**Exhibit 10.3**

 

[Execution]

 

**INTERCREDITOR AGREEMENT**

 

This INTERCREDITOR AGREEMENT (as amended orsupplemented from time to time, herein called this “**Agreement**”), is entered into as of April 24, 2003, by andamong the BANKS (as defined below), BANK OF AMERICA, N.A., as AdministrativeAgent for the Banks (in such capacity, the “**Agent**”)and as Collateral Agent for the Lenders (in such capacity, the “**Collateral Agent**”), and THE PRUDENTIALINSURANCE COMPANY OF AMERICA (“PICA”), PRUCO LIFE INSURANCE COMPANY (“**Pruco**”), ING LIFE INSURANCE & ANNUITYCOMPANY (“ING”), and PRUDENTIAL INVESTMENT MANAGEMENT, INC. (“**Prudential**” and, together with PICA, Prucoand ING, collectively, the “**InitialPrudential Noteholders**”).

 

W I T N E S S E T H:

 

**WHEREAS,** WESTERN GASRESOURCES, INC., a Delaware corporation (herein called the “**Company**”), the Banks and the Agent haveentered into that certain Credit Agreement of even date herewith (herein, asfrom time to time amended, supplemented or restated, called the “**Bank Agreement**”) which amends and restatesin its entirety the Loan Agreement dated as of April 29, 1999 among theCompany, the Agent and the lenders named therein;

 

**WHEREAS,** pursuant tothe Bank Agreement, the Banks have agreed to make revolving loans to theCompany and to issue letters of credit for the account of the Company, and theCompany has executed in favor of each Bank a promissory note (such promissorynotes, as from time to time supplemented or amended and all promissory notesgiven in renewal and extension thereof are collectively referred to herein asthe “**Bank Notes**”);

 

**WHEREAS,** one or moreof the Banks or Prudential Affiliates (as defined herein) may, from time totime, enter into Swap Contracts with the Company or Affiliates of the Company;

 

**WHEREAS,** payment ofthe obligations of the Company to the Banks and the Agent arising under or inconnection with the Bank Agreement and the Swap Contracts from time to time isguaranteed pursuant to that certain Guaranty of even date herewith from theGuarantors in favor of Agent and the Banks (herein, as amended from time totime, collectively called the “**Bank Guaranty**”)which amends and restates the Guaranty dated as of April 29, 1999 from eachGuarantor in favor of the Banks and the Agent;

 

**WHEREAS,** the Companyand the Initial Prudential Noteholders have entered into that certain ThirdAmended and Restated Master Shelf Agreement dated as of December 19, 1991 andeffective as of January 13, 2003 (herein, as from time to time amended,supplemented or

 

----

 

restated, called the “**PrudentialAgreement**”), which amended and restated the Master Shelf Agreementdated as of December 19, 1991 between the Company and PICA;

 

**WHEREAS,** the Companyhas issued and may hereafter issue Senior Notes pursuant to the PrudentialAgreement, in each case evidencing indebtedness of the Company to the InitialPrudential Noteholders and all subsequent holders of Prudential Notes;

 

**WHEREAS,** eachGuarantor has heretofore executed and delivered to Prudential its guaranty(herein, as amended from time to time, collectively called the “**Prudential Guaranties**”), guaranteeingpayment of obligations of the Company to Prudential, for itself and on behalfof the Initial Prudential Noteholders under the Prudential Agreement and allsubsequent holders of Prudential Notes under the Prudential Agreement, arisingunder or in connection with the Prudential Notes and the Prudential Agreementand, to the extent any Prudential Affiliate enters into a Swap Contract, anysuch Swap Contract (by amendment to the Prudential Guaranties);

 

**WHEREAS,** hereaftersubsidiaries of the Company may from time to time issue additional guarantiesin favor of the Banks or any of them in connection with the Bank Agreement, infavor of any Swap Lenders in connection with any Swap Contracts, or in favor ofPrudential in connection with the Prudential Notes and the Prudential Agreement(any such guaranties herein being called “**AdditionalGuaranties**” and any subsidiaries executing Additional Guarantiesherein being called the “**AdditionalGuarantors**”);

 

**WHEREAS,**the Companyhas executed and delivered to the Agent for the benefit of the Banks thatcertain Pledge Agreement of even date herewith (as from time to timesupplemented, amended or restated, the “**CompanyPledge Agreement**”), which amends and restates in its entirety thePledge Agreement dated as of April 29, 1999, pursuant to which the Company hasgranted to the Agent a security interest in all of its ownership interests incertain of its subsidiaries;

 

**WHEREAS,**MIGC hasexecuted and delivered to the Agent for the benefit of the Banks that certainStock Pledge Agreement of even date herewith (as from time to timesupplemented, amended or restated, the “**SubsidiaryPledge Agreement**”), which amends and restates the Stock PledgeAgreement dated as of April 29, 1999, pursuant to which MIGC has granted to theAgent a security interest in all of its ownership interests in MGTC;

** **

**WHEREAS,**the Companyhas executed and delivered to Prudential that certain Pledge Agreement dated asof April 29, 1999, pursuant to which the Company has granted to Prudential, foritself and on behalf of the Initial Prudential Noteholders under the PrudentialAgreement and all subsequent holders of the Prudential Notes under thePrudential Agreement, a security interest in all of its ownership interests incertain of its subsidiaries, and MIGC has executed and delivered to Prudentialthat certain Pledge Agreement dated as of April 29, 1999, pursuant to whichMIGC has granted to Prudential, for itself and on behalf of the Initial PrudentialNoteholders under the Prudential Agreement and all subsequent holders of thePrudential Notes under the Prudential Agreement, a security interest in all ofits ownership interests in MGTC

 

INTERCREDITOR AGREEMENT

 

2

----

 

(such Pledge Agreements as from time to time amended, supplemented orrestated herein being collectively called the “**Prudential Pledge Agreements**”);

 

**WHEREAS,**subsidiariesof the Company may from time to time create additional pledge agreements infavor of the Banks or any of them in connection with the Bank Agreement, infavor of any Swap Lenders in connection with any Swap Contracts, or in favor ofthe holders of the Prudential Notes in connection with the Prudential Agreement(any such pledge agreements herein being called the “**Additional Pledge Agreements**” and any subsidiaries executingsuch Additional Pledge Agreement herein being collectively called the “**Additional Pledgors**”);

 

**WHEREAS,**the BankAgreement and the Prudential Agreement each require that upon the occurrence ofcertain events, the Company and its subsidiaries shall execute and deliver tothe Collateral Agent deeds of trust and mortgages securing the Obligations andcovering certain of their oil and gas properties of the Company and itssubsidiaries (all deeds of trust and mortgages hereafter delivered to the Collateral Agent for the benefit of theLenders by the Company and/or any of its subsidiaries, as from time to timesupplemented amended or restated, are herein being called the “**Mortgages**”);

 

**WHEREAS,** the Agent,the Collateral Agent, Prudential, and the Banks have entered into that certainIntercreditor Agreement dated as of as of April 26, 2001 (as amended andsupplemented to the date hereof, the “**ExistingIntercreditor Agreement**”) to evidence their agreement with respectto certain payments that may be received by the Lenders under or in connectionwith the Subject Guaranties and the Pledge Agreements; and

 

**WHEREAS,** the Lendersdesire to amend and restate the Existing Intercreditor Agreement as providedherein;

 

**NOW, THEREFORE,** inconsideration of the premises and the mutual agreements herein contained, theLenders hereby agree that the Existing Intercreditor Agreement is herebyamended and restated to read in its entirety as follows:

 

1.             Definitions.  As used herein the following definitionsshall have the meanings set forth below:

 

“**AccelerationEvent**” means (i) the failure by the Company to pay in full theoutstanding principal balance of and any accrued and unpaid interest on anyNote on the final maturity date of such Note; (ii) the acceleration of theoutstanding principal balance of and any accrued and unpaid interest on, anyNote by any Lender or by any person or entity acting on behalf of any Lender;or (iii) any of the Debtor Parties (A) suffers the entry against it of ajudgment, decree or order or relief by a court of competent jurisdiction in aninvoluntary proceeding commenced under any applicable bankruptcy, insolvency orother similar law of any jurisdiction now or hereafter in effect, including thefederal Bankruptcy Code, as from time to time amended, or has any suchproceeding commenced against it which remains undismissed for a period of sixtydays; (B) commences a voluntary case under any applicable bankruptcy,insolvency or similar law now or hereafter in effect, including the federalBankruptcy Code, as from time to time amended; or

 

3

----

 

applies for or consents to the entry of an order for relief in an involuntarycase under any such law; or makes a general assignment for the benefit ofcreditors; or fails generally to pay (or admits in writing its inability topay) its debts as such debts become due; or takes corporate or other action toauthorize any of the foregoing; or (C) suffers the appointment of or takingpossession by a receiver, liquidator, assignee, custodian, trustee,sequestrator or similar official of all or a substantial part of its assets ina proceeding brought against or initiated by it, and such appointment or takingpossession is neither made ineffective nor discharged within thirty days afterthe making thereof, or such appointment or taking possession is at any timeconsented to, requested by, or acquiesced to by it.

