Exhibit 10.2
 
GUARANTY
 
This Guaranty (this “Guaranty”), dated as of December 23, 2011 (the “Effective
Date”), is made by Quicksilver Resources Inc., a corporation formed pursuant to
the laws of Delaware (“Guarantor”), in favor of Fortune Creek Gathering and
Processing Partnership (the “Guaranteed Party”).  Guarantor, the Guaranteed
Party and 0927530 B.C. Unlimited Liability Company (“Newco”) are sometimes
referred to herein individually as a “Party” and collectively as the
“Parties.”  Capitalized terms used but not otherwise defined herein shall have
the meanings set forth in the Contribution Agreement, by and among Quicksilver
Resources Canada Inc., a wholly owned subsidiary of the Guarantor (the
“Obligor”) and the Guaranteed Party, dated as of the date hereof (as amended,
restated or otherwise modified from time to time, the “Contribution Agreement”).
 
1.   Guaranty.
 
(a)  In consideration of the Partnership having entered into or hereinafter
entering into transactions with the Obligor pursuant to the Contribution
Agreement, including the Gathering Agreement and the Processing Agreement, and
the Guaranteed Party’s execution, delivery and performance of the Contribution
Agreement, the Gathering Agreement and the Processing Agreement, the Guarantor
absolutely, irrevocably and unconditionally guarantees to the Guaranteed Party,
its successors and assigns, the Obligor’s obligations to the Guaranteed Party
under the Contribution Agreement, the Gathering Agreement and the Processing
Agreement, which were entered into on the Effective Date (collectively, the
“Agreements”), with respect to (i) the payment of the Capital RR Adjustment
Amount pursuant to and in accordance with Section 5.5(c) of the Contribution
Agreement (the “Capital RR Obligation”), (ii) the Obligor’s obligations to pay
the revenue obligations to the Partnership pursuant to the Gathering Agreement
and the Processing Agreement for any month, on the terms and subject to the
conditions set forth in the Gathering Agreement and the Processing Agreement
(the “TOP Obligations”), and (iii) the Obligor’s obligations to deliver the
purchase price of the Compression Assets to the Guaranteed Party pursuant to and
in accordance with Section 4.5 of the Contribution Agreement (the “Compression
Purchase Obligation”) (the Capital RR Obligation, the TOP Obligations and the
Compression Purchase Obligation being collectively referred to herein as the
“Obligations”).
 
(b)  This Guaranty is a continuing guaranty and shall remain in full force and
effect until the indefeasible payment in cash of all Obligations.  Subject to
Section 1(c) and Section 4 of this Guaranty, at such time as the Obligations
have been indefeasibly paid in full in cash, the obligations of the Guarantor
and the Guaranteed Party hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party.
 
(c)  This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any Obligation is rescinded or must
otherwise be returned by the Guaranteed Party as a result of the insolvency,
bankruptcy or reorganization of the Obligor or otherwise, all as though such
payment had not been made, and the Guarantor will pay such amount to the
Guaranteed Party on demand.  Any transfer by subrogation that is made as
contemplated in Section 4 prior to any such payment shall (regardless of the
terms of such transfer) be automatically voided upon the making of any such
payment or payments, and all rights so transferred shall thereupon automatically
revert to and be vested in the Guaranteed  Party.
 
2.   Nature of the Obligations.
 
(a) With respect to the Obligations, the guarantee provided in this Guaranty
shall be a guarantee of payment and performance and not of collection. The
Guaranteed Party shall not have any obligation to proceed at any time or in any
manner against, or exhaust any or all of such Guaranteed
 
 
 

--------------------------------------------------------------------------------

 
 
Party’s rights, against, any person liable for any Obligations prior to
proceeding against the Guarantor hereunder. If the Obligor shall default in the
due and punctual payment or performance of any Obligations, the Guarantor shall
forthwith pay, perform or cause to be paid or performed such Obligations at its
sole cost and expense.
 
