Exhibit 10.42


 


2001 EMPLOYMENT AGREEMENT


 


THIS 2001 EMPLOYMENT AGREEMENT (hereinafter
referred to as the “Agreement”) is made effective as of June 14, 2001, by and
between WESTERN GAS RESOURCES, INC., a Delaware corporation, (hereinafter
referred to as the “Corporation”), and JOHN F. CHANDLER (hereinafter referred
to as the “Employee”).


 


WITNESSETH:


 


WHEREAS, the
Corporation, its subsidiaries and affiliates (the “Western Companies”) acquire,
design, construct and operate natural gas gathering and processing facilities,
market, store and transport natural gas, natural gas liquids and sulphur,
market electrical power and explore for, develop, and produce oil and gas.


 


WHEREAS,
employee has substantial experience in the Corporation’s business and is
currently the Corporation’s Senior Vice President-Marketing, Production,
Business Development and Assistant Secretary.


 


WHEREAS, prior
hereto, the Corporation and the Employee have entered into that certain
Employment Agreement, dated January 2, 2001, which shall be terminated upon
execution of this Agreement and further, shall be replaced in its entirety by
this Agreement.


 


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


 


1.                                       Employment.
Corporation hereby employs the Employee and the Employee hereby accepts such
employment with the Corporation upon the terms and conditions hereinafter set
forth. The Employee’s employment shall continue until it is terminated in
accordance with the provisions of paragraph 12 hereof.


 


2.                                       Powers,
Duties and Responsibilities.


 


(a)                                  Employee
shall devote his full time, attention and effort to the business of the Western
Companies during the Corporation’s normal business hours and during such other
times as are reasonably necessary for the proper performance of his
responsibilities hereunder.


 


(b)                                 Employee’s
primary duties shall be to act as Senior Vice President-Marketing, Production,
Business Development and Assistant Secretary. Employee shall have such powers, duties
and responsibilities, and shall perform such other functions in connection with
the business of the Companies, as may be assigned from time to time by the
Corporation. At all times during Employee’s employment under this Agreement
(including employment following a Change of Control of the Corporation as
hereinafter described), Employee shall be employed in the Corporation’s offices
in Denver, Colorado.


 


3.                                       Compensation
and Bonus. For all of the services rendered by Employee pursuant to this
Agreement, the Corporation shall pay the Employee his or her current annual
base salary. In no event shall Employee’s current annual base salary be
decreased, but it may, from time to time be increased at the discretion of
Employer during the term of this Agreement (hereinafter referred to as
Compensation), payable in accordance with the Corporation’s normal pay
practices during the term of Employee’s employment. In addition, the
Corporation may pay Employee a bonus, as may be determined pursuant to any
bonus plan applicable to the Employee for such year, if any, approved by the
Corporation’s Board of Directors from time-to-time in its sole and absolute
discretion. Employee may provide a written election to have any bonus due in
December of any year paid in January of the following year.


 

















 


4.                                       Officer
Insurance Coverage – Costs of Defense. During the term of Employee’s
employment and for two (2) years thereafter, to the extent the Corporation
maintains an insurance policy or policies providing directors’ and officers’
liability insurance, Employee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Corporation officer. Such coverage shall provide to Employee
officer liability insurance coverage to cover any claims that may be made
arising from his past, present, or future activities on behalf of the Western
Companies, in the same manner as such insurance is provided to the other
officers of the Corporation, provided that such insurance coverage is available
to the Corporation at a reasonable cost. Employee hereby represents that to his
knowledge no investigation, claim, or litigation is currently pending or
threatened against him at this time relating to or arising out of his activities
as an employee of any Western Company.


 


5.                                       Cooperation
With Respect to Investigations, Claims or Litigation. During the term of
Employee’s employment and at all times thereafter, should a Western Company
become involved in any investigation, claim, or litigation relating to or
arising out of Employee’s past, present, or future duties with a Western
Company or with respect to any matters which the Employee has knowledge,
Employee agrees to fully, and in good faith, cooperate with the Corporation
with respect to such investigation, claim, or litigation. The Corporation shall
reimburse Employee for any and all expenses (including attorneys’ fees) and, if
requested by Employee shall (within two business days of such request) advance
such expenses to Employee, which are incurred by Employee in connection with
any action for (i) indemnification or advance payment of expenses by the
Corporation under this Agreement or any other agreement or Corporation Bylaw
now or hereafter in effect relating to claims and/or (ii) recovery under any
directors’ and officers’ liability insurance policies maintained by the
Corporation, regardless of whether Employee ultimately in determined to be
entitled to such indemnification, advance expense payment or insurance
recovery, as the case may be.