 

“**Affiliate**”means, with respect to any Person, another Person that directly, or indirectlythrough one or more intermediaries, Controls or is Controlled by or is undercommon Control with the Person specified. “Control” means the possession, directly or indirectly, of the power todirect or cause the direction of the management or policies of a Person,whether through the ability to exercise voting power, by contract orotherwise.  “Controlling” and“Controlled” have meanings correlative thereto.  Without limiting the generality of the foregoing, a Person shallbe deemed to be Controlled by another Person if such other Person possesses,directly or indirectly, power to vote 15% or more of the securities havingordinary voting power for the election of directors, managing general partnersor the equivalent.

 

“**Agent**”has the meaning assigned to such term in the preamble of this Agreement.

 

“**AdditionalGuaranties**” has the meaning assigned to such term in the preamble ofthis Agreement.

 

“**AdditionalGuarantors**” has the meaning assigned to such term in the preamble ofthis Agreement.

 

“**AdditionalPledge Agreements**” has the meaning assigned to such term in thepreamble of this Agreement.

 

“**AdditionalPledgors**” has the meaning assigned to such term in the preamble ofthis Agreement.

 

“**Banks**”means the “Lenders” as such term is defined in the Bank Agreement.

 

“**BankAgreement**” has the meaning assigned to such term in the preamble ofthis Agreement.

 

“**BankAgreement Obligations**” means all “Obligations” as defined in theBank Agreement, as from time to time supplemented, amended or restated(including, without limitation, default interest, interest accruing at the thenapplicable rate provided in the Bank Agreement after the maturity of the BankNotes and interest accruing at the then applicable rate provided in the BankAgreement after the filing of any petition in bankruptcy, or the commencementof any insolvency, reorganization or like proceeding, relating to any of the

 

4

----

 

Debtor Parties, whether or not a claim for post-filing or post-petitioninterest is allowed in such proceeding), whether direct or indirect, absoluteor contingent, due or to become due, or now existing or hereafter incurred,that arise under, out of, or in connection with, the Bank Agreement, any BankNotes or any other document made, delivered or given in connection therewith,whether on account of principal, interest, premium, fees, indemnities, costs,expenses or otherwise (including, without limitation, all fees and disbursementsof counsel to the Agent and the Banks that are required to be paid by any ofthe Debtor Parties pursuant to the terms of this Agreement, the Bank Agreement,any Bank Notes or any other document made, delivered or given in connectiontherewith).

 

“**BankGuaranty**” has the meaning assigned to such term in the preamble ofthis Agreement.

 

“**Bank Notes**”has the meaning assigned to such term in the preamble of this Agreement.

 

“**BankPledge Agreements**” means the Company Pledge Agreement and theSubsidiary Pledge Agreement.

 

“**CalculationDate**” has the meaning assigned to such term in Section 2 of thisAgreement.

 

“**Collateral**”means all real and personal property subject to the Security Documents.

 

“**CollateralAgent**” means Bank of America, N.A., in its capacity as CollateralAgent under and subject to the terms and conditions of this Agreement.

 

“**CollateralAgent-Related Persons**” means the Collateral Agent, together with itsAffiliates, and the officers, directors, employees, agents andattorneys-in-fact of such Persons and Affiliates.

 

“**Company**”has the meaning assigned to such term in the preamble of this Agreement.

 

“**CompanyPledge Agreement**” has the meaning assigned to such term in thepreamble of this Agreement

 

“**CreditAgreements**” means the Bank Agreement, the Swap Contracts, and thePrudential Agreement.

 

“**DebtorParties**” means the Company, MIGC, any Guarantor, any AdditionalGuarantor, any Additional Pledgor and any Mortgagor.

 

“**DebtRating Downgrade**” shall have the meaning given to such term in theBank Agreement.

 

5

----

 

“**DeterminationDate**” has the meaning assigned to such term in Section 3 of thisAgreement

 

“**ExistingIntercreditor Agreement**” has the meaning assigned to such term inthe preamble of this Agreement.

 

“**FinanceDocuments**” means this Agreement, the Credit Agreements, the SecurityDocuments and all other documents and instruments under, by reason of which, orpursuant to which any or all of the indebtedness and obligations arising underor pursuant to the Credit Agreements are evidenced, governed, secured,guarantied, or otherwise dealt with, and all other agreements, certificates,and other documents, instruments and writings heretofore or hereafter deliveredin connection herewith or therewith.

 

“**Guarantors**”means Mountain Gas Resources, Inc., a Delaware corporation, Western GasResources-Texas, Inc., a Texas corporation, MGTC, Inc., a Wyoming corporation(“**MGTC**”), MIGC, Inc., a Delawarecorporation (“**MIGC**”), Lance Oil& Gas Company, Inc., a Delaware corporation, and Western Gas Wyoming,L.L.C., a Wyoming limited liability company.

 

“**Indebtedness**”means, with respect to any Calculation Date or Determination Date, theaggregate outstanding principal amount of indebtedness of the Company under theBank Agreement, the Bank Notes, the Prudential Agreement, and the PrudentialNotes on such date.

 

“**IndemnifiedLiabilities**” means any and all liabilities, obligations, losses,damages, penalties, claims, demands, actions, judgments, suits, costs, expensesand disbursements (including reasonable attorney’s costs and expenses) of anykind or nature whatsoever which may at any time be imposed on, incurred by orasserted against any Collateral Agent-Related Person in any way relating to orarising out of or in connection with (a) the execution, delivery, enforcement,performance or administration of this Agreement or any Security Document, (b)the use or proposed use of the proceeds of any Collateral, or (c) any actual orprospective claim, litigation, investigation or proceeding relating to any ofthe foregoing, whether based on contract, tort or any other theory (includingany investigation of, preparation for, or defense of any pending or threatenedclaim, investigation, litigation or proceeding).

 

“**Initial PrudentialNoteholders**” has the meaning assigned to such term in the preambleof this Agreement.

 

“**Lenders**”means the Banks, the Agent, the Initial Prudential Noteholders and the otherholders from time to time of the Prudential Notes.

 

“**MajorityLenders**” means two or more Lenders, including at least one holder ofa Bank Note and one holder of a Prudential Note, whose Proportionate Sharesequal or exceed sixty-six and two-thirds percent (66 2/3%).

 

6

----

 

“**Make-WholeAmount**” means with respect to the holders of the Prudential Notes,the “Yield Maintenance Amount” as defined in the Prudential Agreement exceptthat (for purposes of this Agreement only) the “Reinvestment Yield”, which isdefined in the Prudential Agreement and used in computing such YieldMaintenance Amount, shall be the rate of 1.32% per annum with respect to the7.99% Notes, 1.35% per annum with respect to the 6.77% Notes, 1.40% per annumwith respect to the 7.23% Notes, 1.45% per annum with respect to the 9.24%Notes, 1.55% per annum with respect to the 7.61% Notes and 3.45% per annum withrespect to the 6.36% Notes above the Reinvestment Yield, as it would otherwisebe calculated under the Prudential Agreement, and with respect to additionalPrudential Notes issued under the Prudential Agreement, the initial spread overcomparable average life U.S. treasuries at time of commitment to purchase suchPrudential Notes above the Reinvestment Yield, as it would otherwise becalculated under the Prudential Agreement.

 

“**Mortgages**”has the meaning assigned to such term in the preamble of this Agreement.

 

“**Notes**”means the Bank Notes and the Prudential Notes.

 

“**Obligations**”means (i) the Bank Agreement Obligations, (ii) the Swap Agreement Obligationsand (iii) the Prudential Agreement Obligations.

 

“**Person**”means any natural person, corporation, limited liability company, trust, jointventure, association, company, partnership, governmental agency or authority orother entity.

 

“**PICA**”has the meaning assigned to such term in the preamble of this Agreement.

 

“**PledgeAgreements**” means the Bank Pledge Agreements, the Prudential PledgeAgreements, and all Additional Pledge Agreements.

 

“**ProportionateShare**” means a fraction (i) the numerator of which is the sumof the

Indebtedness owing to such Lender plus the Swap Amount and/orMake-Whole Amount owing to such Lender and (ii) the denominator of whichis the sum of the Indebtedness owing to all Lenders plus the Swap Amount and/orMake-Whole Amount owing to all Lenders;

 

“**Pruco**”has the meaning assigned to such term in the preamble of this Agreement.

 

“**Prudential**”has the meaning assigned to such term in the preamble of this Agreement.

 

“**PrudentialAffiliate**” means (i) any corporation or other entity controlling,controlled by, or under common control with, Prudential either directly orthrough subsidiaries and (ii) any managed account or investment fund which ismanaged by Prudential or a Prudential Affiliate described in clause (i) of thisdefinition.  For purposes of thisdefinition, the terms “control”, “controlling” and “controlled” shall mean theownership, directly or through subsidiaries, of a majority of a corporation’sor other entity’s Voting Stock or equivalent voting securities or interests.

