Exhibit 10.1
NINTH AMENDMENT TO COMBINED CREDIT AGREEMENTS
            THIS NINTH AMENDMENT TO COMBINED CREDIT AGREEMENTS, dated as of
September 17, 2010 (this “Amendment”), is entered into by and among QUICKSILVER
RESOURCES INC., a Delaware corporation (the “U.S. Borrower”), QUICKSILVER
RESOURCES CANADA INC., an Alberta, Canada corporation (the “Canadian Borrower”),
each of the Lenders (as defined in the U.S. Credit Agreement (as hereinafter
defined)) party hereto (together with its successors and assigns, the “U.S.
Lenders”), each of the Lenders (as defined in the Canadian Credit Agreement (as
hereinafter defined)) party hereto (together with its successors and assigns,
the “Canadian Lenders” and, together with the U.S. Lenders, the “Consenting
Combined Lenders”), JPMORGAN CHASE BANK, N.A., as global administrative agent
(in such capacity, the “Global Administrative Agent”), and JPMORGAN CHASE BANK,
N.A., TORONTO BRANCH, as Canadian administrative agent (in such capacity, the
“Canadian Administrative Agent”).
W I T N E S S E T H:
            1.        The U.S. Borrower, the Global Administrative Agent, the
other Agents party thereto and the U.S. Lenders are parties to that certain
Amended and Restated Credit Agreement dated as of February 9, 2007 (as amended,
supplemented, restated or otherwise modified from time to time, the “U.S. Credit
Agreement”), pursuant to which the U.S. Lenders agreed to make loans to, and
extensions of credit on behalf of, the U.S. Borrower.
            2.        The Canadian Borrower, the Global Administrative Agent,
the Canadian Administrative Agent, the other Agents party thereto and the
Canadian Lenders are parties to that certain Amended and Restated Credit
Agreement dated as of February 9, 2007 (as amended, supplemented, restated or
otherwise modified from time to time, the “Canadian Credit Agreement” and,
together with the U.S. Credit Agreement, the “Combined Credit Agreements”),
pursuant to which the Canadian Lenders agreed to make loans to, and extensions
of credit on behalf of, the Canadian Borrower.
            3.        The U.S. Borrower and the Canadian Borrower (collectively,
the “Combined Borrowers”) have requested (a) that the U.S. Credit Agreement be
amended to increase the sublimit for issuances of Letters of Credit to
U.S.$75,000,000 and (b) that the U.S. Credit Agreement be amended to amend
certain terms of the U.S. Credit Agreement in certain respects as provided in
this Amendment.
            4.        The U.S. Borrower has advised the Global Administrative
Agent, the Canadian Administrative Agent and the Combined Lenders that the U.S.
Borrower and its Wholly-Owned Subsidiaries Cowtown Gas Processing L.P. and
Cowtown Pipeline L.P. (the “Selling Subsidiaries”) have entered into a Purchase
Agreement (the “Purchase Agreement”), a copy of which is attached as Exhibit I
to this Amendment, with First Reserve Crestwood Holdings LLC (“Buyer”), a newly
formed acquisition subsidiary owned by Crestwood Midstream Partners II, LLC, a
portfolio company of First Reserve Corporation, pursuant to which the following
transactions may occur: (i) the U.S. Borrower, through the Selling Subsidiaries,
will sell to Buyer all of its direct or indirect Equity Interests (collectively,
the “MLP Interests”) in

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Quicksilver Gas Services LP (“MLP”), including (a) 100% of its Equity Interests
in Quicksilver Gas Services Holdings LLC, a Delaware limited liability company
and the direct owner of 100% of the outstanding membership interests in
Quicksilver Gas Services GP LLC, a Delaware limited liability company and MLP’s
sole general partner, and (b) all of its common units, subordinated units,
general partner units and incentive distribution rights in MLP, (ii) Buyer will
purchase from the U.S. Borrower the Subordinated Promissory Note dated
August 10, 2007 (“MLP Note”), issued by MLP to the U.S. Borrower, and (iii) the
U.S. Borrower, the Selling Subsidiaries and/or Buyer shall enter into other
agreements related to the sale of the MLP Interests as specified in the Purchase
Agreement. The transactions described in this paragraph (including, without
limitation, the transactions contemplated by the Purchase Agreement) and the
transactions contemplated by the last sentence of Section II of this Amendment
and which expressly relate to the transactions contemplated by the Purchase
Agreement (including, without limitation, any amendments to, and consents under,
the Combined Loan Documents which may be effected by this Amendment and actions
that the Loan Parties are required to take in connection therewith on or before
the MLP Sale Transactions Closing Date (as defined below)) are collectively
referred to herein as the “MLP Sale Transactions.”