 


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


 


7.                                       Employee
Benefits. During the term of employment, Employee shall be eligible to
participate in the employee benefit plans provided by the Corporation in which
the Employee participates as of the date hereof, as such plans may be changed
from time to time, in accordance with the provisions of such plans, including,
but not limited to, the Corporation’s qualified retirement plans, the
Corporation’s Stock Option Plan(s), and the Corporation’s loan plan to acquire
stock. The Employee hereby agrees and acknowledges that nothing in this
Agreement guarantees him the right to any grant of sock options under any Stock
Option Plan, or loan under any loan plan and that the Board of Directors, in
its sole and absolute discretion, in accordance with the terms of such plans,
as they may be modified from time to time, determines whether and when any
stock options are granted or loans extended.


 


8.                                       Confidential
Information. Employee acknowledges that pursuant to the employment
hereunder, Employee occupies a position of trust and confidence. Accordingly,
in order to facilitate the performance of this Agreement and the activities
contemplated by this Agreement, the Western Companies may disclose to Employee
or Employee may develop or obtain certain proprietary or confidential
information of the Western Companies. During Employee’s employment hereunder
and for a period of one (1) year thereafter (which may be increased to two (2)
years thereafter pursuant to Section 14(a)(ii) or (v) hereof), Employee hereby
agrees not to use or to disclose to any person, other than in the discharge of
his duties under this Agreement, any “proprietary of confidential” information
of the Western Companies, including, but not limited to, any information
concerning the business operations, business strategies, or internal structure
of the Western Companies; the customers or clients of the Western Companies;
any acquisition strategies of the Western Companies; the gas and other
products’ marketing or transportation strategies of the Western Companies, its
subsidiaries or affiliates; the terms of any gas gathering, processing,
marketing, or transportation contracts entered into by the Western Companies;
past, present or future


 

















 


research done by the Western
Companies respecting the business or operations of the Western Companies, or
customers or clients or potential customers or clients of the Western
Companies; personnel data of the Western Companies, product or process
knowledge; the Employee’s work performed for, or relating to or for, any
customer or client of any Western Company or the gas or other product pricing
for any customer or client of any Western Company; any method or procedure
relating or pertaining to projects developed by any Western Company or
contemplated by any Western Company to be developed; or any gas gathering,
processing, drilling, marketing, transportation project which any Western
Company is developing; or any plans or strategy related to the foregoing which
is not generally available or disclosed to the public.


 


If the
Employee violates this agreement of confidentiality, the Corporation shall, in
addition to any other remedy provided by law, be permitted to pursue an action
for injunctive relief, monetary damages, or both. The Employee acknowledges
that all such information constitutes confidential and/or proprietary
information of the Western Companies and agrees that such information shall be
kept confidential; such information shall be used solely for the purpose of
performing the obligations hereunder or activities contemplated by this
Agreement; and that he shall not otherwise disclose or make use of such
information, except in response to a court order.


 


9.                                       Non-Solicitation.
During Employee’s employment hereunder and for a period of three years
thereafter, Employee shall not engage in any of the following:


 


(i)                                     Hire,
offer to hire (or participate in the hiring or offer to hire of) any officer or
employee of any Western Company; or


 


(ii)                                  directly
or indirectly, solicit, divert or take away or attempt to solicit, divert or
take away any business any Western Company has enjoyed or solicited prior to
the date hereof or at any time during Employee’s term of employment with the
Corporation.


 


This
provision, however, shall not be construed to require the Employee to violate
any law forbidding anti-competitive practices or any law regarding anti-trust.


 


In addition,
nothing contained herein shall prevent Employee from hiring any officer or
employee of any Western Company as a result of a general solicitation in a
publicly available publication. In the event Employee violates this
non-solicitation provision, the Western Company shall, in addition to any other
remedy provided by law, be permitted to pursue an action for injunctive relief,
monetary damages, or both.


 


10.                                 Ownership
of Documents.  All information,
drawings, documents and materials whether in writing, on computer disks,
computer hard drive, on magnetic tape or otherwise prepared by the Employee in
connection with his employment, or which Employee obtains in the course of or
as result of his employment by the Corporation shall be the sole and exclusive
property of the Corporation and will be delivered to the Corporation by the
Employee on the earlier of a demand by the Corporation or promptly after
termination of his employment hereunder, together with all written, computer,
magnetic tape or other evidence of the information, drawings, document and
materials, if any, furnished by any Western Company to the Employee in connection
with the Employee’s employment.