 

7

----

 

“**PrudentialAgreement**” has the meaning assigned to such term in the preamble ofthis Agreement.

 

“**PrudentialAgreement Obligations**” means the unpaid principal of, interest onand “Yield Maintenance Amount” as defined in the Prudential Agreement, if any,on the Prudential Notes and all other obligations and liabilities of any of theDebtor Parties to the holders from time to time of the Prudential Notes(including, without limitation, interest accruing at the then applicable rateprovided in the Prudential Agreement, as from time to time supplemented,amended or restated**,** or thePrudential Notes, as applicable, after the maturity thereof and interestaccruing at the then applicable rate provided in the Prudential Agreement orthe Prudential Notes, as applicable, after the filing of any petition inbankruptcy, or the commencement of any insolvency, reorganization or likeproceeding, relating to any of the Debtor Parties, whether or not a claim forpost-filing or post-petition interest is allowed in such proceeding), whetherdirect or indirect, absolute or contingent, due or to become due, or nowexisting or hereafter incurred, which may arise under, out of, or in connectionwith, the Prudential Agreement, any Prudential Notes or any other documentmade, delivered or given in connection therewith, whether on account ofprincipal, interest, Make-Whole Amount, fees, indemnities, costs, expenses orotherwise (including, without limitation, all fees and disbursements of counselto any holder(s) of the Prudential Notes that are required to be paid by theDebtor Parties pursuant to the terms of this Agreement, the PrudentialAgreement, the Prudential Notes or any other document made, delivered or givenin connection therewith).

 

“**PrudentialGuaranties**” has the meaning assigned to such term in the preamble ofthis Agreement.

 

“**PrudentialNotes**” means the 7.61% Senior Notes due July 28, 2007 (the “**7.61% Notes**”), the 6.77% Senior Notes dueSeptember 22, 2003 (the “**6.77% Notes**”),the 7.99% Senior Notes due October 27, 2003 (the “**7.99% Notes**”), the 9.24% Senior Notes due October 27, 2004(the “**9.24% Notes**”), the 6.36%Senior Notes, Series H, due January 17, 2008 (the “**6.36% Notes**”), the 7.23% Senior Notes due December 27, 2003(the “**7.23% Notes**”), and anyadditional Senior Notes issued pursuant to the Prudential Agreement or inreplacement thereof.

 

“**PrudentialPledge Agreements**” has the meaning assigned to such term in thepreamble of this Agreement.

 

“**SubjectGuaranties**” means the Bank Guaranty, the Prudential Guaranties andthe Additional Guaranties.

 

“**SubjectGuaranty Excess Amount**” has the meaning assigned to such term inSection 2 of this Agreement.

 

“**SubsidiaryPledge Agreement**” has the meaning assigned to such term in thepreamble of this Agreement

 

“**SecurityDocuments**” means the Pledge Agreements and the Mortgages.

 

8

----

 

“**SecurityDocument Excess Amount**” has the meaning assigned to such term inSection 3 of this Agreement.

 

“**SwapAgreement Obligations**”****meansany amounts that, at the time in question, are due and payable to any SwapLender under any Swap Contract.

 

“**SwapAmount**” means with respect to each Swap Lender on each CalculationDate and on each Determination Date, the Swap Termination Value under all SwapContracts which would be due and owing thereunder to such Swap Lender on suchCalculation Date or Determination Date if any such Swap Contract wereterminated on such date whether or not such Swap Amount is actually due andowing on such date.

 

“**SwapLender**” means with respect to any Calculation Date or anyDetermination Date, each Lender that is a party to a Swap Contract with theCompany or an Affiliate of the Company on such date.

 

“**SwapContract**” means (a) any and all rate swap transactions, basis swaps,credit derivative transactions, forward rate transactions, commodity swaps,commodity options, forward commodity contracts, equity or equity index swaps oroptions, bond or bond price or bond index swaps or options or forward bond orforward bond price or forward bond index transactions, interest rate options,forward foreign exchange transactions, cap transactions, floor transactions,collar transactions, currency swap transactions, cross-currency rate swaptransactions, currency options, spot contracts, or any other similartransactions or any combination of any of the foregoing (including any optionsto enter into any of the foregoing), whether or not any such transaction isgoverned by or subject to any master agreement, and (b) any and alltransactions of any kind, and the related confirmations, which are subject tothe terms and conditions of, or governed by, any form of master agreementpublished by the International Swaps and Derivatives Association, Inc., anyInternational Foreign Exchange Master Agreement, or any other master agreement(any such master agreement, together with any related schedules, a “**Master Agreement**”), including any suchobligations or liabilities under any Master Agreement.

 

“**SwapTermination Value**” means, in respect of any one or more SwapContracts, after taking into account the effect of any legally enforceablenetting agreement relating to such Swap Contracts, (a) for any date on or afterthe date such Swap Contracts have been closed out and termination value(s)determined in accordance therewith, such termination value(s), and (b) for anydate prior to the date referenced in clause (a), the amount(s) determined asthe mark-to-market value(s) for such Swap Contracts, as determined based uponone or more mid-market or other readily available quotations provided by anyrecognized dealer in such Swap Contracts (which may include a Lender or anyAffiliate of a Lender).

 

“**VotingStock**”****means, withrespect to any corporation, any shares of stock of such corporation whoseholders are entitled under ordinary circumstances to vote for the election ofdirectors of such corporation (irrespective of whether at the time stock of anyother class or classes shall have or might have voting power by reason of thehappening of any contingency).

 

9

----

 

2.             SubjectGuaranties.  If, after theoccurrence and during the continuance of a “Default” or “Event of Default”under any Credit Agreement (as “Default” or “Event of Default” is defined ineach Credit Agreement) any Lender shall at any time obtain any payment or otherrecovery (whether voluntary, involuntary, by application of setoff orotherwise) from any Guarantor pursuant to a Subject Guaranty (each date onwhich a Lender receives any such payment or recovery is herein called a “**Calculation Date**”) in excess of itsProportionate Share calculated as of such date of payments or other recoveriesthen or therewith obtained by all Lenders with respect to the SubjectGuaranties, such Lender shall purchase from the other Lenders suchparticipation(s) in the Indebtedness (and interest thereon) of the Company heldby such other Lenders that is guaranteed pursuant to such other Lenders’Subject Guaranty or Subject Guaranties, as shall be necessary to cause suchpurchasing Lender to share such payment or other recovery ratably with suchselling Lenders; provided, however, that if all or any portion ofsuch payment or other recovery is thereafter recovered from such purchasingLender, the purchase shall be rescinded, and each selling Lender shall repay tothe purchasing Lender the purchase price, to the ratable extent of suchrecovery, together with an amount equal to such selling Lender’s ratable share(according to the proportion of (x) the amount of such selling Lender’srequired repayment to the purchasing Lender to (y) the total amount sorecovered from the purchasing Lender) of any interest or other amount paid orpayable by the purchasing Lender in respect of the total amount so recovered.  Notwithstanding the foregoing, if a SwapAmount is not due and owing on a Calculation Date or does not actually becomedue and owing within 30 days of such Calculation Date, and as a result of theinclusion of the Swap Amount in calculating a Swap Lender’s ProportionateShare, such Swap Lender receives a greater portion of any payment or otherrecovery from any Guarantor than it would have if the Swap Amount had not beenincluded in such calculation (such amount is herein called a “**Subject Guaranty Excess Amount**”), then suchSwap Lender shall immediately purchase from each other Lender suchparticipation(s) in the Indebtedness (and interest thereon) of the Company heldby such other Lender that is guaranteed pursuant to such other Lender’s SubjectGuaranty or Subject Guaranties in an amount equal to such other Lender’sProportionate Share as of such Calculation Date (after being recalculated toexclude the Swap Amount) of the Subject Guaranty Excess Amount plus such otherLender’s Proportionate Share of any interest earned by the Swap Lender on suchSubject Guaranty Excess Amount.

