Document:

Exhibit 10.6

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (this “Agreement”),
effective as of July 6, 2006, between Western Gas Resources, Inc., a Delaware
corporation (the “Company”), and John C. Walter (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; and

 

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

 

NOW, THERFORE, 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:

 

(i)                                     The acquisition by
any individual, entity or group (within the meaning of Section 12(d) (3) or
13(d) (2) of the Exchange Act (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than
thirty-five (35%) percent of either (A) the then outstanding shares of common
stock of the 

 

 

Company (the “Outstanding Common Stock”) or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Voting Securities”); provided,
however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change in Control: (A) any acquisition by
the Company, (B) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or (C) any acquisition by any entity pursuant to a transaction
which complies with Subsection 1(a)(iii); or

 

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

 

(iii)                               Consummation
of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a “Business Combination”),
in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Common Stock and Outstanding Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the entity resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Common Stock and Outstanding Voting Securities,
as the case may be, and (B) no person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 35% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the 

 

 

time of the execution of the initial agreement, or of the
action of the Incumbent Board providing for such Business Combination; or

 

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

 

(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, by
reason of any action taken by Indemnitee or of any inaction on Indemnitee’s
part while acting as a director, officer, employee or agent or by reason of the
fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, limited liability company or other enterprise; in each case
whether or not Indemnitee is acting or serving in any such capacity at the time
any liability or expense is incurred for which indemnification or reimbursement
can be provided under this Agreement; provided that any such action, suit or
proceeding which is brought by Indemnitee against the Company or directors,
officers, employees or agents of the Company shall not be deemed a Claim,
except (i) with respect to actions or proceedings to establish or enforce
a right to indemnify under this Agreement or any other agreement or insurance
policy or under the Company’s Certificate of Incorporation or Bylaws now or
hereafter in effect relating to Claims for Indemnifiable Events (as defined
below), (ii) in specific cases if the Board of Directors has approved the
initiation or bringing of such Claim, or (iii) as otherwise required under
the Delaware General Company Law (“DGCL”), regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advance
expense payment or insurance recovery, as the case may be.

 

(c)                                  Costs:              all Expenses, judgments, fines, penalties
and amounts paid in settlement (including all 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) related to or arising as a result of any Claim.

 

(d)                                 Expenses:
shall include, without limitation, 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.

 

(e)                                  Indemnifiable Event: any
event or occurrence, act or omission to act, 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,
including, without limitation, under the
Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as 

 

 

amended (the “Exchange Act”) or other federal or state statutory law or regulation, at
common law or otherwise, and which may relate directly or indirectly to the
registration, purchase, sale or ownership of any securities of the Company or
to any fiduciary obligation owed with respect thereto.

 

(f)                                    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 three years (other than with
respect to matters concerning the rights of Indemnitee under this Agreement, or
of other indemnitees under similar indemnity agreements).

 

(g)                                 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; or (iii) the Board adopts a resolution to the
effect that, for purposes of this Agreement, a Potential Change in Control has
occurred.

 

(h)                                 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.

 

(i)                                     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, defend and
hold harmless Indemnitee to the fullest extent permitted by law,
even if such indemnification is not specifically authorized by the other
provisions of this Agreement, the Company’s Certificate of Incorporation,
Bylaws or by statute. In the event of any change after the date of this
Agreement in any applicable law, statute or rule which expands the right of a
Delaware corporation to indemnify a member of its Board of Directors or an
officer, employee, controlling person, agent or fiduciary, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits afforded by such change. In the event of any change in any applicable
law, statute or rule which narrows the right of a Delaware corporation to
indemnify a member of its Board of Directors or an officer, employee, agent or
fiduciary, such change, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement, shall have no effect on this
Agreement or the parties’ rights and obligations hereunder.

 

(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 4
hereof is involved) that Indemnitee would not be permitted to be indemnified
under applicable law.

 

(c)                                  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”). Such obligation of the Company to make an Expense Advance shall be
subject to Indemnitee having made the undertaking in Section 8 and 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 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, the Reviewing Party shall be the Independent Legal Counsel
referred to in Section 4 hereof.

