EXHIBIT 10.4


 


[EXECUTION]


 


FOREIGN SUBSIDIARY STOCK PLEDGE AGREEMENT


 


THIS FOREIGN SUBSIDIARY STOCK PLEDGE AGREEMENT (this “Agreement”)
is made as of November 22, 2005, by Western Power Services, Inc., a
Delaware corporation (herein called “Debtor”), in favor of Bank of
America, N.A., as Administrative Agent for the Lenders (herein called “Secured
Party”).


 


RECITALS:


 


1.                                       Western
Gas Resources, Inc. (“Parent”) and Bank of America, N.A., as
Administrative Agent, and certain financial institutions (collectively, the “Lenders”)
are parties to that certain Amended and Restated Credit Agreement dated as of June 29,
2004 (as from time to time amended, supplemented, or restated, the “Credit
Agreement”) pursuant to which Parent has executed in favor of each Lender a
promissory note (such promissory notes, as from time to time supplemented or
amended and all promissory notes given in renewal and extension thereof are
collectively referred to herein as the “Notes”).


 


2.                                       Parent
has executed those certain senior notes pursuant to that certain Third Amended
and Restated Master Shelf Agreement among Debtor, The Prudential Insurance
Company of America (“PICA”), Prudential Investment Management, Inc.
(“PIMI”), Pruco Life Insurance Company (“Pruco”), Pruco Life
Insurance Company of New Jersey (“Pruco NJ”), Gibraltar Life Insurance
Co., Ltd. (“Gibralter”), RGA Reinsurance Company (“RGA”),
American Bankers Life Assurance Company of Florida, Inc. (“American”),
Fortis Benefits Insurance Company (“Fortis”), Connecticut General Life Insurance
Company (“Connecticut”) and certain Prudential Affiliates, as therein
defined (PICA, PIMI, Pruco, Pruco NJ, Gibralter, RGA, American, Fortis,
Connecticut and such Prudential Affiliates collectively herein called “Prudential”)
dated as of December 19, 1991, (effective January 13, 2003), as from
time to time supplemented or amended.


 


3.                                       Parent
and one or more of the Lenders may, from time to time, enter into interest rate
swap agreements with respect to various obligations of Parent (such agreements,
as from time to time amended, are collectively referred to herein as the “Swap
Agreements”).


 


4.                                       It
is a condition precedent to Lenders’ obligation to advance funds to Parent
pursuant to the Credit Agreement that Debtor shall execute and deliver this
Agreement to Secured Party.


 





















 


5.                                       Parent
owns all of the issued and outstanding stock of Debtor and the board of
directors of Debtor has determined that Debtor’s execution, delivery and
performance of this Agreement may reasonably be expected to benefit Debtor,
directly or indirectly, and are in the best interests of Debtor.


 


NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Debtor and Parent from Lenders’ extensions of credit under the
Credit Agreement, and of Ten Dollars and other good and valuable consideration,
the receipt and sufficiency of all of which are hereby acknowledged, Debtor
hereby agrees with Secured Party, for the benefit of each Lender, as follows:


 


AGREEMENTS:


 


ARTICLE I — Definitions and References


 


Section 1.1.                                   General
Definitions.  As used herein, the
terms “Domestic Subsidiary Pledge Agreement”, “Credit Agreement”, “Debtor”, “Parent”,
“Secured Party”, “Lenders”, “Notes”, “Prudential” and “Swap Agreements” shall
have the meanings indicated above, and the following terms shall have the
following meanings:


 


“Collateral” means all property, of whatever type, which is
described in Section 2.1 as being at any time subject to a security
interest granted hereunder to Secured Party.


 


“Commitment” means the agreement or commitment by Lenders to
make loans or otherwise extend credit to Debtor under the Credit Agreement, and
any other agreement, commitment, statement of terms or other document
contemplating the making of loans or advances or other extension of credit by
Lenders to or for the account of Debtor which is now or at any time hereafter
intended to be secured by the Collateral under this Agreement.


 


“Event of Default” means the occurrence of any “Event of Default”
as such term is defined in the Credit Agreement.


 


“Enforcement Action” means any exercise by Secured Party of any
rights or remedies against any Collateral, whether hereunder or otherwise, in
order to foreclose upon, collect, take possession of, sell, lease, dispose of,
or otherwise realize upon Collateral.


 


“Foreign Subsidiary” means any Subsidiary of Debtor that is not a
Domestic Subsidiary.


 


“Intercreditor Agreement” means that certain Intercreditor
Agreement of even date herewith among Lenders and Prudential, as from time to
time amended.


 


“Issuer” means any issuer of Pledged Shares and any successor of
such Issuer.


 


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“Obligation Documents” means the Credit Agreement, the Notes,
the Security Documents and all other documents and instruments under, by reason
of which, or pursuant to which any or all of the indebtedness and obligations
arising under or pursuant to the Credit Agreement are evidenced, governed,
secured, guarantied, or otherwise dealt with, and all other agreements,
certificates, and other documents, instruments and writings heretofore or
hereafter delivered in connection herewith or therewith.


 


“Other Liable Party” means any Person, other than Debtor, who
may now or may at any time hereafter be primarily or secondarily liable for any
of the Secured Obligations or who may now or may at any time hereafter have
granted to Secured Party a Lien upon any property as security for the Secured
Obligations.