 

3.             SecurityDocuments.  If any Lender shall atany time obtain any payment or other recovery (whether voluntary, involuntary,or otherwise) under a Security Document (each date on which a Lender receivesany such payment or recovery is herein called a “**Determination Date**”) in excess of its Proportionate Sharecalculated as of such date of payments or other recoveries then or therewithobtained by all Lenders under a Security Document, such Lender shall purchasefrom the other Lenders such participation(s) in the Indebtedness (and interestthereon) of the Company held by such other Lenders that is secured by theSecurity Documents, as shall be necessary to cause such purchasing Lender toshare such payment or other recovery ratably with such selling Lenders; provided,however, that if all or any portion of such payment or other recovery isthereafter recovered from such purchasing Lender, the purchase shall berescinded, and each selling Lender shall repay to the purchasing Lender thepurchase price, to the ratable extent of such recovery, together with an amountequal to such selling Lender’s ratable share

 

10

----

 

(according to the proportion of (x) the amount of such selling Lender’srequired repayment to the purchasing Lender to (y) the total amount sorecovered from the purchasing Lender) of any interest or other amount paid orpayable by the purchasing Lender in respect of the total amount sorecovered.  Notwithstanding theforegoing, if a Swap Amount is not due and owing on a Determination Date ordoes not actually become due and owing within 30 days of such DeterminationDate, and as a result of the inclusion of the Swap Amount in calculating a SwapLender’s Proportionate Share, such Swap Lender receives a greater portion ofany payment or other recovery with respect to the Collateral under any SecurityDocuments than it would have if the Swap Amount had not been included in suchcalculation (such amount is herein called a “**SecurityDocument Excess Amount**”), then such Swap Lender shall immediatelypurchase from each other Lender such participation(s) in the Indebtedness (andinterest thereon) of the Company held by such other Lender that is securedunder such other Lender’s Security Document in an amount equal to such otherLender’s Proportionate Share as of such Determination Date (after beingrecalculated to exclude the Swap Amount) of the Security Document Excess Amountplus such other Lender’s Proportionate Share of any interest earned by the SwapLender on such Security Document Excess Amount.

 

4.             Consentand Agreement.  Each of the Companyand each Guarantor, by signing the Consent and Agreement attached hereto,agrees that each Lender so purchasing a participation from another Lenderpursuant to Section 2 or 3 hereof may, to the fullest extent permitted by law,exercise all its rights of payment (including rights of setoff) with respect tosuch participation as fully as if such Lender were the direct creditor of theCompany and such Guarantor in the amount of such participation.  By its execution of the Consent andAgreement, the Company hereby agrees that it shall cause each AdditionalGuarantor, each Additional Pledgor and each Mortgagor to execute and deliver toLenders a Consent and Agreement substantially in the form attached heretoconcurrently with the delivery of its respective Additional Guaranty,Additional Pledge Agreement or Mortgage, as applicable.

 

5.             BankruptcyClaims.  If under any applicablebankruptcy, insolvency or other similar law, any Lender receives a securedclaim in lieu of a setoff to which Section 3 hereof applies, such Lender shallexercise its rights in respect of such secured claim in a manner consistent withthe rights of the other Lenders in accordance with Section 3 hereof.

 

6.             Perfectionand Priority.  All securityinterests of the Lenders in the Collateral shall be pari passuregardless of the order of filing of any financing statements with respectthereto or the taking of any other action relevant to the determination of theperfection or priority of such security interests.  Except for the filings to be made by the Agent on behalf of theBanks, each Lender shall be responsible for the preparation and filing of itsrespective financing statement covering the Collateral.  The Lenders hereby direct the Agent toreceive and maintain physical possession, of all certificates (the “**Certificates**”) evidencing theCollateral.  The Agent will hold theCertificates to perfect each Lender’s security interest in the Collateral.  The Agent will hold the Certificates in itscapacity as collateral agent for the Lenders.

 

11

----

 

7.             CollateralAgent Appointment, Powers, and Immunities.

 

(a)           EachLender hereby irrevocably appoints and authorizes Bank of America, N.A. to actas Collateral Agent under the Security Documents on the terms and conditionsset forth in this Agreement and authorizes the Collateral Agent to executeand/or accept from Debtor Parties the Mortgages substantially in the form ofExhibit A hereto and any other Security Documents (including, withoutlimitation, the Bank Pledge Agreements and any Additional Pledge Agreements),as applicable, in the name of and for the benefit of the Lenders, and Bank ofAmerica, N.A., hereby accepts such appointment and shall have all of the rightsand obligations of the Collateral Agent hereunder and under the SecurityDocuments.

 

(b)           EachLender hereby authorizes Collateral Agent to do the following in accordancewith the terms of this Agreement and the Security Documents:

 

(i)            toreceive all documents and items to be furnished from time to time to CollateralAgent or any Lender under the Security Documents;

 

(ii)           todistribute to the Lenders information, requests, documents, and other itemsreceived from the Company and other Persons under the Security Documents;

 

(iii)          toexecute and deliver to the Company and other Persons requests, demands,notices, approvals, consents, waivers, and other communications received fromLenders in connection with the Security Documents and herewith subject to theterms and conditions set forth therein and herein;

 

(iv)          toreceive on behalf of each of the Lenders any payment of monies paid to CollateralAgent in accordance with this Agreement and the Security Documents, and todistribute to each Lender in accordance with the terms of this Agreement suchLender’s share of all payments so received based upon such Lender’sProportionate Share;

 

(v)           toact on behalf of Lenders at the direction of any Lender to maintain theperfection and priority of the Liens created under the Security Documents;

 

(vi)          subjectto the terms and conditions of the Security Documents and this Agreement, toexercise on behalf of each Lender all remedies of Lenders under the SecurityDocuments upon the occurrence of any Acceleration Event; and

 

(vii)         subjectto the terms and conditions of the Security Documents and this Agreement, totake such other actions as may be directed by Majority Lenders as arereasonably incident to any powers granted to Collateral Agent hereunder,including but not limited to any action described in Sections 8 and 9(a)hereof.

 

(c)           EachLender hereby acknowledges and agrees that (i) as set forth in Section 6.19 ofthe Credit Agreement, no Mortgage will be delivered to Collateral Agent by theDebtor Parties at the time the Bank Agreement is executed and delivered and(ii) the execution, delivery and recording of any Mortgage delivered toCollateral Agent is subject to Section 6.19 of the Bank Agreement.

 

12

----

 

8.             EnforcementAgainst Collateral; Application of Proceeds from Collateral.

 

(a)           Priorto the occurrence of an Acceleration Event, no Lender shall exercise any remedyor other right available to it with respect to any Collateral.  Concurrently with the occurrence of anyevent described in either clause (i) or (ii) of the definition of AccelerationEvent, the Lender whose Note has matured and has not been paid at maturity orso accelerating its Note, as the case may be, shall give written notice of suchAcceleration Event to the Agent, in its capacity as Collateral Agent, and eachother Lender.

 

(b)           TheLenders agree among themselves and for their own benefit alone that the liensand security interests granted and provided for in the Security Documents shallnot be enforced against any of the Collateral except at the direction of theMajority Lenders upon the occurrence of one or more Acceleration Events and incompliance with the provisions hereof. Each Lender agrees that, as long as anyIndebtedness exists or may become outstanding pursuant to the terms of theFinance Documents, the provisions of this Agreement shall provide the exclusivemethod by which any Lender may exercise rights and remedies under the SecurityDocuments.

 

(c)           Uponthe occurrence of any Acceleration Event and the Collateral Agent’s actualknowledge of or receipt of a notice of Acceleration Event, the CollateralAgent, at the direction of the Majority Lenders, shall seek to realize upon thesecurity interests and liens granted to the Collateral Agent and/or any Lendersunder the Security Documents in such manner as shall be directed by theMajority Lenders. Whether before or after any Acceleration Event, subject tothe terms and conditions hereof, the Collateral Agent shall (except to thelimited extent provided in the last sentence of Section 9(e)) act only on thedirections of the Majority Lenders with respect to the preservation, protection,collection or realization upon any Collateral. Notwithstanding the foregoing, in the event that the Collateral Agentdeems (in its reasonable discretion) that the provisions of this Agreement arenot adequate to protect the Collateral Agent against the liabilities associatedwith any of the actions described above, then the Collateral Agent may refuseto take such action until such time as the Lenders have granted to CollateralAgent additional security or indemnifications satisfactory to Collateral Agentin its reasonable discretion to protect it against such liabilities.

 

(d)           WheneverCollateral Agent applies any cash proceeds received by Collateral Agent inrespect of any sale of, collection from, or other realization upon all or anypart of the Collateral, the same shall be applied in the following order:

 

(i)            Tothe repayment of all costs and expenses, including reasonable attorneys’ feesand legal expenses, incurred by Collateral Agent in connection with (1) theadministration of the Security Documents, (2) the custody, preservation, use oroperation of, or the sale of, collection from, or other realization upon, anyCollateral, (3) the exercise or enforcement of any of the rights of CollateralAgent hereunder or under the Security Documents, or (4) the failure of theCompany or any Affiliate of the Company to perform or observe any of theprovisions of the Security Documents and to any Indemnified Liabilities andreimbursements due Collateral Agent under Section 9(g);

 

13

----

 

(ii)           Tothe payment or other satisfaction of any Liens, encumbrances, or adverse claimsupon or against any of the Collateral that are prior to those of the CollateralAgent or which Collateral Agent is otherwise required to pay under applicablelaw;

 

(iii)          Tothe reimbursement of Collateral Agent for the amount of any obligations of theCompany or any Affiliate of the Company that are prior to those of theCollateral Agent or which Collateral Agent is otherwise required to pay underapplicable law and are paid or discharged by Collateral Agent (other thanamounts for principal and interest under the Notes) pursuant to the provisionshereof or of the Security Documents, and of any expenses of Collateral Agentpayable by the Company or any Affiliate of the Company hereunder or thereunder;

 

(iv)          Tothe satisfaction the Obligations of the Lenders, to each Lender in accordancewith such Lender’s Proportionate Share;

 

(v)           Tothe payment or prepayment of any other Obligations of a Lender not included insubsection (iv) above, which payment shall be made ratably to each Lender inaccordance with its pro rata share of such Obligations;

 

(vi)          Tothe payment of any other amounts required by applicable law (including anyprovision of the UCC); and

 

(vii)         Bydelivery to the Company or to whomever shall be lawfully entitled to receivethe same or as a court of competent jurisdiction shall direct.

