AMENDED AND RESTATED INTERCREDITOR AGREEMENT

 

“ Bank Guaranty ”) which amends and restates the Guaranty dated as of June 29, 2004 from each Guarantor in favor of the Banks and the Agent;

 

WHEREAS, the Company and the Initial Prudential Noteholders have entered into that certain Third Amended and Restated Master Shelf Agreement dated as of December 19, 1991 and effective as of January 13, 2003 (herein, as from time to time amended, supplemented or restated, called the “ Prudential Agreement ”), which amended and restated the Master Shelf Agreement dated as of December 19, 1991 between the Company and PICA;

 

WHEREAS, the Company has issued and may hereafter issue Senior Notes pursuant to the Prudential Agreement, in each case evidencing indebtedness of the Company to the Initial Prudential Noteholders and all subsequent holders of Prudential Notes;

 

WHEREAS, each Guarantor has heretofore executed and delivered to Prudential its guaranty (herein, as amended from time to time, collectively called the “ Prudential Guaranties ”), guaranteeing payment of obligations of the Company to Prudential, for itself and on behalf of the Initial Prudential Noteholders under the Prudential Agreement and all subsequent holders of Prudential Notes under the Prudential Agreement, arising under or in connection with the Prudential Notes and the Prudential Agreement and, to the extent any Prudential Affiliate enters into a Swap Contract, any such Swap Contract (by amendment to the Prudential Guaranties);

 

WHEREAS, hereafter subsidiaries of the Company may from time to time issue additional guaranties in favor of the Banks or any of them in connection with the Bank Agreement, in favor of any Swap Lenders in connection with any Swap Contracts, or in favor of Prudential in connection with the Prudential Notes and the Prudential Agreement (any such guaranties herein being called “ Additional Guaranties ” and any subsidiaries executing Additional Guaranties herein being called the “ Additional Guarantors ”);

 

WHEREAS, the Company has executed and delivered to the Agent for the benefit of the Banks that certain Amended and Restated Stock Pledge Agreement of even date herewith (as from time to time supplemented, amended or restated, the “ Company Pledge Agreement ”), which amends and restates in its entirety the Pledge Agreement dated as of June 29, 2004, pursuant to which the Company has granted to the Agent a security interest in all of its ownership interests in certain of its subsidiaries (the “ Domestic Subsidiaries ”);

 

WHEREAS , Western Power Services, Inc. (“Power”) has executed and delivered to Agent for the benefit of the Banks that certain Foreign Subsidiary Stock Pledge Agreement of even date herewith (as from time to time supplemented amended or restated the “ Foreign Subsidiary Pledge Agreement ”, pursuant to which Power has granted to Agent a security interest in sixty five percent (65%) of its ownership interest in Western Gas Resources Canada Company.

 

WHEREAS, the Company has executed and delivered to Prudential 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),

 

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pursuant to which the Company has granted to Prudential, for itself and on behalf of the Initial Prudential Noteholders under the Prudential Agreement and all subsequent holders of the Prudential Notes under the Prudential Agreement, a security interest in all of its ownership interests in the Domestic Subsidiaries, and Power has executed and delivered to Prudential that certain Foreign Subsidiary Stock Pledge Agreement of even date herewith, pursuant to which Power has granted to Bank of America, N.A., as collateral agent thereunder, for itself and on behalf of the Initial Prudential Noteholders under the Prudential Agreement and all subsequent holders of the Prudential Notes under the Prudential Agreement a security interest in sixty-five percent (65%) of its ownership interest in Western Gas Resources Canada Company, (such Pledge Agreements as from time to time amended, supplemented or restated herein being collectively called the “ Prudential Pledge Agreements ”);

 

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

 

WHEREAS, the Agent, the Collateral Agent, Prudential, and the Banks have entered into that certain Amended and Restated Intercreditor Agreement dated as of as of June 29, 2004 (as amended and supplemented to the date hereof, the “ Existing Intercreditor Agreement ”) to evidence their agreement with respect to certain payments that may be received by the Lenders under or in connection with the Subject Guaranties and the Pledge Agreements; and

 

WHEREAS, the Lenders desire to amend and restate the Existing Intercreditor Agreement as provided herein;

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Lenders hereby agree that the Existing Intercreditor Agreement is hereby amended and restated to read in its entirety as follows:

 

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

 