 


“Pledged Shares” has the meaning given it in Section 2.1(a).


 


“Prudential Pledge Agreement” means that certain Pledge
Agreement dated as of April 29, 1999, as amended by Amendment No. 2
to Pledge Agreement dated as of April 24, 2003 appointing Bank of America,
N.A. as collateral agent thereunder, pursuant to which Western Gas Resources, Inc.
granted to Bank of America, N.A., as collateral agent, a security interest in
the collateral described therein.


 


“Related Person” means Debtor, each Subsidiary of Debtor, and
each Other Liable Party.


 


“Secured Obligations” shall have the meaning given it in Section 2.2.


 


“Subsidiary” shall have the meaning as defined in the Credit
Agreement.


 


“UCC” means the Uniform Commercial Code in effect in the State
of Texas on the date hereof.


 


Section 1.2.                                   Incorporation of
Other Definitions.  Reference is
hereby made to the Credit Agreement for a statement of the terms thereof.  All capitalized terms used in this Agreement
which are defined in the Credit Agreement and not otherwise defined herein
shall have the same meanings herein as set forth therein.  All terms used in this Agreement which are
defined in the UCC and not otherwise defined herein shall have the same
meanings herein as set forth therein, except where the context otherwise
requires.


 


Section 1.3.                                   Attachments.  All exhibits or schedules which may be attached
to this Agreement are a part hereof for all purposes.


 


Section 1.4.                                   Amendment of
Defined Instruments.  Unless the
context otherwise requires or unless otherwise provided herein, references in
this Agreement to a particular agreement, instrument or document (including,
but not limited to, references in Section 2.1) also refer to and include
all renewals, extensions, amendments, modifications, supplements or
restatements of any such agreement, instrument or document, provided that
nothing contained in this Section shall be


 


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construed to authorize any Person to execute or enter into any such
renewal, extension, amendment, modification, supplement or restatement.


 


Section 1.5.                                   References and
Titles.  All references in this
Agreement to Exhibits, Articles, Sections, subsections, and other subdivisions
refer to the Exhibits, Articles, Sections, subsections and other subdivisions
of this Agreement unless expressly provided otherwise.  Titles appearing at the beginning of any
subdivision are for convenience only and do not constitute any part of any such
subdivision and shall be disregarded in construing the language contained in
this Agreement.  The words “this
Agreement”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited.  The phrases
“this Section” and “this subsection” and similar phrases refer only to the
Sections or subsections hereof in which the phrase occurs.  The word “or” is not exclusive, and the word “including”
(in all of its forms) means “including without limitation”.  Pronouns in masculine, feminine and neuter
gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless
the context otherwise requires.


 


ARTICLE II — Security Interest


 


Section 2.1.                                   Grant of Security
Interest.  As collateral security for
all of the Secured Obligations, Debtor hereby pledges and assigns to Secured
Party and grants to Secured Party for the benefit of each Lender a continuing
security interest in and to all right, title and interest of the following:


 


(a)                        Pledged
Shares.  All of the following,
whether now or hereafter existing, which are owned by Debtor or in which Debtor
otherwise has any rights: the shares of stock of the Subsidiaries of Debtor
described in Exhibit A hereto and all certificates representing such
shares, all options and other rights, contractual or otherwise, at any time
existing with respect to such shares, and all dividends, cash, instruments and
other property now or hereafter received, receivable or otherwise distributed
in respect of or in exchange for any or all of such shares (any and all such shares,
certificates, options, rights, dividends, cash, instruments and other property
being herein called the “Pledged Shares”).


 


(b)                       Proceeds.  All proceeds of any and all of the foregoing
Collateral.


 


In each case, the foregoing shall be covered by this Agreement, whether
Debtor’s ownership or other rights therein are presently held or hereafter
acquired and however Debtor’s interests therein may arise or appear (whether by
ownership, security interest, claim or otherwise).


 


Section 2.2.                                   Secured
Obligations.  The security interest
created hereby in the Collateral constitutes continuing collateral security for
all of the following obligations, indebtedness and liabilities, whether now
existing or hereafter incurred or arising:


 


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(a)                        Credit
Agreement Indebtedness.  The payment
by Debtor, as and when due and payable, of all amounts from time to time owing
by Debtor under or in respect of the Credit Agreement, each Note, and any of
the other Obligation Documents, and the due performance by Debtor of all of its
other obligations under or in respect of the various Obligation Documents.


 


(b)                       Renewals.  All renewals, extensions, amendments,
modifications, supplements, or restatements of or substitutions for any of the
foregoing.


 


(c)                        Swap
Obligations.  All obligations of any
Related Person to any Lender or any Affiliate of any Lender under or pursuant
to a Swap Agreement between any Related Person and such Lender or any Affiliate
of such Lender.


 


As used herein, the term “Secured Obligations” refers to all present
and future indebtedness, obligations, and liabilities of whatever type which
are described above in this section, including any interest which accrues after
the commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of the Debtor.  It is the intention of the Debtor and Secured
Party that this Agreement not constitute a fraudulent transfer or fraudulent
conveyance under any state or federal law that may be applied hereto.  Debtor hereby agrees that its obligations
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under Section 548
of the Bankruptcy Code (Title 11, United States Code) or any comparable
provisions of any applicable state law.