 

The provisions of this Section 8(d) are intended solely to establishthe manner and amount of distribution of proceeds as among the Lenders.  The provisions of this Agreement are notintended, as among the Banks, to modify or amend the manner of application offunds as set forth in the Bank Agreement and related documents or to modify oramend the manner of application of funds as set forth in the PrudentialAgreement and related documents.  Anyamounts distributable hereunder to a Lender shall be applied in accordance withthe priorities set forth in the applicable Finance Documents, regardless of howsuch payments are characterized or the order of priority under this Section8(d).

 

(e)           WheneverCollateral Agent in good faith determines that it is uncertain about how todistribute to Lenders any funds which it has received, or whenever CollateralAgent in good faith determines that there is any dispute among Lenders abouthow such funds should be distributed, Collateral Agent may choose to deferdistribution of the funds which are the subject of such uncertainty ordispute.  If Collateral Agent in goodfaith believes that the uncertainty or dispute will not be promptly resolved,or if Collateral Agent is otherwise required to invest funds pendingdistribution to Lenders, Collateral Agent shall invest such funds pendingdistribution; all interest on any such investment shall be distributed upon thedistribution of such investment and in the same proportion and to the samePersons as such investment.  All moneysreceived by

 

14

----

 

Collateral Agent for distribution to Lenders shall be held byCollateral Agent pending such distribution solely as Collateral Agent for suchLenders, and Collateral Agent shall have no equitable title to any portionthereof except in its separate capacity as a Lender.

 

9.             ProvisionsConcerning Collateral Agent.

 

(a)           Dutiesas Collateral Agent. Notwithstanding any provision to the contrary contained elsewhere hereinor in any other Finance Document, the Collateral Agent shall not have anyduties or responsibilities, except those expressly set forth herein, nor shallthe Collateral Agent have or be deemed to have any fiduciary relationship withany Lender or participant, and no implied covenants, functions,responsibilities, duties, obligations or liabilities shall be read into thisAgreement or any other Finance Document or otherwise exist against theCollateral Agent.  Without limiting thegenerality of the foregoing sentence, the use of the term Aagent@herein with reference to the Collateral Agent is not intended to connote anyfiduciary or other implied (or express) obligations arising under agencydoctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and isintended to create or reflect only an administrative relationship betweenindependent contracting parties.  TheLenders irrevocably authorize the Collateral Agent, at its option and in itsdiscretion, to release any lien on or security interest in any Collateral (i)if the property subject to such lien or security interest is permitted to besold or otherwise transferred pursuant to both the Bank Agreement and thePrudential Agreement or such lien is otherwise permitted to be releasedpursuant to such Credit Agreements and (ii) upon termination of and payment infull of all Obligations (other than contingent indemnification obligations,including but not limited to obligations of the Debtor Parties under the SwapAgreements that are not yet due).

 

(b)           Delegationof Duties.  The Collateral Agent mayexecute any of its duties under this Agreement or any Security Document by orthrough agents, employees or attorneys-in-fact and shall be entitled to adviceof counsel and other consultants or experts concerning all matters pertainingto such duties.  The Collateral Agentshall not be responsible for the negligence or misconduct of any agent orattorney-in-fact that it selects in the absence of gross negligence or willfulmisconduct.

 

(c)           Liabilityof Collateral Agent.  No CollateralAgent-Related Person shall (a) be liable for any action taken or omitted to betaken by any of them under or in connection with this Agreement or any SecurityDocument or the transactions contemplated hereby and thereby **including but not limited to those arising from itsown negligence****(except for its owngross negligence or willful misconduct in connection with its duties expresslyset forth herein)**, or (b) be responsible in any manner to any Lenderor participant for any recital, statement, representation or warranty made bythe Company, any of the Company’s Affiliates or any officer thereof, containedherein or in any other Security Document, or in any certificate, report,statement or other document referred to or provided for in, or received by theCollateral Agent under or in connection with, this Agreement or any Security Document,or the validity, effectiveness, genuineness, enforceability or sufficiency ofthis Agreement or any Security Document, or for any failure of the Company orany of its Affiliates to perform its obligations hereunder or thereunder.  No Collateral Agent-Related Person shall beunder any obligation to

 

15

----

 

any Lender or participant to ascertain or to inquire as to theobservance or performance of any of the agreements contained in, or conditionsof, this Agreement or any Security Document, or to inspect the properties,books or records of the Company or any of its Affiliates.

 

(d)           Relianceby Collateral Agent.  The CollateralAgent shall be entitled to rely, and shall be fully protected in relying, uponany writing, communication, signature, resolution, representation, notice,consent, certificate, affidavit, letter, telegram, facsimile, telex ortelephone message, electronic mail message, statement or other document orconversation reasonably believed by it to be genuine and correct and to havebeen signed, sent or made by the proper Person or Persons, and upon advice andstatements of legal counsel (including counsel to the Company or any of itsAffiliates), independent accountants and other experts selected by theCollateral Agent.  The Collateral Agentshall be fully justified in failing or refusing to take any action under anySecurity Document unless it shall first receive such advice or concurrence ofthe Majority Lenders as it deems appropriate and, if it so requests, it shallfirst be indemnified to its satisfaction by the Lenders against any and allliability and expense which may be incurred by it by reason of taking orcontinuing to take any such action.  TheCollateral Agent shall in all cases be fully protected in acting, or inrefraining from acting, under this Agreement or any Security Document inaccordance with a request or consent of the Majority Lenders (or such greaternumber of Lenders as may be expressly required hereby in any instance) and suchrequest and any action taken or failure to act pursuant thereto shall bebinding upon all the Lenders.

 

(e)           Noticeof Default.  The Collateral Agentshall not be deemed to have knowledge or notice of the occurrence of anyAcceleration Event or any “Default” or “Event of Default” under any CreditAgreement or Security Document (as “Default” or “Event of Default” is definedin each Credit Agreement and Security Document), except with respect todefaults in the payment of principal, interest and fees required to be paid tothe Collateral Agent, acting in its capacity as “Administrative Agent” underthe Bank Agreement, as for the account of the Banks, or unless the CollateralAgent shall have received written notice from a Lender or the Company, describingsuch “Default” or “Event of Default” and stating that such notice is a Anoticeof default.@  The Collateral Agent will notify the Lendersof its receipt of any such notice.  TheCollateral Agent shall take such action with respect to the Collateral afterany such “Default” or “Event of Default” as may be directed by the MajorityLenders in accordance with the terms hereof. Unless and until the Collateral Agent has received any such direction,the Collateral Agent shall not be obligated to take such action with respect tosuch “Default” or “Event of Default”. Furthermore, the Collateral Agent may (but shall not be obligated to)take action hereunder to the extent necessary to maintain insurance on theCollateral or otherwise protect the Collateral from damage or destruction.

 

(f)            CreditDecision; Disclosure of Information by Collateral Agent.  Each Lender acknowledges that no CollateralAgent-Related Person has made any representation or warranty to it, and that noact by the Collateral Agent hereafter taken, including any consent to andacceptance of any assignment or review of the affairs of the Company or any ofits Affiliates, shall be deemed to constitute any representation or warranty byany Collateral Agent-Related Person to any Lender as to any matter, includingwhether Collateral Agent-Related Persons have disclosed material information intheir possession.  Each Lenderrepresents to the Collateral

 

16

----

 

Agent that it has, independently and without reliance upon anyCollateral Agent-Related Person and based on such documents and information asit has deemed appropriate, made its own appraisal of and investigation into thebusiness, prospects, operations, property, financial and other condition and creditworthinessof the Company and its Affiliates, and all applicable bank or other regulatorylaws relating to the transactions contemplated hereby, and made its owndecision to enter into the Finance Documents and this Agreement and to extendcredit to the Company under its Credit Agreement.  Each Lender also represents that it will, independently andwithout reliance upon any Collateral Agent-Related Person and based on suchdocuments and information as it shall deem appropriate at the time, continue tomake its own credit analysis, appraisals and decisions in taking or not takingaction under this Agreement and the other Finance Documents, and to make suchinvestigations as it deems necessary to inform itself as to the business,prospects, operations, property, financial and other condition andcreditworthiness of the Company.  Exceptfor notices, reports and other documents expressly required to be furnished tothe Lenders by the Collateral Agent herein (or required to be furnished to theBanks by the Agent, in its capacity as “Administrative Agent” under the BankAgreement), the Collateral Agent shall not have any duty or responsibility toprovide any Lender with any credit or other information concerning thebusiness, prospects, operations, property, financial and other condition orcreditworthiness of any of the Company or its Affiliates which may come intothe possession of any Collateral Agent-Related Person.