 


11.                                 Agreement
Not To Compete. The parties hereto recognize that the Employee is retained
by the Corporation as part of a professional, management and executive staff of
the Corporation whose duties include the formulation and execution of
management policy. Therefore, except in the event of termination which would
entitle Employee to payments pursuant to paragraphs 14 (a) (ii), or 14 (a) (v)
in which case the terms of this provision shall not apply, the Employee hereby agrees
that during the term of his employment hereunder and for a period of one (1)
year after the termination of employment, he shall not act or engage in
material competition with the activities of or plans of any Western Company as
they exist up to the time of the Employee’s termination of employment. Material
competition by the Employee shall mean that the Employee is involved in any
business or investment activity, in any capacity including but not limited to
an employee, consultant, advisor, agent, shareholder, independent contractor,
investor, partner, member, owner or otherwise, which activity directly competes
with or has a material adverse


 

















 


economic effect on any of the
business activities or business plans of any Western Company. Examples of such
material competition include, but shall not be limited to an activity involving
the gathering and processing business within 25 miles of one of the Western
Companies’ existing or planned gathering, processing or generation facilities;
an activity involving the storage or hub business for natural gas or natural
gas liquids within 100 miles of an existing or planned storage facility of any
Western Company; and/or an activity involving the purchase of oil or gas
leases, the farming-in of such leases or any similar arrangement, within five
(5) miles of the boundaries of an existing oil or gas lease of any Western
Company. In the event the Employee violates this agreement not to compete, the
Corporation shall, in addition to any other remedies provided by law, be
permitted to pursue an action for injunctive relief (preliminary or permanent),
monetary damages, or both.


 


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


 


(a)                                  The
Employee’s death.


 


(b)                                 The
Employee’s disability as that term is defined pursuant to the Corporation’s
disability insurance plan covering its officers.


 


(c)                                  The
Employee’s written election to terminate employment, to be effective ninety
(90) days thereafter unless an earlier effective date is specified by the
Corporation.


 


(d)                                 The
Corporation’s written election to terminate Employee’s employment without
“cause.”


 


(e)                                  The
Corporation’s written election to terminate the Employee’s employment “for cause.”


 


(f)                                    In
the event of a Change of Control (as hereinafter defined), Employee’s
employment is terminated without cause or upon the expiration of six (6) months
following a Change of Control, whichever is earlier.


 


For purposes
of this Agreement, the Corporation may elect to terminate Employee’s employment
“for cause” if: (i) Employee shall have committed a felony, fraud, theft or
embezzlement involving the assets of any Western Company; (ii) Employee
violates or causes any Western Company to violate, in a material respect, any
statute, law, ordinance, rule or regulation relating to such Western Company,
which violation results in a material adverse effect to the Corporation’s
business or financial condition; (iii) Employee engages in any activity which is
outside the scope of the Employee’s authority and detrimental to any Western
Company’s business; (iv) Employee fails to comply with the provisions of this
Agreement and Employee has either (x) not diligently commenced to correct such
detrimental activity; or (y) failed to comply after ten (10) days’ written
notice from the Corporation, which notice provides a detailed description
thereof; or (v) Employee intentionally fails or refuses to perform his
obligations or responsibilities hereunder, or to carry out any reasonable and
lawful direction of the Corporation with respect to such obligations or
responsibilities.


 


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


 


(i)                                     Employee’s
Right to Compensation and Benefits. Employee shall be entitled to the
pro-rata share of Compensation and employee benefits, if any, which have been
earned but not paid through the date of Employee’s death or disability.
Employee shall only be entitled to such additional bonus, if any, which has
been previously authorized by the Board of Directors, but has not been paid as
of the date of Employee’s death or disability.


 


(ii)                                  Employee’s
Obligations. Notwithstanding such termination of employment, if the
Employee is terminated as a result of disability, Employee shall remain bound
by the provisions of


 

















 


paragraphs 5,
8, 9, 10 and 11 hereof.


 


14.                                 Employee’s Rights and Obligations Upon
Termination of Employment By the Corporation Without Cause.
If Employee’s employment is terminated by the Corporation without cause
pursuant to Section 12(d) herein, then Employee shall be entitled to the
following in full satisfaction of his rights under this Agreement or at law:


 


(a)                                  Severance
Pay.


 


(i)                                     Employee shall be
entitled to severance pay in an amount equal to the annual Compensation. Such
severance pay will be payable in accordance with the Corporation’s normal pay
practices over the 12 months following such termination of employment.