 


ARTICLE III — Representations,
Warranties and Covenants


 


Section 3.1.                                   Representations
and Warranties.  Debtor hereby
represents and warrants to Secured Party and the Lenders as follows:


 


(a)                        Ownership
Free of Liens.  Debtor has good and
marketable title to the Collateral free and clear of all Liens, encumbrances or
adverse claims, except for the security interest created by this Agreement and
the security interest in favor of Bank of America, N.A., as collateral agent,
pursuant to the Prudential Pledge Agreement. 
No dispute, right of setoff, counterclaim or defense exists with respect
to all or any part of the Collateral.  No
effective financing statement or other instrument similar in effect covering
all or any part of the Collateral is on file in any recording office except any
which have been filed in favor of Secured Party relating to this Agreement and
any which have been filed in favor of Bank of America, N.A., as collateral
agent, relating to the Prudential Pledge Agreement.


 


(b)                       No
Conflicts or Consents.  Neither the
ownership or the intended use of the Collateral by Debtor, nor the grant of the
security interest by Debtor to Secured Party


 


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herein, nor the exercise by Secured Party of its rights or remedies
hereunder, will (i) conflict with any provision of (a) the articles
or certificate of incorporation or bylaws of Debtor or any similar charter
documents of any Issuer, or (b) any agreement, judgment, license, order or
permit applicable to or binding upon Debtor or any Issuer, or (ii) result
in or require the creation of any Lien, charge or encumbrance upon any material
assets or properties of Debtor or of any Issuer or Related Person except as
expressly contemplated in the Obligation Documents.  Except as expressly contemplated in the
Obligation Documents (including, without limitation, Section 6.13 of the
Credit Agreement), no consent, approval, authorization or order of, and no
notice to or filing with, any court, governmental authority, Issuer or third
party is required in connection with the grant by Debtor of the security
interest herein, or the exercise by Secured Party of its rights and remedies
hereunder.


 


(c)                        Security
Interest.  Debtor has and will have
at all times full right, power and authority to grant a security interest in
the Collateral to Secured Party as provided herein, free and clear of any Lien,
adverse claim, or encumbrance except for the Liens in favor of Bank of America,
N.A., as collateral agent, pursuant to the Prudential Pledge Agreement.


 


(d)                       Perfection.  The taking possession by Secured Party of all
certificates, instruments and cash constituting Collateral from time to time
and the filing of financing statements with the Secretary of State (or
equivalent governmental official) of the State in which Debtor is organized
will perfect, and establish the first priority of (subject only to any Liens in
favor of Prudential in accordance with and subject to the terms of the
Intercreditor Agreement), Secured Party’s security interest hereunder in the
Collateral securing the Secured Obligations. 
No further or subsequent filing, recording, registration, other public
notice or other action is necessary or desirable to perfect or otherwise
continue, preserve or protect such security interest except (i) for
continuation statements described in UCC Section 9.515(d), (ii) for
filings required to be filed in the event of a change in the name, identity, or
corporate structure of Debtor, or (iii) in the event any financing
statement filed by Secured Party relating hereto otherwise becomes inaccurate
or incomplete.


 


(e)                        Location
of Debtor and Records.  Debtor’s
chief executive office and principal place of business and the office where the
records concerning the Collateral are kept is located at 1099 18th Street, Suite 1200, Denver, Colorado
80202.


 


(f)                          Pledged
Shares.  Debtor has delivered to
Secured Party all certificates evidencing Pledged Shares.  All such certificates are valid and genuine
and have not been altered.  All shares
and other securities constituting the Pledged Shares have been duly authorized
and validly issued, are fully paid and non-assessable, and were not issued in
violation of the preemptive rights of any Person or of any agreement by which
Debtor or the Issuer thereof is bound. 
All documentary, stamp or other taxes or fees owing in connection with
the issuance, transfer or pledge of Pledged Shares (or rights in respect
thereof) have been paid.  No restrictions
or conditions exist with respect to the transfer,


 


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voting or capital of any Pledged Shares under the documentation
governing such Pledged Shares.  The
Pledged Shares constitute sixty-five percent (65%) of the shares of capital
stock of each Issuer that is a corporation. 
No Issuer of any Pledged Shares has any outstanding stock rights, rights
to subscribe, options, warrants or convertible securities outstanding or any
other rights outstanding whereby any Person would be entitled to have issued to
him capital stock of such Issuer.  The
Pledged Shares do not constitute “margin stock” as such term is defined in
Regulation U promulgated by the Board of Governors of the Federal Reserve
System.


 


Section 3.2.                                   Affirmative
Covenants.  Unless Secured Party
shall otherwise consent in writing after having received the consent of the
Required Lenders, Debtor will at all times comply with the covenants contained
in this Section 3.2 from the date hereof and so long as any part of the
Secured Obligations or the Commitment is outstanding.


 


(a)                        Ownership
and Liens.  Debtor will maintain good
and marketable title to all Collateral free and clear of all Liens,
encumbrances or adverse claims, except for the security interest created by
this Agreement and the security interest created by the Prudential Pledge
Agreement.  Debtor will defend Secured
Party’s right, title and special property and security interest in and to the
Collateral against the claims of any Person.