 

(g)           Indemnificationof Collateral Agent.  The Lendersshall indemnify upon demand each Collateral Agent-Related Person (to the extentnot reimbursed by or on behalf of the Company or any of its Affiliates andwithout limiting the obligation of the Company or any of its Affiliates to doso), to the extent of each Lender’s Proportionate Share, and hold harmless eachCollateral Agent-Related Person from and against any and all IndemnifiedLiabilities incurred by it, **including but notlimited to those arising from its own negligence**;  **provided,however, that no Lender shall be liable for the payment to anyCollateral Agent-Related Person of any portion of such Indemnified Liabilitiesto the extent determined in a final, nonappealable judgment by a court ofcompetent jurisdiction to have resulted from such Collateral Agent-RelatedPerson’s own gross negligence or willful misconduct**; provided, however,that no action taken in accordance with the directions of the Majority Lendersshall be deemed to constitute gross negligence or willful misconduct forpurposes of this Section.  Withoutlimitation of the foregoing, each Lender shall reimburse the Collateral Agentupon demand for its ratable share of any costs or out-of-pocket expenses(including reasonable attorney’s fees and expenses) incurred by the CollateralAgent in connection with the preparation, execution, delivery, administration,modification, amendment or enforcement (whether through negotiations, legalproceedings or otherwise) of, or legal advice in respect of rights orresponsibilities under, this Agreement or any Security Document to the extent thatthe Collateral Agent is not reimbursed for such expenses by or on behalf of theCompany.  The undertaking in thisSection shall survive termination of the Indebtedness.  *Notwithstandinganything herein to the contrary, the parties hereto agree that the obligationsof each holder of a Prudential Note to Collateral Agent under this Section 9(g)shall be limited to the amount of the proceeds of the Collateral it receiveshereunder, under the Security Documents or from any other source that isattributable to the Collateral.*

 

17

----

 

(h)           CollateralAgent in its Individual Capacity. Bank of America, N.A. (“Bank of America”) and its Affiliates may makeloans to, issue letters of credit for the account of, accept deposits from,acquire equity interests in and generally engage in any kind of banking, trust,financial advisory, underwriting or other business with the Company and itsAffiliates as though Bank of America were not the Collateral Agent hereunderand without notice to or consent of the Lenders.  The Lenders acknowledge that, pursuant to such activities, Bankof America or its Affiliates may receive information regarding the Company orits Affiliates (including information that may be subject to confidentialityobligations in favor of the Company or such Affiliate) and acknowledge that theCollateral Agent shall be under no obligation to provide such information tothem.  With respect to the Collateral,Bank of America shall have the same rights and powers under this Agreement andthe Security Documents as any other Lender and may exercise such rights andpowers as though it were not the Collateral Agent, and the terms ALender@and ALenders@include Bank of America in its individual capacity.

 

(i)            SuccessorCollateral Agent.  The CollateralAgent may resign as Collateral Agent upon not less than 60 days’ notice to the Lenders, with suchresignation to take effect upon the acceptance by a successor Collateral Agentof its appointment as the Collateral Agent hereunder.  In addition, the Majority Lenders may remove the Collateral Agentby giving written notice thereof to the Collateral Agent at least 30 days’prior to the effective date of such removal. Upon any such resignation orremoval, the Majority Lenders shall have the right to appoint a successorCollateral Agent.  If no successorCollateral Agent shall have been so appointed and shall have accepted suchappointment in writing within 30 days after the retiring Collateral Agent’sgiving of notice of resignation or its removal, then the retiring CollateralAgent may, on behalf of the Lenders, appoint a successor Collateral Agent whichmeets the eligibility requirements of Section 9(k), and the Debtor Partiesagree to pay such reasonable fees and expenses of any such appointee as shallbe necessary to induce such appointee to agree to become a successor CollateralAgent hereunder. Upon acceptance of appointment as Collateral Agent, suchsuccessor shall thereupon and forthwith succeed to and become vested with allthe rights, powers and privileges, immunities and duties of the retiringCollateral Agent, the term “Collateral Agent” shall mean such successorCollateral Agent, and the retiring Collateral Agent, upon the transferring andsetting over to such successor Collateral Agent all rights, moneys and othercollateral held by it in its capacity as Collateral Agent, shall be dischargedfrom its duties and obligations hereunder. After any retiring Collateral Agent’s resignation or removal hereunderas Collateral Agent, the provisions of this Section 9 shall inure to itsbenefit as to any actions taken or omitted to be taken by it while it wasCollateral Agent under this Agreement.

 

(j)            Successionof Successor Collateral Agent.  Anysuccessor Collateral Agent appointed hereunder shall execute, acknowledge anddeliver to the Debtor Parties, the Banks, the holders of the Prudential Notesand the predecessor Collateral Agent an instrument accepting such appointment,and thereupon such successor Collateral Agent, without any further act, deed,conveyance or transfer, shall become vested with the title to the Collateral,and with all the rights, powers, duties and obligations of the predecessorCollateral Agent in the trust hereunder, with like effect as if originally namedas Collateral Agent herein.  Upon therequest of any such successor Collateral Agent, the Debtor Parties and thepredecessor Collateral Agent shall promptly execute and deliver suchinstruments of conveyance and further assurance reflecting

 

18

----

 

terms consistent with the terms of the Finance Documents then in effectand do such other things as may reasonably be required for more fully andcertainly vesting and confirming in such successor Collateral Agent itsinterest in the Collateral and all such rights, powers, duties and obligationsof the predecessor Collateral Agent hereunder, and the predecessor CollateralAgent shall also promptly assign and deliver to the successor Collateral Agentany Collateral subject to the lien and security interest of this Agreementwhich may then be in its possession.

 

(k)           Eligibilityof Designated Replacement Collateral Agent.  Any successor Collateral Agent appointed by a retiring CollateralAgent pursuant to Section 9(i) shall be a state or national bank or trustcompany in good standing, organized under the laws of the United States ofAmerica or of any state, having a capital, surplus and undivided profitsaggregating at least $500,000,000 and whose certificates of deposit have aSatisfactory Rating, if there be such a bank or trust company willing and ableto accept the duties hereunder upon reasonable and customary terms.  As used in this Section 9(k), the term“Satisfactory Rating” means, with respect to any Person, that such Person andits bank deposits or other short term credit obligations have both a short-termbank deposit rating of Prime-2 or better from Moody’s Investors Service, Inc.and a short term credit obligation rating of A-3 or better from Standard andPoor’s, a division of The McGraw-Hill Companies.

 

(l)            SuccessorCollateral Agent by Merger.  Anycorporation into which the Collateral Agent may be merged or with which it maybe consolidated, or any corporation resulting from any merger or consolidationto which the Collateral Agent shall be a party, or any state or national bankor trust company in any manner succeeding to the corporate trust business ofthe Collateral Agent as a whole or substantially as a whole shall be thesuccessor of the Collateral Agent hereunder without the execution or filing ofany paper or any further act on the part of any of the parties hereto, anythingto the contrary contained herein notwithstanding.

 

10.           UnconditionalAgreement.  This Agreement shall inall respects be a continuing, absolute, unconditional and irrevocableagreement, and shall remain in full force and effect until the payment in fullof all Obligations (other than contingent obligations, including but notlimited to obligations of the Debtor Parties under Swap Agreements which arenot yet due) satisfied in full, all obligations of all Lenders to the otherLenders hereunder shall have been satisfied in full and all Security Documentshave been terminated.  Each Lenderagrees that this Agreement shall continue to be effective or be reinstated, asthe case may be, if at any time any payment (in whole or in part) of any of theobligations of the Company, any of the Guarantors or any of the AdditionalGuarantors is rescinded or must otherwise be restored by any Lender, upon theinsolvency, bankruptcy or reorganization of the Company, any of the Guarantorsor any of the Additional Guarantors or otherwise, as though such payment hadnot been made.

 

11.           Representationsand Warranties of Bank.  In order toinduce the Initial Prudential Noteholders to enter into this Agreement, each ofthe Banks and the Agent severally represent and warrant to the InitialPrudential Noteholders that it has full corporate power, and has taken allaction necessary, to execute and deliver this Agreement and to fulfill itsrespective obligations hereunder, and that no governmental or otherauthorizations are required in connection herewith, and that this Agreementconstitutes its legal, valid and binding obligation, enforceable in

 

19

----

 

accordance with its terms, except as limited by bankruptcy, insolvency,reorganization, moratorium, regulatory and similar laws of general applicationand by general principles of equity.

 

12.           Representationsand Warranties of the Initial Prudential Noteholders.  In order to induce the Banks and the Agentto enter into this Agreement, each Initial Prudential Noteholder represents andwarrants to the Banks and the Agent that it has full corporate power, and hastaken all action necessary, to execute and deliver this Agreement and tofulfill its obligations hereunder, and that no governmental or otherauthorizations are required in connection herewith, and that this Agreementconstitutes its legal, valid and binding obligation, enforceable in accordancewith its terms, except as limited by bankruptcy, insolvency, reorganization,moratorium, regulatory and similar laws of general application and by generalprinciples of equity.