(b)  The Guarantor agrees to take such action as may be necessary to keep itself
informed as to the scope and performance of the Obligations and of the affairs
of the Obligor, and agrees that the Guaranteed Party has no obligation to notify
the Guarantor of any matter which may increase or change its obligations
hereunder as a guarantor or to assist the Guarantor in managing or supervising
the Obligor.  
 
(c)  The Guarantor further agrees to pay all reasonable expenses (including,
without limitation, all reasonable fees and disbursements of counsel) that may
be paid or incurred by the Guaranteed Party or any of its affiliates in
enforcing any rights with respect to, or collecting against, the Guarantor under
this Guaranty.  The Guarantor hereby waives notice of acceptance of this
Guaranty, and agrees (without prejudice to its direct or indirect rights under
the partnership agreement of the Guaranteed Party) that it shall not be required
to consent to, or to receive any notice of, any supplement to or amendment of,
or waiver or modification of the terms of, the Contribution Agreement, the
Gathering Agreement and the Processing Agreement that may be made or given as
provided therein.  
 
(d)  No failure or delay or lack of demand, notice or diligence in exercising
any right under this Guaranty shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right under this Guaranty.  
 
3.   Insolvency; Certain Changes.  In the event that the Contribution Agreement,
the Gathering Agreement and the Processing Agreement shall be terminated,
rejected or disaffirmed as a result of bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar proceedings with respect to the Obligor, as
the case may be, the Guarantor’s obligations hereunder shall continue to be
effective, or be reinstated, as the case may be, to the same extent as if the
same had not been so terminated, rejected or disaffirmed.  The Guarantor shall
and does hereby waive all rights and benefits that might, in whole or in part,
relieve the Guarantor or the Obligor from the performance of their duties and
obligations by reason of any proceeding as specified in the preceding sentence,
and the Guarantor agrees that it shall be liable for all sums guaranteed or
claims of any nature whatsoever in respect of and without regard to, any
modification, limitation or discharge of the liability of the Obligor or the
Guarantor, as the case may be, that may result from any such proceedings and
notwithstanding any stay, injunction or other prohibition issued in any such
proceedings. Furthermore, subject to  Section 6(a) and Section 8, the obligation
of the Guarantor hereunder will not be discharged by, other than in connection
with a consent executed by the Guarantor and the Guaranteed Party prior to such
event:  (a) any extension or renewal with respect to any obligation of the
Obligor under the Contribution Agreement, the Gathering Agreement and the
Processing Agreement; (b) any modification of, or amendment or supplement to,
any such agreement made in accordance with the terms of such agreement; (c) any
furnishing or acceptance of additional security or any release of any security;
(d) any waiver, consent or other action or inaction or any exercise or
non-exercise of any right, remedy or power with respect to the Guarantor or the
Obligor, as the case may be, or any change in the structure of the Guarantor or
the Obligor, as the case may be; (e) any change in ownership of the shares of
capital stock of the Guarantor or the Obligor, as the case may be, any merger or
consolidation of either thereof into or with any other person, or the transfer
of all or substantially all of the assets of the Guarantor or the Obligor to any
other person; or (f) any other occurrence whatsoever, except payment and
performance in full of all the Obligations.
 
4.  No Subrogation.  Notwithstanding any payment or payments made by the
Guarantor hereunder, the Guarantor shall not be entitled to be subrogated to any
of the rights of the Guaranteed
 
 
2

--------------------------------------------------------------------------------

 
 