 


(b)                       Further
Assurances.  Debtor will, at its
reasonable expense and at any time and from time to time, promptly execute and
deliver all further instruments and documents and take all further action that
may be reasonably necessary or that Secured Party may reasonably request in
order (i) to perfect and protect the security interest created or
purported to be created hereby and the priority of such security interest as
stated herein; (ii) to enable Secured Party to exercise and enforce its
rights and remedies hereunder in respect of the Collateral; or (iii) to
otherwise effect the purposes of this Agreement, including but not limited to: (A) executing
and filing such financing or continuation statements, or amendments thereto, as
may be reasonably necessary or desirable or that Secured Party may request in
order to perfect and preserve the security interest created or purported to be
created hereby; and (B) furnishing to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.


 


(c)                        Inspection
and Information.  Debtor will furnish
to Secured Party and each Lender any information which Secured Party may from
time to time reasonably request on behalf of itself or any Lender concerning
the Collateral, any covenant, provision or condition of this Agreement, or any
matter in connection with Debtor’s businesses and operations.  Debtor shall permit representatives and
independent contractors of the Secured Party to make such visitations and
inspections on the terms as provided in Section 6.10 of the Credit
Agreement.  Secured party and each Lender
hereby agree that it will, at all times, abide by the terms of Section 10.08
of the Credit Agreement regarding treatment of confidential information.


 


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(d)                       Delivery
of Pledged Shares.  All instruments,
certificates and writings evidencing the Pledged Shares shall be delivered to
Secured Party on or prior to the execution and delivery of this Agreement,
together with a true and correct copy of the articles of incorporation, and
bylaws or other organizational documents of each Issuer and all amendments and supplements
thereto.  All other instruments,
certificates and writings hereafter evidencing or constituting Pledged Shares
and all amendments or supplements to the articles of incorporation, or bylaws
(whether or not authorized hereunder) shall be delivered to Secured Party
promptly upon the receipt thereof by or on behalf of Debtor.  All such Pledged Shares shall be held by or
on behalf of Secured Party pursuant hereto and shall be delivered in suitable
form for transfer by delivery with any necessary endorsement or shall be
accompanied by fully executed instruments of transfer or assignment in blank,
all in form and substance reasonably satisfactory to Secured Party.


 


(e)                        Proceeds
of Pledged Shares.  If Debtor shall
receive, by virtue of its being or having been an owner of any Pledged Shares,
any (i) certificate evidencing shares of stock (including any certificate
representing a stock dividend or distribution in connection with any increase
or reduction of capital, reorganization, reclassification, merger, consolidation,
sale of assets, combination of shares, stock split, spinoff or split-off),
promissory note or other instrument or writing; (ii) option or right,
whether as an addition to, substitution for, or in exchange for, any Pledged
Shares, or otherwise; (iii) dividends payable in cash (except such
dividends permitted to be retained by Debtor pursuant to Section 4.8
hereof) or in securities or other property, or (iv) dividends or other
distributions in connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in
surplus, if an Event of Default shall have occurred and be continuing, Debtor
shall receive the same in trust for the benefit of Secured Party, shall
segregate it from Debtor’s other property, and shall promptly deliver it to
Secured Party in the exact form received, with any necessary endorsement or
appropriate stock powers duly executed in blank, to be held by Secured Party as
Collateral.


 


(f)                          Status
of Pledged Shares.  The certificates
evidencing the Pledged Shares shall at all times be valid and genuine and shall
not be altered.  The Pledged Shares at
all times shall be duly authorized, validly issued, fully paid, and non-assessable,
and shall not be issued in violation of the pre-emptive rights of any Person or
of any agreement by which Debtor or the Issuer thereof is bound and shall not
be subject to any restrictions, other than as may be imposed by the laws or
regulations of the province of Nova Scotia, if applicable, with respect to
transfer, voting or capital of such Pledged Shares.


 


(g)                       Notices
from Issuer.  Debtor will promptly
deliver to Secured Party a copy of each notice or other communication received
by Debtor from any Issuer in respect of any Pledged Shares.


 


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Section 3.3.                                   Negative
Covenants.  Unless Secured Party
shall otherwise consent in writing after having received the consent of the
Required Lenders, Debtor will at all times comply with the covenants contained
in the Credit Agreement and in this Section 3.3 from the date hereof and
so long as any part of the Secured Obligations or the Commitment is
outstanding.


 


(a)                        Transfer
or Encumbrance.  Except as expressly
allowed under the Credit Agreement, without the prior written consent of
Required Lenders, Debtor will not sell, assign (by operation of law or
otherwise), transfer, exchange or otherwise dispose of any of the Collateral,
nor will Debtor grant a Lien upon or execute, file or record any financing statement
or other registration with respect to the Collateral, nor will Debtor allow any
such Lien, financing statement, or other registration to exist or deliver
actual or constructive possession of the Collateral to any other Person, other
than Liens, financing statements or other registrations in favor of Secured
Party and Bank of America, N.A., as collateral agent, pursuant to the
Prudential Pledge Agreement.


 


(b)                       Financing
Statement Filings.  Debtor recognizes
that financing statements pertaining to the Collateral have been or may be
filed with the secretary of state (or equivalent governmental official) of the
state in which Debtor is organized. 
Without limitation of any other covenant herein, Debtor will not cause or
permit any change to be made in its name identity or corporate structure, or
any change to be made to its jurisdiction of organization, unless Debtor shall
have notified Secured Party of such change at least thirty (30) days prior to
the effective date of such change, and shall have first taken all action
reasonably required by Secured Party for the purpose of further perfecting or
protecting the security interest in favor of Secured Party in the
Collateral.  In any notice furnished
pursuant to this subsection, Debtor will expressly state that the notice is
required by this Agreement and contains facts that may require additional
filings of financing statements or other notices for the purposes of continuing
perfection of Secured Party’s security interest in the Collateral.