 

13.           Successorsand Assigns.  This Agreement shallbe binding upon, and inure to the benefit of and be enforceable by, the Lendersand each of their respective successors, transferees and assigns.  Without limiting the generality of theforegoing sentence, any Lender may assign or otherwise transfer (in whole or inpart) to any other person or entity the obligations of the Debtor Parties tosuch Lender (with respect to the Banks, subject to the provisions of the BankAgreement and with respect to the holders of the Prudential Notes, subject tothe Prudential Agreement), and such other person or entity shall thereuponbecome vested with all rights and benefits, and become subject to all theobligations, in respect thereof granted to or imposed upon such Lender underthis Agreement, subject, however, to any contrary provisions in such assignmentor transfer (with respect to the Banks, subject to the provisions of the BankAgreement and with respect to the holders of the Prudential Notes, subject tothe Prudential Agreement).

 

14.           Benefitof Agreement.  None of theprovisions of this Agreement shall inure to the benefit of any of the DebtorParties or any other Person other than the Lenders; consequently, neither theDebtor Parties nor any other persons shall be entitled to rely upon, or toraise as a defense, in any manner whatsoever, the provisions of this Agreementor the failure of any Lender to comply with such provisions.

 

15.           Amendmentsand Waivers.  No amendment to orwaiver of any provision of this Agreement, nor consent to any departure by anyLender herefrom, shall in any event be effective unless the same shall be inwriting and signed by Majority Lenders, and each such waiver or consent shallbe effective only in the specific instance and for the specific purpose forwhich given; provided, however, that without the consent of eachLender, no such amendment, waiver or consent shall: (a) amend this Section 15,(b) amend the definition of Proportionate Share or (c) change Sections 2, 3, 6or 8 in a manner that would alter the pari passu treatment of the securityinterests of the Lenders, the order of priority or the pro rata sharing ofpayments required thereby.

 

16.           Notices.  All notices and other communicationsprovided to any Lender under this Agreement shall be in writing or by facsimileand addressed, delivered or transmitted to such Lender at its address orfacsimile number set forth (a) on Annex 1 hereto, or (b) at such other

 

20

----

 

address or facsimile number as may be designated by such Lender in anotice to the other Lenders.  Anynotice, if mailed and properly addressed with postage prepaid or if properlyaddressed and sent by prepaid courier service, shall be deemed given received;any notice, if transmitted by facsimile, shall be deemed given when transmittedif actually received, and the burden of proving receipt shall be on thetransmitting Lender.

 

17.           RemediesCumulative.  No failure or delay onthe part of any Lender in exercising any power or right under this Agreementshall operate as a waiver thereof, nor shall any single or partial exercise ofany such power or right preclude any other or further exercise thereof of theexercise of any other power or right. The remedies herein provided are cumulative and not exclusive of anyremedies provided by law.

 

18.           Integration.  Whenever possible each provision of thisAgreement shall be interpreted in such manner as to be effective and validunder applicable law, but if any provision of this Agreement shall beprohibited by or invalid under such law, such provision shall be ineffective tothe extent of such prohibition or invalidity, without invalidating theremainder of such provision or the remaining provisions of this Agreement.

 

**19.          NOORAL AGREEMENTS.  THIS AGREEMENTSHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THESTATE OF TEXAS.  THIS AGREEMENTCONSTITUTES THE ENTIRE UNDERSTANDING BETWEEN THE PARTIES HERETO WITH RESPECT TOTHE SUBJECT MATTER HEREOF AND SUPERSEDES ANY PRIOR AGREEMENTS, WRITTEN OR ORAL,WITH RESPECT THERETO.**

 

**20.          JURYTRIAL.  EACH LENDER HEREBYKNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO ATRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSEOF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY LENDER INCONNECTION HEREWITH.  EACH LENDERACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATIONFOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THEOTHER LENDERS ENTERING INTO THIS AGREEMENT.**

 

21.           Restatement.  This Agreement amends and restates in itsentirety the Existing Intercreditor Agreement.

 

22.           Counterparts.  This Agreement may be separately executed incounterparts and by the different parties hereto in separate counterparts, eachof which when so executed shall be deemed to constitute one and the sameAgreement.  This Agreement may be dulyexecuted by facsimile or other electronic transmission.

 

21

----

 

**IN WITNESS WHEREOF,**the parties hereto have caused this Agreement to be executed as of the datefirst written above by their duly authorized officers.

 

 
|   | BANK OF AMERICA, N.A. |
|--------|-----------------------|
|   |                  |
|   |                  |
|   | By:                   | /s/ Richard L. Stein |   |
|   |                  | Name: Richard L. Stein |
|   |                  | Title: Principal |

 

22

----

 
|   | BANK OF OKLAHOMA, N.A. |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    | /s/ Thomas M. Foncannon |   |
|   |                   | Name: Thomas M. Foncannon |
|   |                   | Title: Senior Vice President |

 

23

----

 
|   | BANK ONE, NA |
|--------|--------------|
|   |         |
|   |         |
|   | By:          | /s/ Tom K. Martin |   |
|   |         | Name: Tom K.  Martin |
|   |         | Title:  Associate Director |

 

24

----

 
|   | BNP PARIBAS |
|--------|-------------|
|   |        |
|   |        |
|   | By:         | /s/ J. Ornischuk |   |
|   |        | Name: J.  Ornischuk |
|   |        | Title:  Director |
|   |        |
|   |        |
|   | By:         | /s/ Greg Smothers |   |
|   |        | Name: Greg  Smothers |
|   |        | Title: Vice  President |
|        |             |  |  |  |

 

25

----

 
|   | COMERICA BANK - TEXAS |
|--------|-----------------------|
|   |                  |
|   |                  |
|   | By:                   | /s/ Thomas G. Rajan |   |
|   |                  | Name: Thomas  G. Rajan |
|   |                  | Title: Vice  President |

 

26

----

 
|   | FLEET NATIONAL BANK |
|--------|---------------------|
|   |                |
|   |                |
|   | By:                 | /s/ Christopher Holmgren |   |
|   |                | Name:  Christopher Holmgren |
|   |                | Title:  Managing Director |

 

27

----

 
|   | THE ROYAL BANK OF SCOTLAND plc |
|--------|--------------------------------|
|   |                           |
|   |                           |
|   | By:                            | /s/ Matthew J. Main |   |
|   |                           | Name:  Matthew J. Main |
|   |                           | Title:  Senior Vice President |

 

28

----

 
|   | UNION BANK OF CALIFORNIA, N.A. |
|--------|--------------------------------|
|   |                           |
|   |                           |
|   | By:                            | /s/ Kimberly Coil |   |
|   |                           | Name:  Kimberley Coil |
|   |                           | Title:  Banking Officer |
|   |                           |
|   |                           |
|   | By:                            | /s/ Ali Ahmed |   |
|   |                           | Name: Ali  Ahmed |
|   |                           | Title: Vice  President |
|        |                                |  |  |  |

 

29

----

 
|   | U.S. BANK NATIONAL ASSOCIATION |
|--------|--------------------------------|
|   |                           |
|   |                           |
|   | By:                            | /s/ Kathryn A. Gaiter |   |
|   |                           | Name:  Kathryn A. Gaiter |
|   |                           | Title: Vice  President |

 

30

----

 
|   | WACHOVIA BANK, NATIONAL  ASSOCIATION |
|--------|--------------------------------------|
|   |                                 |
|   |                                 |
|   | By:                                  | /s/ Philip Trinder |   |
|   |                                 | Name: Philip  Trinder |
|   |                                 | Title: Vice  President |

 

31

----

 
|   | WELLS FARGO BANK, N.A. |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    | /s/ Todd Stornetta |   |
|   |                   | Name: Todd  Stornetta |
|   |                   | Title: Vice  President |

 

32

----

 
|   | THE PRUDENTIAL INSURANCE COMPANY  OF AMERICA |
|--------|----------------------------------------------|
|   |                                         |
|   |                                         |
|   | By:                                          | /s/ Ric E. Abel |   |
|   |                                         | Ric E. Abel |
|   |                                         | Vice  President |
|   |                                         |
|   |                                         |
|   | PRUCO LIFE INSURANCE COMPANY                 |
|   |                                         |
|   |                                         |
|   | By:                                          | /s/ Ric E. Abel |   |
|   |                                         | Ric E. Abel |
|   |                                         | Vice  President |
|   |                                         |
|   |                                         |
|   | PRUDENTIAL INVESTMENT  MANAGEMENT, INC.      |
|   |                                         |
|   |                                         |
|   | By:                                          | /s/ Ric E. Abel |   |
|   |                                         | Ric E. Abel |
|   |                                         | Vice  President |
|   |                                         |
|   |                                         |
|   | ING LIFE INSURANCE & ANNUITY  COMPANY    |
|   |                                         |
|   |                                         |
|   | By:                                          | Prudential Private Placement Investors, L.P.  (as Investment Advisor) |
|   |                                         |
|   |                                         | By: | Prudential  Private Placement Investors,  Inc., General Partner |
|   |                                         |
|   |                                         |   | By: | /s/ Ric E. Abel |   |
|   |                                         |   | Ric E. Abel |
|   |                                         |   | Vice  President |
|        |                                              |  |  |  |  |

 

33

----

 

CONSENT AND AGREEMENT

 

Each of the undersigned hereby consents toSection 4, Section 7(a), Section 9(i) and Section 9(j) of the foregoingAgreement as of the date first written above.