 

(e)                                  Any indemnification under this Agreement, other than pursuant to
Section 2(c) above, shall be made no later than 60 days after receipt by the
Company of the written request of Indemnitee, accompanied by substantiating
documentation of the Costs incurred by or for Indemnitee and shall not require
evidence that Indemnitee has previously paid such costs. If there has been no
determination by the Reviewing Party within 60 days after written request by
Indemnitee or if the Reviewing Party determines that Indemnitee substantively
would not be permitted to be indemnified in whole or in part under 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 any 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 end 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) from conduct finally adjudged as violating
federal or state securities laws for “insider trading”; (iii) from conduct
finally adjudged as constituting active or deliberate dishonesty or willful
fraud or illegality; (iv) from conduct finally adjudged as producing an,
unlawful personal benefit to Indemnitee; (v) from any disgorgement of bonus or
other incentive-based or equity based compensation or profits from the sale of
securities as the result of a 

 

 

restatement
pursuant to Section 304 of the Sarbanes-Oxley Act, or (vi) prior to a Change of
Control and except to enforce this Agreement, under any Claim initiated by the
Indemnitee unless the Board of Directors of the Company shall have authorized
or consented to such Claim.

 

3.                                       Contribution.                         If the indemnification provided for in
Section 2 for any reason is held by a court of competent jurisdiction to be
unavailable to an Indemnitee in respect of any losses, claims, damages,
expenses or liabilities referred to therein, then the Company, in lieu of
indemnifying Indemnitee thereunder, shall contribute to the amount paid or
payable by Indemnitee as a result of such losses, claims, damages, expenses or
liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and Indemnitee, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
Indemnitee in connection with the action or inaction which resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In connection with the registration of the Company’s
securities, the relative benefits received by the Company and Indemnitee shall
be deemed to be in the same respective proportions that the net proceeds from
the offering (before deducting expenses) received by the Company and the
Indemnitee, in each case as set forth in the table on the cover page of the
applicable prospectus, bear to the aggregate public offering price of the
securities so offered. The relative fault of the Company and Indemnitee shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or Indemnitee
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

 

The Company and Indemnitee agree that it
would not be just and equitable if contribution pursuant to this Section 3 were
determined by pro rata or per capita allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. In connection with any registration
of the Company’s securities, in no event and notwithstanding the other
provisions of this Section 3 shall an Indemnitee be required to contribute
any amount hereunder in excess of the lesser of (i) that proportion of the
total of such losses, claims, damages or liabilities indemnified against equal
to the proportion of the total securities sold under such registration
statement that is being sold by Indemnitee or (ii) the proceeds received
by Indemnitee from its sale of securities under such registration statement. No
person found guilty of fraudulent misrepresentation (within the meaning of
Section 10(f) of the Securities Act) shall be entitled to contribution from any
person who was not found guilty of such fraudulent misrepresentation.

 

4.                                       Change in Control. The Company agrees that if there is a
Change in Control of the Company 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 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.

 

5.                                       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,
provide an irrevocable letter of credit, or other collateral or other financial arrangement satisfactory to
Indemnitee, 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 end all Claims relating to en 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) (whether in cash or an
irrevocable letter of credit) 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 (vi) 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.

 

6.                                       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) make an Expense Advance to
Indemnitee, which are incurred by Indemnitee in connection with any action
brought by Indemnitee for (i) indemnification or an Expense Advance 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, Expense Advance or insurance recovery, as the case may be,
unless, as a part of such action, a court of competent jurisdiction over such
action determines that the material assertions made by Indemnitee as a basis
for such action were not made in good faith or were frivolous.

 

7.                                       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.

 

8.                                       Undertaking by Indemnitee. Indmenitee hereby undertakes to repay to the Company any Expense
Advance pursuant to Section 2 to the extent that it is ultimately determined
that Indemnitee is not entitled to indemnification in accordance with the
provisions of Section 2.

 

9.                                       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.

 

10.                                 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 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 mat 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.

 

11.                                 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 DGCL or otherwise.

 

12.                                 Liability Insurance.

 

(a)                                  The
Company hereby covenants and agrees that, so long as the Indemnitee shall
continue to serve as a member of its Board of Directors or an officer,
employee, controlling person, agent or fiduciary of the Company and thereafter
so long as the Indemnitee shall be subject to any possible Claim by reason of
the fact that the 

 

 

Indemnitee
was a member of its Board of Directors or an officer, employee, controlling
person, agent or fiduciary of the Company, the Company shall promptly maintain
in full force and effect directors’ and officers’ liability insurance
in reasonable amounts from established and reputable insurers.