 


(ii)                                  Notwithstanding
anything else contained herein, in the event of a Change of Control of the
Corporation (as hereinafter defined) or after the sale of substantially all the
assets of the Corporation, upon the earlier of a) Employee’s employment is
terminated without cause after a Change of Control of the Corporation or b)
upon the expiration of six (6) months following said Change of Control, then the
Employee shall be entitled to severance pay equal to two (2) times the annual
Compensation of Employee. Severance pay pursuant to this paragraph shall be
paid to the Employee either a) over a 24-month period or b) in a one-time lump
sum payment, at Employee’s option. If the Employee elects payment over a 24
month period, then monthly installments shall commence on the first day of the
calendar month following the date of termination of employment or the first day
of the calendar month following the expiration of six (6) months after a Change
of Control. If the Employee elects payment in a one-time lump sum payment, then
said payment shall be made within thirty (30) days of the date of termination
of employment or within thirty (30) days after the expiration of the six (6)
months after a Change of Control. In the event that the Employee is entitled to
the severance pay pursuant to this sub-section, the obligation of the Employee
not to use or to disclose any “proprietary or confidential information” set forth
in Section 8 hereof shall apply for two (2) years following such Change of
Control of the Corporation or such sale of substantially all the assets of the
Corporation.


 


(iii)                               The severance pay
provisions of this Section 14(a) (ii) are not additive and in no event
shall the Employee be entitled to receive severance pay greater than two (2)
times the annual Compensation.


 


(iv)                              Notwithstanding anything
else contained herein, in the event of a Change of Control of the Corporation
(as hereinafter defined) or after the sale of substantially all the assets of
the Corporation, upon the earlier of a) Employee’s employment is terminated
without cause after a Change of Control of the Corporation or b) upon the
expiration of six (6) months following said Change of Control, then Employee
shall receive either of the following for unvested stock options previously
granted to Employee:


 


A) in the event of a Change of Control in which the Corporation is
acquired in a cash purchase, then Employee shall receive a lump sum payment
constituting the positive difference between the exercise price of unvested
stock options previously granted to Employee and the transaction price of
common stock; or


 


B) in the event of a Change of Control in which the Corporation is
acquired in a stock purchase, then Employee’s stock options which have not
vested prior to termination without cause shall be converted to an amount of
unqualified vested options of the acquiring corporation’s stock at the original
grant price to Employee based upon the conversion rate of the acquiring
corporation’s stock on the acquisition date.


 

















 


(v)                                 Notwithstanding
anything else contained herein, in the event Employee’s employment is
terminated without cause within sixty (60) days prior to the release of a press
release regarding a Change of Control of the Corporation, then the Employee
shall be entitled to severance pay equal to two (2) times the annual
Compensation of Employee. Severance pay pursuant to this paragraph shall be
payable to the Employee either a) over a 24 month period or b) in a one-time
lump sum payment, at Employee’s option. If the Employee elects payment over a
24-month period, then monthly installments shall commence on the first day of
the calendar month following Employee’s election for payment. If the Employee
elects payment in a one-time lump sum payment, then said payment shall be made
within thirty (30) days of the date of Employee’s election for payment. In
addition, for any unvested stock options previously granted to Employee,
Employee shall be entitled to either payment or conversion of such unvested
stock options as described in paragraph 14 (a) (iv). In the event that the
Employee is entitled to the severance pay pursuant to this sub-section, the
obligation of the Employee not to use or to disclose any “proprietary or
confidential information” set forth in Section 8 hereof shall apply for
two (2) years following the, earlier of such termination or such Change of
Control of the Corporation.


 


(vi)                              For purposes of this
Agreement, “Change of Control of the Corporation” means 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 (s amended), of a number of voting shares of capital stock of the
Corporation greater than the number of voting shares of capital stock of the
Corporation which are then owned, both legally and 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”). None of the Founders shall be counted among those persons acting in
concert to acquire ownership unless such Founder, acting in concert with an
acquiring person or group (an “Acquiring Group Founder”), votes against the
other Founders in an election for the Board of Directors or the modification of
the Corporation’s certificate of incorporation or by-laws or in the vote to
accept or reject a plan of merger, sale of substantially all of the assets of
the Corporation or similar proposal. The shares of an Acquiring Group Founder
shall be counted in the acquiring group’s shares and shall not be counted in
the shares of the Founders who are not Acquiring Group Founders.


 


(b)                                 Employee’s Right to Compensation and
Benefits. Employee shall be entitled to the
pro-rata share of Compensation and employee benefits, if any, which have been
earned but not paid through the date of termination of employment. Employee
shall only be entitled to such additional bonus, if any, which has been
previously authorized by the Board of Directors, but has not been paid as of
the date of termination of employment.