 


(c)                        Dilution
of Shareholdings.  Debtor will not
permit the issuance of (i) any additional shares of any class of capital
stock of any Issuer (unless immediately upon issuance the same are pledged and
delivered to Secured Party pursuant to the terms hereof to the extent necessary
to give Secured Party a first priority security interest (subject only to any
security interest in favor of Prudential in accordance with and subject to the
terms of the Intercreditor Agreement) after such issue in at least the same
percentage of such Issuer’s outstanding shares as Debtor had before such
issue), (ii) any securities convertible voluntarily by the holder thereof
or automatically upon the occurrence or non-occurrence of any event or
condition into, or exchangeable for, any such shares of capital stock, or (iii) any
warrants, options, contracts or other commitments entitling any Person to
purchase or otherwise acquire any such shares of capital stock not outstanding
as of the date of this Agreement.


 


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(d)                       Restrictions
on Pledged Shares.  Debtor will not
enter into any agreement creating, or otherwise permit to exist, any
restriction or condition upon the transfer, voting or control of any Pledged
Shares except under the Debt Securities.


 


ARTICLE IV — Remedies, Powers and
Authorizations


 


Section 4.1.                                   Provisions
Concerning the Collateral.


 


(a)                        Additional
Filings.  Debtor hereby authorizes
Secured Party to file, without the signature of Debtor where permitted by law,
one or more financing or continuation statements, and amendments thereto,
relating to the Collateral.  Debtor
further agrees that a carbon, photographic or other reproduction of this
Agreement or of any financing statement describing any Collateral is sufficient
as a financing statement and may be filed in any jurisdiction by Secured Party
as it may deem appropriate.


 


(b)                       Power of
Attorney.  Debtor hereby irrevocably
appoints Secured Party as Debtor’s attorney-in-fact and proxy, with full
authority in the place and stead of Debtor and in the name of Debtor or
otherwise, from time to time in Secured Party’s discretion, upon the occurrence
and during the continuance of an Event of Default, to take any action, and to
execute or indorse any instrument, certificate or notice, which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement
including any action or instrument: (i) to request or instruct each Issuer
(and any registrar, transfer agent, or similar Person acting on behalf of each
Issuer) to register the pledge or transfer of the Collateral to Secured Party; (ii) to
otherwise give notification to any Issuer (or any such registrar, transfer
agent, financial intermediary, or other Person) of Secured Party’s security
interests hereunder; (iii) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral; (iv) to receive,
indorse and collect any drafts or other instruments or documents; (v) to
enforce any obligations included among the Collateral; and (vi) to file
any claims or take any action or institute any proceedings which Secured Party
may deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce, perfect, or establish the priority of the rights of
Secured Party with respect to any of the Collateral.  Debtor hereby acknowledges that such power of
attorney and proxy are coupled with an interest, and are irrevocable.


 


(c)                        Performance
by Secured Party.  If Debtor fails to
perform any agreement or obligation contained herein, Secured Party may itself
perform, or cause performance of, such agreement or obligation, and the
reasonable expenses of Secured Party incurred in connection therewith shall be
payable by Debtor under Section 4.5.


 


Section 4.2.                                   Remedies.  If an Event of Default shall have occurred
and be continuing, Secured Party may from time to time in its discretion,
except as limited by any regulatory


 


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approvals, requests or requirements, without limitation and without
notice except as expressly provided below (in each case subject to the
Intercreditor Agreement):


 


(a)                        exercise
in respect of the Collateral, in addition to any other rights and remedies provided
for herein, under the other Obligation Documents or otherwise available to it,
all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral);


 


(b)                       require
Debtor to, and Debtor hereby agrees that it will at its expense and upon
request of Secured Party, promptly assemble all or part of the Collateral as
directed by Secured Party and make it (together with all books, records and
information of Debtor relating thereto) available to Secured Party at a place
to be designated by Secured Party which is reasonably convenient to both
parties;


 


(c)                        reduce its
claim to judgment or foreclose or otherwise enforce, in whole or in part, the
security interest created hereby by any available judicial procedure;


 


(d)                       dispose of,
at its office, on the premises of Debtor or elsewhere, all or any part of the
Collateral, as a unit or in parcels, by public or private proceedings, and by
way of one or more contracts (it being agreed that the sale of any part of the
Collateral shall not exhaust Secured Party’s power of sale, but sales may be
made from time to time, and at any time, until all of the Collateral has been
sold or until the Secured Obligations have been paid and performed in full),
and at any such sale it shall not be necessary to exhibit any of the
Collateral;


 


(e)                        buy (or
allow one or more of the Lenders to buy) the Collateral, or any part thereof,
at any public sale;


 


(f)                          buy (or
allow one or more of the Lenders to buy) the Collateral, or any part thereof,
at any private sale if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations;


 


(g)                       apply by
appropriate judicial proceedings for appointment of a receiver for the
Collateral, or any part thereof, and Debtor hereby consents to any such
appointment;


 


(h)                       at its
discretion, retain the Collateral in satisfaction of the Secured Obligations
whenever the circumstances are such that Secured Party is entitled to do so
under the UCC or otherwise (provided that Secured Party shall in no
circumstances be deemed to have retained the Collateral in satisfaction of the
Secured Obligations in the absence of an express notice by Secured Party to
Debtor that Secured Party has either done so or intends to do so); and


 


(i)                           take
any other Enforcement Action.