Party against the Obligor or against any collateral security or guarantee or
right of offset held by the Guaranteed Party for the payment or performance of
the Obligations, nor shall the Guarantor seek or be entitled to seek any
contribution or reimbursement from the Obligor in respect of payments made by
the Guarantor hereunder, until all Obligations have been indefeasibly paid in
full in cash and this Guaranty is terminated pursuant to Section 1(b), in such
case, the Guaranteed Party will, at the Guarantor's request, execute and deliver
to the Guarantor appropriate documents, without recourse and without
representation and warranty, necessary to evidence the transfer by subrogation
to the Guarantor of the interest of the Guaranteed Party in the Obligations.  If
any amount shall be paid to the Guarantor on account of any subrogation or other
right, any such other remedy, or any collateral security at any time when all of
the Obligations shall not have been paid in full, such amount shall be held in
trust for the benefit of the Guaranteed Party, shall be segregated from the
other funds of the Guarantor and shall forthwith be paid over to the Guaranteed
Party to be held by the Guaranteed Party for the benefit of the Guaranteed Party
as collateral security for, or then or at any time thereafter applied in whole
or in part by the Guaranteed Party against, any Obligation.
 
5.  Representations and Warranties.  The Guarantor represents and warrants to
the Guaranteed Party that:
 
(a)  the Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
corporate power and authority and the legal right to own and operate its
property, to lease the property it operates and to conduct the business in which
it is currently engaged;
 
(b)  the Guarantor has the corporate power and authority and the legal right to
execute and deliver, and to perform its obligations under, this Guaranty, and
has taken all necessary corporate action to authorize its execution, delivery
and performance of this Guaranty;
 
(c)  this Guaranty constitutes a legal, valid and binding obligation of the
Guarantor enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting the enforcement of creditors’ rights
generally, general equitable principles and an implied covenant of good faith
and fair dealing;
 
(d)  the execution, delivery and performance of this Guaranty will not violate
any provision of any requirement of law or contractual obligation of the
Guarantor and will not result in or require the creation or imposition of any
lien on any of the properties or revenues of the Guarantor pursuant to any
requirement of law or contractual obligation of the Guarantor;
 
(e)  no consent or authorization of, filing with, notice to, or other act by or
in respect of, any arbitrator or governmental authority and no consent of any
other person (including, without limitation, any stockholder or creditor of the
Guarantor) is required in connection with the execution, delivery, performance,
validity or enforceability of this Guaranty; and
 
(f)  no litigation, investigation or proceeding of or before any arbitrator or
governmental authority is pending or, to the knowledge of the Guarantor,
threatened by or against the Guarantor or against any of its properties or
revenues (1) with respect to this Guaranty or any of the transactions
contemplated hereby, (2) which, if adversely determined, would have a material
adverse effect on the business, operations, property or financial or other
condition of the Guarantor.
 
 
3

--------------------------------------------------------------------------------

 
 
The Guarantor agrees that the foregoing representations and warranties shall be
deemed to have been made by the Guarantor on the Effective Date and on the date
on which the Gathering Agreement and the Processing Agreement between the
Obligor and the Guaranteed Party is entered into.
 
6.  Covenants.  The Guarantor hereby covenants and agrees with the Guaranteed
Party that, from and after the date of this Guaranty until the Obligations are
paid or performed in full:
 
(a)  the Guarantor shall not transfer or sell all or substantially all of its
assets in one transaction or a series of related transactions unless the
acquirer or acquirers or transferee or transferees assume its obligations under
this Guaranty without the prior written consent of the Guaranteed Party, which
consent:
 

 
(i) 
shall not be unreasonably withheld, delayed or conditioned; and

 

 
(ii) 
may be withheld by the Guaranteed Party if and only if (i) in its reasonable
opinion the said acquirer or transferee is not as creditworthy as the Guarantor
as of the date of such transfer or acquisition or (ii) such acquirer or
transferee does not assume the obligations of the Guarantor under this Guaranty;

 
and for the avoidance of doubt any sale of assets or series of related sales of
assets by the Guarantor to a master limited partnership controlled by the
Guarantor will not be considered to be a sale of all or substantially all of the
Guarantor’s assets, and no consent or assumption for such sale or sales will be
required, if (A) the net cash proceeds of any such sale will be reinvested in
the businesses of, or applied to the reduction of the indebtedness of, the
Guarantor or any of its subsidiaries and (B) any non-cash consideration received
is either (i) retained by the Guarantor or (ii) sold for cash consideration, the
net cash proceeds of which will be reinvested in the businesses of, or applied
to the reduction of the indebtedness of, the Guarantor or any of its
subsidiaries;
 