“ Acceleration Event ” means (i) the failure by the Company to pay in full the outstanding principal balance of and any accrued and unpaid interest on any Note on the final maturity date of such Note; (ii) the acceleration of the outstanding principal balance of and any accrued and unpaid interest on, any Note by any Lender or by any person or entity acting on behalf of any Lender; or (iii) any of the Debtor Parties (A) suffers the entry against it of a judgment, decree or order or relief by a court of competent jurisdiction in an involuntary proceeding commenced under any applicable bankruptcy, insolvency or other similar law of any jurisdiction now or hereafter in effect, including the federal Bankruptcy Code, as from time to time amended, or has any such proceeding commenced against it which remains undismissed for a period of sixty days; (B) commences a voluntary case under any applicable bankruptcy,

 

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insolvency or similar law now or hereafter in effect, including the federal Bankruptcy Code, as from time to time amended; or applies for or consents to the entry of an order for relief in an involuntary case under any such law; or makes a general assignment for the benefit of creditors; or fails generally to pay (or admits in writing its inability to pay) its debts as such debts become due; or takes corporate or other action to authorize any of the foregoing; or (C) suffers the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of all or a substantial part of its assets in a proceeding brought against or initiated by it, and such appointment or taking possession is neither made ineffective nor discharged within thirty days after the making thereof, or such appointment or taking possession is at any time consented to, requested by, or acquiesced to by it.

 

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

 

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

 

“ Additional Guaranties ” has the meaning assigned to such term in the preamble of this Agreement.

 

“ Additional Guarantors ” has the meaning assigned to such term in the preamble of this Agreement.

 

“ Additional Pledge Agreements ” has the meaning assigned to such term in the preamble of this Agreement.

 

“ Additional Pledgors ” has the meaning assigned to such term in the preamble of this Agreement.

 

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

 

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

 

“ Bank Agreement Obligations ” means all “Obligations” as defined in the Bank Agreement, as from time to time supplemented, amended or restated (including, without limitation, default interest, interest accruing at the then applicable rate provided in the Bank Agreement after the maturity of the Bank Notes and interest accruing at the then applicable rate provided in the Bank Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any of the Debtor Parties, whether or not a claim for post-filing or post-petition interest is allowed in such

 

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proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, that arise under, out of, or in connection with, the Bank Agreement, any Bank Notes or any other document made, delivered or given in connection therewith, whether on account of principal, interest, premium, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Agent and the Banks that are required to be paid by any of the Debtor Parties pursuant to the terms of this Agreement, the Bank Agreement, any Bank Notes or any other document made, delivered or given in connection therewith).

 

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

 

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

 

“ Bank Pledge Agreements ” means the Company Pledge Agreement and the Foreign Subsidiary Pledge Agreement.

 

“ Calculation Date ” has the meaning assigned to such term in Section 2 of this Agreement.

 

“ Collateral ” means all property subject to the Security Documents.

 

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

 

“ Collateral Agent-Related Persons ” means the Collateral Agent, together with its Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

 

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

 

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

 

“ Credit Agreements ” means the Bank Agreement, the Swap Contracts, and the Prudential Agreement.

 

“ Debtor Parties ” means the Company, any Guarantor, any Additional Guarantor, any Additional Pledgor.

 

“ Determination Date ” has the meaning assigned to such term in Section 3 of this Agreement

 

“ Existing Credit Agreement ” has the meaning assigned to such term in the preamble of this Agreement.

 

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“ Existing Intercreditor Agreement ” has the meaning assigned to such term in the preamble of this Agreement.

 

“ Finance Documents ” means this Agreement, the Credit Agreements, 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 Agreements 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.

 

“ Foreign Subsidiary Pledge Agreement ” has the meaning assigned to such term in the preamble of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

“ Make-Whole Amount ” means with respect to the holders of the Prudential Notes, the “Yield Maintenance Amount” as defined in the Prudential Agreement except that (for purposes of this Agreement only) the “Reinvestment Yield”, which is defined in the Prudential Agreement and used in computing such Yield Maintenance Amount, shall be the rate of 1.55% per annum

 

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with respect to the 7.61% Notes, 1.62% per annum with respect to the 5.92% Notes, and 1.42% per annum with respect to the 5.57% Notes above the Reinvestment Yield, as it would otherwise be calculated under the Prudential Agreement, and with respect to additional Prudential Notes issued under the Prudential Agreement, the initial spread over comparable average life U.S. treasuries at time of commitment to purchase such Prudential Notes above the Reinvestment Yield, as it would otherwise be calculated under the Prudential Agreement.

 

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

 

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

 

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental agency or authority or other entity.