 


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Debtor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days’ notice to Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. 
Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. 
Secured Party may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.


 


Section 4.3.                                   Application of
Proceeds. Whenever Secured Party applies any cash held by Secured Party as
Collateral, or any cash proceeds received by Secured Party in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral, the same shall be applied in the following order (subject to the
rights of Lenders under the Credit Agreement and subject to the terms of the
Intercreditor Agreement):


 


(a)                        To the
repayment of all costs and expenses, including reasonable attorneys’ fees and
legal expenses, incurred by Secured Party in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure of Debtor to perform or
observe any of the provisions hereof;


 


(b)                       To the
payment or other satisfaction of any Liens, encumbrances, or adverse claims
upon or against any of the Collateral (other than those arising pursuant to the
Prudential Pledge Agreement);


 


(c)                        To the
reimbursement of Secured Party for the amount of any obligations of Debtor or
any Other Liable Party paid or discharged by Secured Party (other than amounts
for principal and interest under the Notes) pursuant to the provisions of this
Agreement or the other Obligation Documents, and of any expenses of Secured
Party payable by Debtor hereunder or under the other Obligation Documents;


 


(d)                       To the
satisfaction of any other Secured Obligations to each Lender and Prudential in
accordance with its Proportionate Share (as defined in the Intercreditor
Agreement);


 


(e)                        By holding
the same as Collateral;


 


(f)                          To the
payment of any other amounts required by applicable law (including any
provision of the UCC); and


 


(g)                       By delivery
to Debtor or to whomever shall be lawfully entitled to receive the same or as a
court of competent jurisdiction shall direct.


 


12





















 


Each Lender hereby authorizes the Secured Party to remit to Prudential
any cash held as Collateral or cash proceeds at any time due to Prudential
pursuant to clause (d) above and the terms of the Intercreditor Agreement.


 


Section 4.4.                                   Deficiency.  In the event that the proceeds of any sale,
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Secured Obligations and any other amounts to which
Secured Party and Lenders are legally entitled, Debtor shall be liable for the
deficiency, together with interest thereon as provided in the governing
Obligation Documents or (if no interest is so provided) at such other rate as
shall be fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by Secured Party to collect such
deficiency.


 


Section 4.5.                                   Indemnity and
Expenses.  In addition to, but not in
qualification or limitation of, any similar obligations under other Obligation
Documents:


 


(a)                        Debtor
will indemnify Secured Party and each Lender from and against any and all
claims, losses and liabilities growing out of or resulting from this Agreement
(including enforcement of this Agreement), WHETHER
OR NOT SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT
OWED, IN WHOLE IN OR PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR
ARE CAUSED BY OR ARISE OUT OF SUCH INDEMNIFIED PARTY’S OWN NEGLIGENCE,
except to the extent such claims, losses or liabilities are proximately caused
by the indemnified party’s  individual
gross negligence or willful misconduct. 
As used in this Section 4.5, the terms “Secured Party” and “Lender”
shall include each director, officer, agent, attorney, employee, representative
and Affiliate of such Person.


 


(b)                       Debtor will
upon demand pay to Secured Party the amount of any and all reasonable costs and
expenses, including the reasonable fees and disbursements of Secured Party’s
counsel and of any experts and agents, which Secured Party may incur in
connection with (i) the transactions which give rise to this Agreement, (ii) the
preparation of this Agreement and the perfection and preservation of this
security interest created under this Agreement, (iii) the administration
of this Agreement; (iv) the custody, preservation, use or operation of, or
the sale of, collection from, or other realization upon, any Collateral; (v) the
exercise or enforcement of any of the rights of Secured Party hereunder; or (vi) the
failure by Debtor to perform or observe any of the provisions hereof, except
expenses resulting from Secured Party’s gross negligence or willful misconduct.


 


Section 4.6.                                   Non-Judicial
Remedies.  In granting to Secured
Party the power to enforce its rights hereunder without prior judicial process
or judicial hearing, Debtor expressly waives, renounces and knowingly relinquishes
any legal right which might otherwise require Secured Party to enforce its
rights by judicial process.  In so
providing for non-judicial remedies, Debtor recognizes and concedes that such
remedies are consistent with the usage of trade, are responsive


 


13





















 


to commercial necessity, and are the result of a bargain at arm’s
length.  Nothing herein is intended,
however, to prevent Secured Party or Debtor from resorting to judicial process
at its option.