(b)  if the Guarantor shall be required by any laws to deduct or withhold any
taxes from or in respect of any sum payable pursuant to the Obligations to the
Guaranteed Party, the sum payable shall be increased as necessary so that after
making all required deductions, the Guaranteed Party receives an amount equal to
the sum it would have received had no such deductions been made. If the
Guarantor fails to pay any taxes when due to the appropriate taxing authority or
fails to remit to the Guaranteed Party the required receipts or other required
documentary evidence, the Guarantor shall indemnify the Guaranteed Party for any
incremental taxes, interest or penalties that may become payable by the
Guaranteed Party arising out of such failure;  
 
(c)  to the extent that the Guarantor has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
or otherwise) with respect to itself or its property, each Guarantor hereby
irrevocably waives such immunity in respect of its obligations hereunder to the
extent permitted by applicable law;
 
(d)  unless otherwise specified, any reference to currency is to Canadian
currency and any amount advanced, paid or calculated is to be advanced, paid or
calculated in Canadian currency; and
 
(e)  the Guarantor will maintain in Alberta a person acting as agent to receive
on its behalf and on behalf of its property service of process.
 
7.  Option.  If a consent from the Guaranteed Party is requested as aforesaid in
Section 6(a) and is withheld, delayed or conditioned, then the Guarantor or its
designee may, instead of obtaining the
 
 
4

--------------------------------------------------------------------------------

 
 
said consent, at the Guarantor’s sole option, purchase from Newco, and Newco
shall convey, Newco’s entire partnership interest upon payment by the Guarantor
or its designee to Newco of the greater of: (i) a 15% unlevered pretax return on
Newco’s capital investment in the Guaranteed Party; and (ii) a multiple equal to
2.0 times its capital invested in the Guaranteed Party.
 
8.  Governing Law and Submission to Jurisdiction.  The laws of the Province of
Alberta shall govern the construction, interpretation and effect of this
Guaranty, without regard to conflicts of law rules.  Each Party hereby submits
to the exclusive jurisdiction of the Courts of Alberta and all courts of appeal
therefrom for all purposes hereof, provided that the foregoing shall not
restrict a Party from enforcing a judgment outside of Alberta including the
ability to initiate an original action in the courts of another jurisdiction if
the judgment cannot be enforced.  Each Party waives, to the fullest extent
permitted by applicable law, any right it may have to trial by jury in respect
of any suit, action or proceeding relating to this Guaranty.
 
9.  Assignment.  Subject to Section 6(a), no Party shall assign any of its
rights or benefits hereunder without first having obtained the written consent
of the other Parties.  Upon any transfer or transaction that complies with
Section 6(a), the Guarantor shall be released from its obligations hereunder so
long as such successor or transferee expressly assumes this Guaranty by a
writing reasonably acceptable in form and substance to the Guaranteed
Party.  Except as provided in the immediately preceding sentence, no such
assignment shall relieve the assignor of its obligations hereunder.  Any
attempted transfer or transaction in violation of Section 6(a) shall be null and
void.
 
10.  Counterparts.  The Parties may execute this Guaranty in two or more
counterparts, which shall, in the aggregate, be signed by all of the Parties;
each counterpart shall be deemed an original instrument as against any Party who
has signed it.
 
11.  Entire Agreement; Amendment.  This Guaranty contains the entire agreement
of the Parties relating to the rights granted and obligations assumed herein and
therein and supersede all prior agreements between the Parties as to the subject
matter hereof.  Any oral representations or modifications concerning this
Guaranty shall be of no force or effect unless contained in a subsequent written
modification signed by the Parties.
 
12.  Headings; Interpretation.  The division of this Guarantee into sections,
subsections, paragraphs and clauses and the inclusion of headings and a table of
contents are for convenience of reference only and do not affect the
construction or interpretation of this Guaranty.  This Guaranty shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the Party drafting or causing any instrument to be
drafted. 
 