 

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

 

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

 

“ Proportionate Share ” means a fraction (i) the numerator of which is the sum of the Indebtedness owing to such Lender plus the Swap Amount and/or Make-Whole Amount owing to such Lender and (ii) the denominator of which is the sum of the Indebtedness owing to all Lenders plus the Swap Amount and/or Make-Whole Amount owing to all Lenders;

 

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

 

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

 

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

 

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

 

“ Prudential Agreement Obligations ” means the unpaid principal of, interest on and “Yield Maintenance Amount” as defined in the Prudential Agreement, if any, on the Prudential Notes and all other obligations and liabilities of any of the Debtor Parties to the holders from time to time of the Prudential Notes (including, without limitation, interest accruing at the then applicable rate provided in the Prudential Agreement, as from time to time supplemented, amended or restated , or the Prudential Notes, as applicable, after the maturity thereof and interest accruing at the then applicable rate provided in the Prudential Agreement or the Prudential

 

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Notes, as applicable, after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any of the Debtor Parties, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Prudential Agreement, any Prudential Notes or any other document made, delivered or given in connection therewith, whether on account of principal, interest, Make-Whole Amount, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to any holder(s) of the Prudential Notes that are required to be paid by the Debtor Parties pursuant to the terms of this Agreement, the Prudential Agreement, the Prudential Notes or any other document made, delivered or given in connection therewith).

 

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

 

“ Prudential Notes ” means the 7.61% Senior Notes due July 28, 2007 (the “ 7.61% Notes ”), the 5.92% Senior Notes, Series I, due June 30, 2011 (the “ 5.92% Notes ”), the 5.57% Senior Notes, Series J, due January 18, 2015 (the “ 5.57% Notes ”) and any additional Senior Notes issued pursuant to the Prudential Agreement or in replacement thereof.

 

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

 

“ Subject Guaranties ” means the Bank Guaranty, the Prudential Guaranties and the Additional Guaranties.

 

“ Subject Guaranty Excess Amount ” has the meaning assigned to such term in Section 2 of this Agreement.

 

“ Security Documents ” means the Pledge Agreements.

 

“ Security Document Excess Amount ” has the meaning assigned to such term in Section 3 of this Agreement.

 

“ Swap Agreement Obligations ” means any amounts that, at the time in question, are due and payable to any Swap Lender under any Swap Contract.

 

“ Swap Amount ” means with respect to each Swap Lender on each Calculation Date and on each Determination Date, the Swap Termination Value under all Swap Contracts which would be due and owing thereunder to such Swap Lender on such Calculation Date or Determination Date if any such Swap Contract were terminated on such date whether or not such Swap Amount is actually due and owing on such date.

 

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

 

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

 

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

 

“ Voting Stock ” means, with respect to any corporation, any shares of stock of such corporation whose holders are entitled under ordinary circumstances to vote for the election of directors of such corporation (irrespective of whether at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

 

2.                                        Subject Guaranties .  If, after the occurrence and during the continuance of a “Default” or “Event of Default” under any Credit Agreement (as “Default” or “Event of Default” is defined in each Credit Agreement) any Lender shall at any time obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) from any Guarantor pursuant to a Subject Guaranty (each date on which a Lender receives any such payment or recovery is herein called a “ Calculation Date ”) in excess of its Proportionate Share calculated as of such date of payments or other recoveries then or therewith obtained by all Lenders with respect to the Subject Guaranties, such Lender shall purchase from the other Lenders such participation(s) in the Indebtedness (and interest thereon) of the Company held by such other Lenders that is guaranteed pursuant to such other Lenders’ Subject Guaranty or Subject Guaranties, as shall be necessary to cause such purchasing Lender to share such payment or other recovery ratably with such selling Lenders; provided , however , that if all or any portion of such payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded, and each selling Lender shall repay to the purchasing Lender the purchase price, to the ratable extent of such recovery, together with an amount equal to such selling Lender’s ratable share (according to the proportion of (x) the amount of such selling

 

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Lender’s required repayment to the purchasing Lender to (y) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.  Notwithstanding the foregoing, if a Swap Amount is not due and owing on a Calculation Date or does not actually become due and owing within 30 days of such Calculation Date, and as a result of the inclusion of the Swap Amount in calculating a Swap Lender’s Proportionate Share, such Swap Lender receives a greater portion of any payment or other recovery from any Guarantor than it would have if the Swap Amount had not been included in such calculation (such amount is herein called a “ Subject Guaranty Excess Amount ”), then such Swap Lender shall immediately purchase from each other Lender such participation(s) in the Indebtedness (and interest thereon) of the Company held by such other Lender that is guaranteed pursuant to such other Lender’s Subject Guaranty or Subject Guaranties in an amount equal to such other Lender