 


(c)                                  Payment of Excise Taxes.
The Corporation shall be responsible for the payment of any and all excise
taxes including any increase in income taxes resulting from such payment, which
may result or be assessed to the Employee in connection with payments, whether
in cash, stock or benefits received by the Employee under this
paragraph 14 of this Agreement. In addition, the Corporation shall defend,
indemnify, save and hold the Employee harmless from any and all claims for
excise taxes which are due or may become due or which arise or result from any
dispute with a Federal, state or local taxing authority in connection with this
paragraph 14.


 


(d)                                 Employee’s Obligations.
Notwithstanding such termination of employment, Employee shall remain bound by
the provisions of paragraphs 5, 8, 9, 10 and 11 hereof.


 

















 


15.                                 Employee’s
Rights and Obligations Upon Termination of Employment by the Corporation With
Cause.  If Employee’s employment is
terminated by the Corporation with cause pursuant to paragraph 12(e) herein,
then the Employee shall be entitled to the following in full satisfaction of
all of his rights under this Agreement or at law:


 


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


 


(ii)                                  Employee’s
Right to Compensation and Benefits. 
Employee shall only be entitled to the pro-rata share of Compensation
and employee benefits, if any, earned but not paid through the date of
termination of employment.  Employee
shall only be entitled to such additional bonus, if any, which has been
previously authorized by the Board of Directors, but has not been paid as of
the date of termination of employment.


 


(iii)                               Employee’s
Obligations.  Notwithstanding such
termination of employment, Employee shall remain bound by the provisions of
paragraphs 5, 8, 9, 10 and 11 hereof.


 


16.                                 Employee’s
Rights and Obligations Upon Termination of Employment By Employee.  If Employee’s employment is terminated by
the Employee pursuant to paragraph 12(c) herein, then the Employee shall be
entitled to the following in full satisfaction of all of his rights under this
Agreement or at law:


 


(i)                                     Severance
Pay.  Employee shall be entitled to
no severance pay.


 


(ii)                                  Employee’s
Rights to Compensation and Benefits. 
Employee shall be entitled to the pro-rata share of Compensation and
Employee Benefits, if any, which have been earned but not paid through the
effective date of such termination of employment.  Employee shall only be entitled to such additional bonus, if any,
which has been previously authorized by the Board of Directors, but has not
been paid as of the date of termination of employment.


 


(iii)                               Employee’s
Obligations.  Notwithstanding such
termination of employment, Employee shall remain bound by the provisions of
paragraphs 5, 8, 9, 10 and 11 hereof.


 


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


 


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


 


Western Gas
Resources, Inc.

12200 North Pecos Street

Denver, Colorado 80234


 


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


 


John F.
Chandler

2125 Pine Street

Boulder, CO 80302


 

















 


19.                                 Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Colorado.


 


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


 


21.                                 Miscellaneous.


 


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


 


(b)                                 Assignment.  Except as provided in paragraph 17, this
Agreement is personal to each of the parties hereto, and neither party may
assign nor delegate any of such party’s rights or obligations hereunder without
first obtaining the written consent of the other party.


 


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


 


(d)                                 Gender,
Plurals and Pronouns.  Throughout
this Agreement, the masculine gender shall include the feminine and neuter, and
the singular shall include the plural and vice versa, wherever the context and
facts require such construction.


 


(e)                                  Binding
Arbitration, Attorney’s Fees and Expenses. 
Except for disputes arising or resulting from the provisions contained
in paragraph 14 of this Agreement, if any dispute arises between the parties to
this Agreement (but not as to whether the Corporation is obligated to provide
legal representation to the Employee pursuant to Section 4 hereof), then both
parties shall submit the dispute to binding arbitration.  Both parties agree to be bound by the
decision of such arbitration.  The
obligation to submit to binding arbitration shall not prevent either party from
seeking a court order or an injunction enforcing the term of this
Agreement.  In the event of any binding
arbitration between the parties, or any litigation to enforce any provision
(except for disputes arising or resulting from the provision contained in
paragraph 14) of this Agreement or any right of either party, the unsuccessful
party to such arbitration or litigation shall pay the successful party all
costs and expenses, including reasonable attorneys’ fees, incurred.  In the event a dispute arises or results
from the provisions of paragraph 14 of this Agreement, then both parties shall
submit the dispute to binding arbitration under the foregoing provisions,
except that all costs and expenses, including reasonable attorneys’ fees,
incurred shall be solely borne by the Corporation.


 


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


 

















 


(g)                                 Entire
Agreement.  Except for the
Indemnification Agreement, this Agreement contains all agreements,
understandings, and arrangements between the parties hereto and no other
exists.  Except for the Indemnification
Agreement, all previous agreements, understandings, and arrangements between
the parties relating to employment are terminated by this Agreement.  This Agreement may be amended, waived,
changed, modified, extended or rescinded only by a writing signed by the party
against whom such amendment, waiver, change, modification, extension or
rescission is sought.


