall not be required to
transfer and deliver any stock certificate or certificates for shares purchased
upon exercise of said Options until after compliance with all then applicable
requirements of law.  In no event shall the Corporation be required to issue
fractional shares to the Participant.

 

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(iv)                              If the Corporation shall be advised by counsel
that shares of stock deliverable upon exercise of an Option are required to be
registered under the Securities Act of 1933, or that the consent of any other
authority is required for the issuance of same, the Corporation may effect
registration or obtain consent, and delivery of shares by the Corporation may be
deferred until registration is effected or consent obtained.

 

(v)                                 Options may be exercised, in whole or in
part, by the surrender (or delivery) to the Corporation of previously acquired
shares of Corporation common stock.  This method of exercise is to include the
constructive exchange (or surrendering) of Corporation stock already owned
(“Payment Shares”) in payment for the shares to be received under the Option
exercise in lieu of actually tendering such Corporation stock to the
Corporation.  If the Payment Shares are held by a registered securities broker
for the Participant in “street name,” the Participant will provide the Company
with a notarized statement attesting to the number of shares owned that are
intended to serve as Payment Shares.  If the Corporation stock certificates are
actually held by the Participant, he shall provide the Corporation with their
certificate numbers.  Upon receipt of a notarized statement regarding ownership
of the Payment Shares, or upon confirmation of ownership of the Payment Shares
by reference to Corporation records, the Corporation shall treat the Payment
Shares as being constructively exchanged.  The Corporation shall then issue to
the employee a certificate for a net number of shares:  the number of shares
subject to the Option exercise less the number of Payment Shares.  The exchange
price for the Payment Shares under the respective Option exercise will be the
Fair Market Value of the Corporation Common Stock as determined in Paragraph
2(i) above as of the effective date of the exchange.

 

8.                                       Rights To Terminate Employment. 
Nothing in this Plan or in any Award Agreement shall confer upon any Participant
the right to continue in the employment of the Corporation or affect any right
which the Corporation may have to terminate the employment of such Participant.

 

9.                                       Amendments and Termination.  The Board
may amend, suspend, discontinue or terminate the Plan; provided, however, that
unless first approved by the requisite vote of stockholders, no amendment shall
be made to the Plan that would (a) permit a decrease in the Option price of any
outstanding Option, (b) increase the total number of shares of Common Stock
reserved for issuance under the Plan, or (c) expand or alter the provisions
relating to the class of persons eligible to receive Options granted under the
Plan.  No modification to the Plan shall, without the consent of an Participant,
adversely affect such Participant’s rights under an Option previously granted to
him.

 

10.                                 Rights As Stockholders.  No stock shall be
issued until full payment for such stock has been made.  The Participant shall
have no rights as a stockholder with respect to optioned shares until the date
of the issuance of the stock certificate to him or her for such shares.  No
adjustments shall be made for dividends (ordinary or extraordinary, whether in
cash, securities, or other properties) or distributions or other rights for
which the record date is prior to the date such certificate is issued.

 

11.                                 Adjustments of and Change In Stock.  No
adjustment shall be made to the number of shares of Common Stock for which
Options are granted by the Plan or the exercise price thereof as a result of any
change in the number of issued and outstanding shares of Common Stock.  However,
the number of shares of Common Stock covered by outstanding Options, as well as
the exercise price, shall be adjusted proportionately for any increase or
decrease in the number of outstanding shares of Common Stock resulting from a
stock split, the payment of a stock dividend with respect to the Common Stock,
or any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company.  In addition, in the
event of a dissolution or liquidation of the Corporation, a merger of the
Corporation, or sale of all or substantially all of the assets of the
Corporation, the Corporation shall take such action as may be necessary to
enable the Participant to receive, in lieu of shares of Common Stock, securities
or other assets that were issued or payable upon such event in receipt of or in
exchange for such shares of Common Stock.

 

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12.                                 Award Agreement.  The granting of an Option
under this Plan occurs only by a written Award Agreement, effective on the date
set forth therein, substantially in the form attached hereto and marked Exhibit
1, executed by and on behalf of the Corporation and the employee to whom the
Option is granted, and such executed Award Agreement is delivered to the
Corporation.

 

13.                                 Nonassignability.  No Option granted under
this Plan shall be assignable or transferable in any manner voluntarily,
involuntarily, or by operation of law, except by will or by the laws of descent
and distribution.  During the life of such recipient, an Option shall be
exercisable only by such person or by such person’s guardian or legal
representative.

 

14.                                 Period of Plan.  No Options shall be granted
on or after                               , 2012.  The Plan shall terminate on
the later of (1)                                 , 2012; (2) the date on which
all Options granted under the Plan have expired; or (3) the date on which all
Options granted under the Plan have been exercised in full.

 

 

ADOPTED BY THE BOARD OF DIRECTORS OF
WESTERN GAS RESOURCES, INC.

 

 

 

 

 

 

By:

 

 

Date

[Name]

[Title]

 

 

ATTEST:

 

 

 

 

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