 

 
|   | WESTERN GAS RESOURCES, INC.       |
|--------|-----------------------------------|
|   |                              |
|   |                              |
|   | By:                               | /s/ William J. Krysiak |   |
|   |                              | William J. Krysiak |
|   |                              | Executive Vice President and |
|   |                              | Chief Financial Officer |
|   |                              |   |
|   |                              |   |
|   | MIGC, INC.                        |
|   |                              |
|   |                              |
|   | By:                               | /s/ William J. Krysiak |   |
|   |                              | William J. Krysiak |
|   |                              | Executive Vice President and |
|   |                              | Chief Financial Officer |
|   |                              |
|   |                              |   |
|   | MGTC, INC.                        |
|   |                              |
|   |                              |
|   | By:                               | /s/ William J. Krysiak |   |
|   |                              | William J. Krysiak |
|   |                              | Executive Vice President and |
|   |                              | Chief Financial Officer |
|   |                              |
|   |                              |
|   | WESTERN GAS RESOURCES-TEXAS, INC. |
|   |                              |
|   |                              |
|   | By:                               | /s/ William J. Krysiak |   |
|   |                              | William J. Krysiak |
|   |                              | Executive Vice President and |
|   |                              | Chief Financial Officer |
|        |                                   |  |  |  |  |  |

 

34

----

 
|   | MOUNTAIN GAS RESOURCES, INC.      |
|--------|-----------------------------------|
|   |                              |
|   |                              |
|   | By:                               | /s/ William J. Krysiak |   |
|   |                              | William J. Krysiak |
|   |                              | Executive Vice President and |
|   |                              | Chief Financial Officer |
|   |                              |   |
|   |                              |   |
|   | LANCE OIL & GAS COMPANY, INC. |
|   |                              |
|   |                              |
|   | By:                               | /s/ William J. Krysiak |   |
|   |                              | William J. Krysiak |
|   |                              | Executive Vice President and |
|   |                              | Chief Financial Officer |
|   |                              |
|   |                              |   |
|   | WESTERN GAS WYOMING, L.L.C.       |
|   |                              |
|   | By:                               | WESTERN GAS RESOURCES, INC., its  sole member |
|   |                              |   |
|   |                              |   |
|   |                              | By: | /s/ William J. Krysiak |   |
|   |                              |   | William J. Krysiak |
|   |                              |   | Executive Vice President and |
|   |                              |   | Chief Financial Officer |
|        |                                   |  |  |  |

 

35

----

 

Annex 1

 

ADDRESSES FOR NOTICE

 
| **Bank of America,  N.A.**  |
|-----------------------------|
| 901 Main Street             |
| Dallas, TX  75201      |
| Attn:                       | Ramon Presas |
| Tel:                        | 214.209.2642 |
| Fax:                        | 214.290.8364 |
|                        |   |
| *with a copy to:*           |
| **Bank of America,  N.A.**  |
| 700 Louisiana, 8th Floor    |
| TX4-213-08-14               |
| Houston, TX  77002     |
| Attn:                       | **Richard Stein** |
| Tel:                        | 713.247.7258 |
| Fax:                        | 713.247.7286 |
|                        |   |
| **Bank of Oklahoma,  N.A.** |
| 1625 Broadway, Suite 1570   |
| Denver, CO  80202      |
| Attn:                       | **Thomas M. Foncannon** |
| Tel:                        | 303.534.9461 |
| Fax:                        | 303.534.9499 |
|                        |   |
| *with a copy to:*           |
| **Bank of Oklahoma,  N.A.** |
| 1625 Broadway, Suite 1570   |
| Denver, CO  80202      |
| Attn:                       | **Mary Anne Anderson** |
| Tel:                        | 303.534.9465 |
| Fax:                        | 303.534.9499 |
|                        |   |
| **Bank One, NA**            |
| 1 Bank One Plaza            |
| IL21-0634                   |
| Chicago, IL  60670     |
| Attn:                       | **Brenda De Los Reyes** |
| Tel:                        | 312.732.2594 |
| Fax:                        | 312.732.4840 |

 

----

 
| *with a copy to:*                   |
|-------------------------------------|
| **Bank One, NA**                    |
| 1717 Main Street, 4th Floor         |
| Dallas, TX  75201              |
| Attn:                               | **Thomas K. Martin** |
| Tel:                                | 214.290.2301 |
| Fax:                                | 214.290.2332 |
|                                |   |
| **BNP Paribas**                     |
| 1220 Smith Street, Suite 3100       |
| Houston, TX  77002             |
| Attn:                               | **Joe Onischuk** |
| Tel:                                | 713.982.1161 |
| Fax:                                | 713.659.6915 |
|                                |   |
| **Comerica Bank -  Texas**          |
| 1601 Elm Street                     |
| 2nd Floor, MC 6593                  |
| Dallas, TX  75201              |
| Attn:                               | **Thomas G. Rajan** |
| Tel:                                | 214.969.6565 |
| Fax:                                | 214.969.6561 |
|                                |   |
| **Fleet National Bank**             |
| Mail Stop:  MA DE 10008A       |
| 100 Federal Street                  |
| Boston, MA  02110              |
| Attn:                               | **David Lundberg** |
| Tel:                                | 617.434.8516 |
| Fax:                                | 617.434.3652 |
|                                |   |
| **The Royal Bank of  Scotland plc** |
| 600 Travis Street, Suite 6070       |
| Houston, TX  77002             |
| Attn:                               | **Keith Johnson** |
| Tel:                                | 713.221.2437 |
| Fax:                                | 713.221.2430 |
|                                |   |
| **Union Bank of  California, Inc.** |
| 500 N. Akard, Suite 4200            |
| Dallas, TX  75201              |
| Attn:                               | **Kimberly Coil** |
| Tel:                                | 214.922.4200 |
| Fax:                                | 214.922.4209 |

 

2

----

 
| *with a copy to:*                                |
|--------------------------------------------------|
| **Union Bank of  California, Inc.**              |
| 601 Potrero Grande Dr., 1st Floor                |
| Monterey Park, CA  91754                    |
| Attn:                                            | **An Cheng** |
| Tel:                                             | 323.720.7837 |
| Fax:                                             | 323.278.6173 |
|                                             |
| **U.S. Bank National  Association**              |
| 918 17TH Street, DNCOBB3E                        |
| Denver, CO  80202                           |
| Attn:                                            | **Kathryn A. Gaiter** |
| Tel:                                             | 303.585.4210 |
| Fax:                                             | 303.585.4362 |
|                                             |
| **Wachovia Bank,  National Association**         |
| 1001 Fannin Street, Suite 255                    |
| Houston, TX  77002                          |
| Attn:                                            | **Philip Trinder** |
| Tel:                                             | 713.346.2718 |
| Fax:                                             | 713.650.6354 |
|                                             |
| **Wells Fargo Bank,  N.A.**                      |
| 1740 Broadway                                    |
| Denver, CO  80274                           |
| Attn:                                            | **Todd Stornetta** |
| Tel:                                             | 303.863.5653 |
| Fax:                                             | 303.863.5196 |
|                                             |
| **The Prudential  Insurance Company of America** |
| **Pruco Life  Insurance Company**                |
| **Prudential  Investment Management, Inc.**      |
| 2200 Ross Avenue, Suite 4200E                    |
| Dallas, TX  75201                           |
| Attn:                                            | **Ric Abel** |
| Tel:                                             | 214.720.6202 |
| Fax:                                             | 214.720.6299 |
|                                             |
| **ING Life Insurance  & Annuity Company**    |
| c/o Prudential Private Placement Investors, L.P. |
| 4 Gateway Center, 100 Mulberry Street            |
| Newark, NJ 07102                                 |
| Attn:                                            | **Albert Trank** |
| Tel:                                             | 973.802.8608 |
| Fax:                                             | 973.624.6432 |
|                                                  |  |  |  |

 

3

----

 
| **Prudential  Investment Management, Inc.** |
|---------------------------------------------|
| c/o Prudential Capital Group                |
| 2200 Ross Avenue, Suite 4200E               |
| Dallas, TX 75201                            |
| Attn:                                       | **Ric Abel** |
| Tel:                                        | 214.720.6202 |
| Fax:                                        | 214.720.6299 |

 

4

----

 

EXHIBIT A

 

FORM OF MORTGAGE

 

5

----