 


Section 4.7.                                   Other Recourse.  Debtor waives any right to require Secured
Party or any Lender to proceed against any other Person, to exhaust any
Collateral or other security for the Secured Obligations, or to have any Other
Liable Party joined with Debtor in any suit arising out of the Secured
Obligations or this Agreement, or pursue any other remedy in Secured Party’s
power.  Debtor further waives any and all
notice of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Secured
Obligations of any Other Liable Party from time to time.  Debtor further waives any defense arising by
reason of any disability or other defense of any Other Liable Party or by
reason of the cessation from any cause whatsoever of the liability of any Other
Liable Party.  This Agreement shall
continue irrespective of the fact that the liability of any Other Liable Party
may have ceased and irrespective of the validity or enforceability of any other
Obligation Document to which Debtor or any Other Liable Party may be a party,
and notwithstanding any death, incapacity, reorganization, or bankruptcy of any
Other Liable Party or any other event or proceeding affecting any Other Liable
Party.  Until all of the Secured
Obligations shall have been paid in full, Debtor shall have no right to
subrogation and Debtor waives the right to enforce any remedy which Secured
Party or any Lender has or may hereafter have against any Other Liable Party,
and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Secured Party and each Lender.  Debtor authorizes Secured Party, without
notice or demand, without any reservation of rights against Debtor, and without
in any way affecting Debtor’s liability hereunder or on the Secured
Obligations, from time to time to (a) take or hold any other property of
any type from any other Person as security for the Secured Obligations, and
exchange, enforce, waive and release any or all of such other property, (b) apply
the Collateral or such other property and direct the order or manner of sale
thereof as Secured Party may in its discretion determine, subject to the
Intercreditor Agreement, (c) renew, extend for any period, accelerate,
modify, compromise, settle or release any of the obligations of any Other
Liable Party in respect to any or all of the Secured Obligations or other
security for the Secured Obligations, (d) waive, enforce, modify, amend,
restate or supplement any of the provisions of any Obligation Document with any
Person other than Debtor, and (e) release or substitute any Other Liable
Party.  Any action described in this Section 4.7
may be taken by Secured Party only in accordance with the Intercreditor
Agreement.


 


Section 4.8.                                   Voting Rights,
Dividends, Etc. in Respect of Pledged Shares 


 


(a)                        So long as
no Event of Default shall have occurred and be continuing Debtor may receive
and retain any and all dividends or interest paid in respect of the Pledged
Shares; provided, however, that any and all


 


(i)             dividends and interest paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of or in exchange for, any
Pledged Shares,


 


14





















 


(ii)          dividends and other distributions paid or
payable in cash in respect of any Pledged Shares in connection with a partial
or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, and


 


(iii)       cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Shares,


 


shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Shares and shall, if received by Debtor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Debtor, and be forthwith delivered to Secured Party in the exact form received
with any necessary indorsement or appropriate stock powers duly executed in blank,
to be held by Secured Party as Collateral.


 


(b)                       Upon the
occurrence and during the continuance of an Event of Default:


 


(i)             all rights of Debtor to receive and retain
the dividends and interest payments which it would otherwise be authorized to
receive and retain pursuant to subsection (a) of this section shall
automatically cease, and all such rights shall thereupon become vested in
Secured Party which shall thereupon have the sole right to receive and hold as
Pledged Shares such dividends and interest payments;


 


(ii)          without limiting the generality of the
foregoing, Secured Party may at its option (subject to the Intercreditor
Agreement) exercise any and all rights of conversion, exchange, subscription or
any other rights, privileges or options pertaining to any of the Pledged Shares
as if it were the absolute owner thereof, including, without limitation, the
right to exchange, in its discretion, any and all of the Pledged Shares upon
the merger, consolidation, reorganization, recapitalization or other adjustment
of any Issuer, or upon the exercise by any Issuer of any right, privilege or
option pertaining to any Pledged Shares, and, in connection therewith, to
deposit and deliver any and all of the Pledged Shares with any committee,
depository, transfer, agent, registrar or other designated agent upon such
terms and conditions as it may determine; and


 


(iii)       all dividends and interest payments which are
received by Debtor contrary to the provisions of subsection (b)(i) of
this section shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Debtor, and shall be forthwith paid
over to Secured Party as Pledged Shares in the exact form received, to be held
by Secured Party as Collateral.


 


Section 4.9.                                   Private Sale of
Pledged Shares.  Debtor recognizes
that Secured Party may deem it impracticable to effect a public sale of all or
any part of the Pledged Shares and that Secured Party may, therefore, determine
to make one or more private sales of any such securities to a restricted group
of purchasers who will be obligated to agree, among other things, to acquire


 


15





















 


such securities for their own account, for investment and not with a
view to the distribution or resale thereof. 
Debtor acknowledges that any such private sale may be at prices and on
terms less favorable to the seller than the prices and other terms which might
have been obtained at a public sale and, notwithstanding the foregoing, agrees
that such private sales shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no obligation to delay sale
of any such securities for the period of time necessary to permit the Issuer of
such securities to register such securities for public sale under the
Securities Act of 1933, as amended. 
Debtor further acknowledges and agrees that any offer to sell such
securities which has been (a) publicly advertised on a bona  fide
basis in a newspaper or other publication of general circulation in the
financial community of Denver, Colorado (to the extent that such an offer may
be so advertised without prior registration under the Securities Act), or (b) made
privately in the manner described above to not less than fifteen (15) bona
fide offerees shall be deemed to involve a “public disposition” for the
purposes of Section 9.610(c) of the UCC (or any successor or similar,
applicable statutory provision) as then in effect in the State of Texas,
notwithstanding that such sale may not constitute a “public offering” under the
Securities Act of 1933, as amended, and that Secured Party may, in such event,
bid for the purchase of such securities.


 


ARTICLE V — Miscellaneous


 


Section 5.1.                                   Notices.  Any notice or communication required or
permitted hereunder shall be given as provided in the Credit Agreement.