 


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


 


	
   

  	
  WESTERN GAS
  RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lanny F.
  Outlaw

  
	
   

  	
   

  	
  Lanny F.
  Outlaw, President & CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
  /s/ John F. Chandler

  
	
   

  	
  John F. Chandler

  



 

















 


 


2001 INDEMNIFICATION AGREEMENT


 


THIS 2001 INDEMNIFICATION AGREEMENT
(this “Agreement”), effective as of June 14, 2001, between Western Gas
Resources, Inc., a Delaware corporation (the “Company”), and JOHN F. CHANDLER
(the “Indemnitee”).


 


WHEREAS, it is
essential to the Company to retain and attract as officers the most capable
persons available;


 


WHEREAS, Indemnitee
is an officer of the Company;


 


WHEREAS, both the
Company and Indemnitee recognize the increased risk of litigation and other
claims being asserted against officers of public companies in today’s
environment;


 


WHEREAS, the Bylaws
of the Company require the Company to indemnify and advance expenses to its
officers to the full extent permitted by law and the Indemnitee has been
serving and continues to serve as an officer of the Company in part in reliance
on such Bylaws;


 


WHEREAS, in
recognition of Indemnitee’s need for substantial protection against personal
liability in order to enhance Indemnitee’s continued service to the Company in
an effective manner and Indemnitee’s reliance on the aforesaid Bylaws, and in
part to provide Indemnitee with specific contractual assurance that the
protection promised by such Bylaws will be available to Indemnitee (regardless
of, among other things, any amendment to or revocation of such Bylaws, or any
change in the composition of the Company’s Board of Directors or acquisition
transaction relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to Indemnitee
to the fullest extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company’s directors’ and officers’
liability insurance policies;


 


WHEREAS, prior
hereto, the Company and the Indemnitee had entered into an indemnification
agreement that the parties desire to restate;


 


NOW, THEREFORE, in
consideration of the premises and of Indemnitee continuing to serve the Company
directly or, at its request, another enterprise, and intending to be legally
bound hereby, the parties hereto agree as follows:


 


1.             Certain Definitions:


 


(a)           Change in Control:
shall be deemed to have occurred if (i) any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the “beneficial owner” (as
defined in Rule 13d3 under said Act), directly or indirectly, of securities of
the Company representing 20% or more of the total voting power represented by
the Company’s then outstanding Voting Securities, or (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or


 


1

















 


consolidation
which would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the Company approve
a plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of transactions)
all or substantially all the Company’s assets.


 


(b)           Claim: any
threatened, pending or completed action, suit or proceeding, or any inquiry or
investigation, whether instituted by the Company or any other party, that
Indemnitee in good faith, believes might lead to the institution of any such
action, suit or proceeding, whether civil, criminal, administrative,
investigative or other.


 


(c)           Expenses:
include attorneys’ fees and all other costs, expenses and obligations paid or
incurred in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend, be a witness in
or participate in any Claim relating to any Indemnifiable Event.


 


(d)           Indemnifiable
Event: any event or occurrence related to the fact that Indemnitee is or
was a director, officer, employee, agent or fiduciary of the Company, or is or
was serving at the request of the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of anything done
or not done by Indemnitee in any such capacity.


 


(e)           Independent Legal
Counsel: an attorney or firm of attorneys, selected in accordance with the
provisions of Section 3, who shall not have otherwise performed services for
the Company or Indemnitee within the last five years (other than with respect
to matters concerning the rights of Indemnitee under this Agreement, or of
other indemnitees under similar indemnity agreements).


 


(f)            Potential Change
in Control: shall be deemed to have occurred if (i) the Company enters into
an agreement, the consummation of which would result in the occurrence of a
Change in Control; (ii) any person (including the Company) publicly announces
an intention to take or to consider taking actions which if consummated would
constitute a Change in Control; (iii) any person, other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company, who is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 9.5% or more of the combined voting
power of the Company’s then outstanding Voting Securities, increases his beneficial
ownership of such securities by five percentage points (5%) or more over the
percentage so owned by such person; or (iv) the Board adopts a resolution to
the effect that, for purposes of this Agreement, a Potential Change in Control
has occurred.


 


(g)           Reviewing Party:
any appropriate person or body consisting of a member or members of the
Company’s Board of Directors or any other person or body appointed by the Board
who is not a party to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.


 


(h)           Voting Securities:
any securities of the Company which vote generally in the election of
directors.