 

(b)                                 In
all policies of directors’ and officers’ liability insurance,
the Indemnitee shall be named as an insured in such a manner as to provide the
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company’s directors, if the Indemnitee is a director; or of the
Company’s officers, if the Indemnitee is not a director of the Company but is
an officer; or of the Company’s key employees, if the Indemnitee is not a
director or officer of the Company.

 

(c)                                  If,
at the time of the receipt by the Company of a notice of a Claim pursuant to
Section 2(a) hereof, the Company has liability insurance in effect which may
cover such Claim, the Company shall give prompt notice of the commencement of
such Claim to the insurers in accordance with the procedures set forth in each
of the Company’s policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of Indemnitee, all
amounts payable as a result of such action, suit, proceeding, inquiry or
investigation in accordance with the terms of such policies.

 

13.                                 Choice
of Counsel. If Indemnitee is not an officer of the
Company, Indemnitee, together with the other directors who are not officers of
the Company (the “Outside Directors”), shall be entitled to employ,
and be reimbursed for the fees and disbursements of, counsel separate from that
chosen by Indemnitees who are officers of the Company. The principal counsel
for Outside Directors (“Principal Counsel”) shall be determined by
majority vote of the Outside Directors, and the Principal Counsel for the
Indemnitees who are not Outside Directors (“Separate
Counsel”) shall be
determined by majority vote of such Indemnitees. The obligation of the Company
to reimburse Indemnitee for the fees and disbursements of counsel hereunder
shall not extend to the fees and disbursements of any counsel employed by
Indemnitee other than Principal Counsel or Separate Counsel, as the case may
be, provided that (i) Indemnitee shall have the right to employ Indemnitee’s
counsel in any such Claim at Indemnitee’s expense and (ii) if (A) the
employment of counsel by Indemnitee has been previously authorized by the Company,
(B) Indemnitee shall have reasonably concluded with the advice of counsel
that there is a substantial possibility that Principal Counsel or Separate
Counsel, as the case may be, will have a conflict of interest in representing
Indemnitee, or (C) the Company shall not continue to retain Principal
Counsel or Separate Counsel, as the case may be, to defend such Claim, then the
fees and expenses of Indemnitee’s counsel shall be at the expense of the
Company

 

14.                                 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.

 

 

15.                                 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.

 

16.                                 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.

 

17.                                 Settlement of Claims. The
Company shall not be liable to indemnify indemnitee under this Agreement for
any amounts paid in settlement of any Claim effected without the Company’s
prior written consent. The Company shall not settle any Claim in any manner
which would impose any penalty or limitation on Indemnitee without Indemnitee’s
prior written consent. Neither the Company nor Indemnitee will unreasonably
withhold or delay their consent to any proposed settlement. The Company shall
not be liable to indemnify Indemnitee under this Agreement with regard to any
judicial award if the Company was not given a reasonable and timely
opportunity, at its expense, to participate in the defense of such action.

 

18.                                 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.

 

19.                                 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.

 

20.                                 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.

 

21.                                 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.

 

[Signature Page
Follows]

 

 

IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of July 6, 2006.

 

 

	
   

  	
  WESTERN GAS RESOURCES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter A. Dea

  	
   

  
	
   

  	
  Name: Peter A. Dea

  
	
   

  	
  Title:

  	
  President and Chief Executive 

  
	
   

  	
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John C. Walter

  	
   

  
	
   

  	
  Name: John C. WalterExhibit 10.7

 

EMPLOYMENT AGREEMENT

 

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

 

WITNESSETH:

 

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

 

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

 

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

 

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

 

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

 

1.                                      Definitions.

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

3.                                      Powers, Duties and Responsibilities.

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

9.                                      Confidential Information and Nondisclosure.

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                  Employee’s death.

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                  Severance Pay.

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

Western Gas Resources, Inc.

1099 18th Street, Suite 1200

Denver, Colorado 80202

 

10

 

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

 

	
  Edward A. Aabak

  
	
   

  	
   

  

 

20.                               Miscellaneous.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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.

 

12

 

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

 

 

	
   

  	
  CORPORATION: 

  
	
   

  	
   

  
	
   

  	
  WESTERN GAS RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Peter A. Dea

  	
   

  
	
   

  	
  Name:

  	
  Peter A. Dea

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
  /s/ Edward A. Aabak

  	
   

  
	
   

  	
  Name: 
  Edward A. Aabak

  
							

 

13

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