 


Section 5.2.                                   Amendments.  No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Debtor,
Secured Party, and Required Lenders (or Debtor and Secured Party with the prior
written consent of Required Lenders) and no waiver of any provision of this
Agreement, and no consent to any departure by Debtor therefrom, shall be
effective unless it is in writing and signed by Secured Party with the prior written
consent of Required Lenders, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given and
to the extent specified in such writing.


 


Section 5.3.                                   Preservation of
Rights.  No failure on the part of
Secured Party or any Lender to exercise, and no delay in exercising, any right
hereunder or under any other Obligation Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude
any other or further exercise thereof or the exercise of any other right.  Neither the execution nor the delivery of
this Agreement shall in any manner impair or affect any other security for the
Secured Obligations.  The rights and
remedies of Secured Party and each Lender provided herein and in the other
Obligation Documents are cumulative and are in addition to, and not exclusive
of, any rights or remedies provided by law. 
The rights of Secured Party and each Lender under any Obligation
Document against any party thereto are not conditional or contingent on any
attempt by Secured Party or such Lender to exercise any of its rights under any
other Obligation Document against such party or against any other Person.


 


16





















 


Section 5.4.                                   Unenforceability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.


 


Section 5.5.                                   Survival of
Agreements.  All representations and
warranties of Debtor herein, and all covenants and agreements herein shall
survive the execution and delivery of this Agreement, the execution and
delivery of any other Obligation Documents and the creation of the Secured
Obligations.


 


Section 5.6.                                   Other Liable
Party.  Neither this Agreement nor
the exercise by Secured Party or the failure of Secured Party to exercise any
right, power or remedy conferred herein or by law shall be construed as
relieving any Other Liable Party from liability on the Secured Obligations or
any deficiency thereon.  This Agreement
shall continue irrespective of the fact that the liability of any Other Liable
Party may have ceased or irrespective of the validity or enforceability of any
other Obligation Document to which Debtor or any Other Liable Party may be a
party, and notwithstanding the reorganization, death, incapacity or bankruptcy
of any Other Liable Party, and notwithstanding the reorganization or bankruptcy
or other event or proceeding affecting any Other Liable Party.


 


Section 5.7.                                   Binding Effect
and Assignment.  This Agreement
creates a continuing security interest in the Collateral and (a) shall be
binding on Debtor and its successors and permitted assigns and (b) shall
inure, together with all rights and remedies of Secured Party hereunder, to the
benefit of Secured Party that inure to the benefit of such Lender, and their
respective successors, transferees and assigns. 
Without limiting the generality of the foregoing, each Lender may
(except as otherwise provided in and subject to the Credit Agreement and the
Intercreditor Agreement) pledge, assign or otherwise transfer any or all of its
rights under any or all of the Obligation Documents to any other Person, and
such other Person shall thereupon become vested with all of the benefits in
respect thereof, herein or otherwise in accordance with the Credit
Agreement.  None of the rights or duties
of Debtor hereunder may be assigned or otherwise transferred without the prior
written consent of Secured Party.


 


Section 5.8.                                   Termination.  It is contemplated by the parties hereto that
there may be times when no Secured Obligations are outstanding, but
notwithstanding such occurrences, this Agreement shall remain valid and shall
be in full force and effect as to subsequent outstanding Secured
Obligations.  Upon the satisfaction in
full of the Secured Obligations, upon the termination or expiration of the
Credit Agreement and the Commitment, and upon written request for the
termination hereof delivered by Debtor to Secured Party, this Agreement and the
security interest created hereby shall terminate and all rights to the
Collateral shall revert to Debtor. 
Secured Party will, upon Debtor’s request and at Debtor’s reasonable
expense, (a) return to Debtor such of the Collateral as shall not have
been sold or otherwise disposed of or applied pursuant to the terms hereof; and
(b) execute and deliver to Debtor such documents as Debtor shall
reasonably request to evidence such termination.


 


17





















 


SECTION 5.9.      FINAL
AGREEMENT.  THIS WRITTEN AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES HERETO.


 


Section 5.10.                             Loan Document.  This Agreement is a “Loan Document”, as
defined in the Credit Agreement, and, except as expressly provided herein to
the contrary, this Agreement is subject to all provisions of the Credit
Agreement governing such Loan Documents.


 


Section 5.11.                             Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas applicable to
contracts made and to be performed entirely within such State, except as
required by mandatory provisions of law and except to the extent that the
perfection and the effect of perfection or non-perfection of the security
interest created hereunder, in respect of any particular collateral, are
governed by the laws of a jurisdiction other than such State.


 


Section 5.12.                             Counterparts.  This Agreement may be separately executed in
any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.


 


[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]


 


18





















 


IN WITNESS WHEREOF, Debtor, has caused this Agreement to be executed
and delivered by its duly authorized officer, as of the date first above
written.


 


 


	
   

  	
  WESTERN POWER SERVICES, INC., as Debtor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William J. Krysiak

  	
   

  
	
   

  	
   

  	
  William J. Krysiak

  
	
   

  	
   

  	
  Executive Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  



 





















 


EXHIBIT A


 


Corporations


 


	
  Issuer

  	
   

  	
  Certificate No.

  	
   

  	
  No. of Shares

  	
   

  	
  Class

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Western Gas Resources Canada Company

  	
   

  	
  4

  	
   

  	
  65

  	
   

  	
  Common