 


2.             Basic Indemnification Arrangement.


 


(a)           In the event
Indemnitee was, is or becomes a party to or witness or other participant in, or
is threatened to be made a party to or witness or other participant in, a Claim
by reason of (or arising in part out of) an Indemnifiable Event, the Company
shall indemnify Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than thirty days after written demand is
presented to the Company, against any and all Expenses, judgments, fines,
penalties and amounts paid in settlement (including all


 


2

















 


interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses, judgments, fines, penalties or amounts paid in settlement) of
such Claim. If so requested by Indemnitee, the Company shall advance (within
two business days of such request) any and all Expenses to Indemnitee (an  “Expense Advance”).


 


(b)           Notwithstanding the
foregoing, the obligations of the Company under Section 2(a) shall be subject
to the condition that the Reviewing Party shall not have determined (in a
written opinion, in any case in which the Independent Legal Counsel referred to
in Section 3 hereof is involved) that Indemnitee would not be permitted to be
indemnified under applicable law.


 


(c)           Notwithstanding the
foregoing, the obligation of the Company to make an Expense Advance pursuant to
Section 2(a) shall be subject to the condition that, if, when and to the extent
that the Reviewing Party determines that Indemnitee would not be permitted to
be so indemnified under applicable law, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if Indemnitee has
commenced or thereafter commences legal proceedings in a court, of competent
jurisdiction to secure a determination that Indemnitee should be indemnified
under applicable law, any determination made by the Reviewing Party that
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse the Company
for any Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed).


 


(d)           If there has not
been a Change in Control, the Reviewing Party shall be selected by the Board of
Directors, and if there has been such a Change in Control (other than a Change
in Control which has been approved by a majority of the Company’s Board of
Directors who were directors immediately prior to such Change in Control), the
Reviewing Party shall be the Independent Legal Counsel referred to in Section 3
hereof.


 


(e)           If there has been no
determination by the Reviewing Party or if the Reviewing Party determines that
Indemnitee substantively would not be permitted to be indemnified in whole or
in part under any applicable law, Indemnitee shall have the right to commence
litigation in any court in the States of Colorado or Delaware having subject
matter jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging such determination by the Reviewing
Party or any aspect thereof, including the legal or factual bases therefor, and
the Company hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.


 


(f)            Notwithstanding
anything else contained herein, in no event shall Indemnitee be entitled to
indemnification under this Agreement for any Claims that relate to liability:
(i) under Section 16(b) of the Securities Exchange Act of 1934, as amended;
(ii) under federal or state securities laws for “insider trading”; (iii)
conduct finally adjudged as constituting active or deliberate dishonesty or
willful fraud or illegality; (iv) conduct finally adjudged as producing an
unlawful personal benefit to Indemnitee; or (v) prior to a Change of Control,
under any Claim initiated by the Indemnitee unless the Board of Directors of
the Company shall have authorized or consented to such Claim.


 


3.             Change in Control.  The Company agrees that if there is a Change in Control of the
Company (other than a Change in Control which has been approved by a majority
of the Company’s Board of Directors who were directors immediately prior to
such Change in Control) then with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and Expense Advances
under this Agreement or any other agreement or Company Bylaw now or hereafter
in effect relating to Claims for Indemnifiable Events, the Company shall seek
legal advice only from Independent Legal Counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent the Indemnitee would be
permitted to be indemnified under applicable law. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to fully


 


3

















 


indemnify such counsel against
any and all expenses (including attorneys’ fees), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.


 


4.             Establishment of Trust.


 


(a)           In the event of a
Potential Change in Control, the Company shall: (i) upon written request by
Indemnitee, create a trust for the benefit of Indemnitee, with the trustee chosen
by Indemnitee; (ii) from time to time upon written request of Indemnitee, fund
such trust in an amount sufficient to satisfy any and all Expenses reasonably
anticipated at the time of each such request to be incurred in connection with
investigating, preparing for and defending any Claim relating to an
Indemnifiable Event, and any and all judgments, fines, penalties and settlement
amounts of any and all Claims relating to an Indemnifiable Event from time to
time actually paid or claimed, reasonably anticipated or proposed to be paid.


 


(b)           Notwithstanding
anything else contained herein, in no event shall the Company be required to
deposit more than Five Hundred Thousand Dollars ($500,000) in any trust created
hereunder in excess of amounts deposited in respect of reasonably anticipated
Expenses.


 


(c)           The amount or
amounts to be deposited in the trust pursuant to the foregoing funding
obligation shall be determined by the Reviewing Party, in any case in which the
Independent Legal Counsel referred to above is involved.