13.  No Third Party Beneficiaries.  This Guaranty shall be binding upon and
shall inure solely to the benefit of the Parties and their respective successors
and permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other person any legal or equitable right, benefit or
remedy of any nature whatsoever, under or by reason of this Guaranty.
 
14.  Severability.  If any provision of this Guaranty, or the application of
such provision to any person or in any circumstance, shall be held to be
invalid, illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions of this Guaranty, and the application
of such provision to any persons or in any circumstances other than those as to
which it is held invalid, illegal or unenforceable shall not be affected
thereby.
 
15.  Expenses.  Except as otherwise specified in this Guaranty, all costs and
expenses, including fees and disbursements of counsel, financial advisors and
accounts, incurred in connection with
 
 
5

--------------------------------------------------------------------------------

 
 
this Guaranty and the transactions contemplated by this Guaranty shall be borne
by the Party incurring such costs and expenses.
 

16.  Notices.  Any written notice or communication to any of the Parties
required or permitted under this Guaranty shall be deemed to have been duly
given and received (i) on the date of service, if served personally or sent by
facsimile transmission (and confirmed by telephone) to the Party to whom notice
is to be given, or (ii) on the next day if sent by a nationally recognized
courier for next day service and so addressed and if there is evidence of
acceptance by receipt.
 

 
(a) 
if to the Guarantor:

 
801 Cherry Street
Suite 3700, Unit 19
Fort Worth, Texas  76102
Fax#:  817.665.5021
Attn:  Chief Financial Officer & General Counsel

 

 
(b) 
if to the Guaranteed Party:

 
One Palliser Square
2000, 125 – 9th Avenue S.E.
Calgary, Alberta  T2G 0P8
Fax#:  403.262.6115
Attn:  Chief Operating Officer
  with a copy to:   801 Cherry Street Suite 3700, Unit 19 Fort Worth, Texas 
76102 Fax#: 817.665.5021
Attn:  Chief Financial Officer & General Counsel
  with a copy to:   c/o Kohlberg Kravis Roberts & Co LP 9 West 57th, Suite 4200
New York, New York  10019 Fax#: 212.750.0003 Attn: Brandon Freiman, David
Sorkin, Esq.

 

 
(c) 
if to Newco:

 
c/o Kohlberg Kravis Roberts & Co LP
9 West 57th, Suite 4200
New York, New York  10019
Fax#:  212.750.0003
Attn:  Brandon Freiman, David Sorkin, Esq.

 
 
6

--------------------------------------------------------------------------------

 
 
17.  Binding Effect.  This Guaranty shall be binding on all successors and
assigns of the Parties and inure to the benefit of the respective permitted
successors and assigns of the Parties, except to the extent of any express
contrary provision in this Guaranty.
 
 
[Remainder of this page intentionally left blank. Signature page follows this
page.]
 
 
7

--------------------------------------------------------------------------------

 
 
 
QUICKSILVER RESOURCES INC.
              By: /s/ Glenn Darden   Name:  Glenn Darden   Title:  President and
Chief Executive Officer  

 
 
Accepted and agreed:

FORTUNE CREEK GATHERING AND
PROCESSING PARTNERSHIP, by its partner,
MAKARIOS MIDSTREAM INC.
   
FORTUNE CREEK GATHERING AND
PROCESSING PARTNERSHIP, by its partner,
0927530 B.C. UNLIMITED LIABILITY COMPANY
                        Per: /s/ Thomas Darden   Per: /s/ Mayo Shattuck    
Thomas Darden     Mayo Shattuck     President and Chief Executive Officer,
Director     Director  

Accepted and agreed:
 
0927530 B.C. UNLIMITED LIABILITY COMPANY
            Per: /s/ Mayo Shattuck     Mayo Shattuck     Director  

 
 
 

--------------------------------------------------------------------------------