 


(d)           The terms of the
trust shall provide that upon a Change in Control (i) the trust shall not be
revoked or the principal thereof invaded, without the written consent of the
Indemnitee, (ii) the trustee shall advance, within two business days of a
request by the Indemnitee, any and all Expenses to the Indemnitee (and the
Indemnitee hereby agrees to reimburse the trust under the circumstances under
which the Indemnitee would be required to reimburse the Company under Section
2(b) of this Agreement), (iii) the trust shall continue to be funded by the
Company in accordance with the funding obligation set forth herein, (iv) the
trustee shall promptly pay to Indemnitee all amounts for which Indemnitee shall
be entitled to indemnification pursuant to this Agreement or otherwise, and (v)
all unexpended funds in such trust shall revert to the Company upon a final
determination by the Reviewing Party or a court of competent jurisdiction, as
the case may be, that Indemnitee has been fully indemnified under the terms of
this Agreement.


 


5.             Indemnification for Additional Expenses.  The Company shall indemnify Indemnitee
against any and all expenses (including attorneys’ fees) and, if requested by
Indemnitee, shall (within two business days of such request) advance such
expenses to Indemnitee, which are incurred by Indemnitee in connection with any
action brought by Indemnitee for (i) indemnification or advance payment of
Expenses by the Company under this Agreement or any other agreement or Company
Bylaw now or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors’ and officers’ liability insurance
policies maintained by the Company, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advance expense payment
or insurance recovery, as the case may be.


 


6.             Partial Indemnity, Etc.  If Indemnitee is entitled under any provision of this Agreement
to indemnification by the Company for some or a portion of the Expenses, judgments,
fines, penalties and amounts paid in settlement of a Claim but not, however,
for all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any or
all Claims relating in whole or in part to an Indemnifiable Event or in defense
of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.


 


7.             Burden of Proof. 
In connection with any determination by the Reviewing Party or otherwise
as to whether Indemnitee is entitled to be indemnified hereunder the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.


 


8.             No Presumptions. 
For purposes of this Agreement, the termination of any claim, action,
suit or proceeding, by judgment, order, settlement (whether with or without
court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet


 


4

















 


any particular standard of conduct
or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law. In addition, neither the
failure of the Reviewing Party to have made a determination as to whether
Indemnitee has met any particular standard of conduct or had any particular
belief, nor an actual determination by the Reviewing Party that Indemnitee has
not met such standard of conduct or did not have such belief, prior to the
commencement of legal proceedings by Indemnitee to secure a judicial
determination that Indemnitee should be indemnified under applicable law shall
be a defense to Indemnitee’s claim or create a presumption that Indemnitee has
not met any particular standard of conduct or did not have any particular
belief.


 


9.             Nonexclusivity, Etc. The rights of the Indemnitee
hereunder shall be in addition to any other rights Indemnitee may have under
the Company’s Bylaws or the Delaware General Corporation Law or otherwise. To
the extent that a change in the Delaware General Corporation Law (whether by
statute or judicial decision) permits greater indemnification by agreement than
would be afforded currently under the Company’s Bylaws and this Agreement, it
is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.


 


10.           Liability Insurance. To the extent the Company
maintains an insurance policy or policies providing directors’ and officers’
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.


 


11.           Period of Limitations. No legal action shall be
brought and no cause of action shall be asserted by or in the right of the
Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal
or legal representatives after the expiration of two years from the date of
accrual of such cause of action, and any claim or cause of action of the
Company shall be extinguished and deemed released unless asserted by the timely
filing of a legal action within such two-year period; provided, however, that
if any shorter period of limitations is otherwise applicable to any such cause
of action such shorter period shall govern.


 


12.           Amendments, Etc. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.


 


13.           Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all papers required
and shall do everything that may be necessary to secure such rights, including
the execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.


 


14.           No Duplication of Payments. The Company shall not
be liable under this Agreement to make any payment in connection with any Claim
made against Indemnitee to the extent Indemnitee has otherwise actually
received payment (under any insurance policy, Bylaw or otherwise) of the
amounts otherwise indemnifiable hereunder.


 


15.           Binding Effect, Etc. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business, and/or assets of the Company, spouses,
heirs, executors and personal and legal representatives. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as an
officer or director of the Company or of any other enterprise at the Company’s
request.


 


16.           Severability. The provisions of this Agreement
shall be severable in the event that any of the provisions hereof (including
any provision within a single section, paragraph or sentence) is held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable
in any respect, and the validity and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent permitted by law.


 


5

















 


17.           Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without giving
effect to the principles of conflicts of laws.


 


IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of June 14, 2001


 


	
  WESTERN GAS
  RESOURCES, INC.

  	
  INDEMNITEE

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Lanny F.
  Outlaw

  	
   

  	
  /s/ John F.
  Chandler

  
	
   

  	
  Lanny F. Outlaw, President

  	
  John F.
  Chandler