            5.        The U.S. Borrower and the Canadian Borrower have requested
that the Combined Lenders consent to the consummation of the MLP Sale
Transactions, and, in reliance on the representations and warranties of the U.S.
Borrower and the Canadian Borrower contained herein, and subject to the terms,
and satisfaction or waiver of the conditions precedent, set forth herein, the
Consenting Combined Lenders consent to the consummation of the MLP Sale
Transactions as provided in Section II hereof.
            6.        Subject to and upon the terms and conditions set forth
herein, the Combined Lenders have agreed to the Combined Borrowers’ requests.
            NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
            I.        Amendments to U.S. Credit Agreement. In reliance on the
representations and warranties of the U.S. Borrower and the Canadian Borrower
contained herein, and subject to the terms, and satisfaction of the conditions
precedent, set forth in Section IV hereof, the U.S. Credit Agreement shall be
amended effective as of the Effective Date in the manner provided in this
Section I:
            A.      Amendment to Definition of Permitted Investment. The
definition of “Permitted Investment” contained in Section 1.1 of the U.S. Credit
Agreement shall be amended to delete the reference to “and” at the end of clause
(x) thereto, to replace the period at the end of clause (y) thereto and replace
it with a reference to “; and”, and to add a new clause (z) thereto which shall
read in full as follows:
“(z) the Investment by the Borrower in the Canadian Borrower made within 10
Business Days after the consummation of the MLP Sale Transactions, in an amount
(based, if such Investment is made in U.S. Dollars, on the then existing U.S.
Dollars to Canadian Dollars rate of exchange and the Borrower’s estimate of a
contingency for fluctuation between the time of investment and conversion to

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Canadian Dollars) not to exceed the amount of the Canadian Obligations then
outstanding, which Investment proceeds shall be used by the Canadian Borrower to
repay such Canadian Obligations promptly following receipt thereof.”
            B.      Additional Definitions. Section 1.1 of the U.S. Credit
Agreement shall be amended by inserting the following definitions in appropriate
alphabetical order:
            “MLP Sale Transactions” has the meaning given to the term “MLP Sale
Transactions” in the Ninth Amendment.
            “Ninth Amendment” means that certain Ninth Amendment to Combined
Credit Agreements dated as of September 17, 2010, by and among the Borrower, the
Canadian Borrower, the Global Administrative Agent, the Canadian Administrative
Agent and the Combined Lenders party thereto.
            C.      Amendment to Letters of Credit Provision. Subsection (i) of
Section 2.5(b) of the U.S. Credit Agreement shall be amended by amending and
restating such subsection in its entirety to read in full as follows:
            “(i) the aggregate LC Exposure shall not exceed U.S. $75,000,000”
            II.        Consent to MLP Sale Transactions. The U.S. Borrower and
the Canadian Borrower hereby request that the Combined Lenders consent to the
consummation of the MLP Sale Transactions and waive any violation of the U.S.
Credit Agreement that would otherwise exist or arise on the consummation of the
MLP Sale Transactions in the absence of such consent. In reliance on the
representations and warranties of the U.S. Borrower and the Canadian Borrower
contained herein, and subject to the terms, and satisfaction of the conditions
precedent, set forth in Section III hereof, the Consenting Combined Lenders
hereby consent to the consummation of the MLP Sale Transactions as of the MLP
Sale Transactions Closing Date (hereinafter defined) and waive any violation of
the U.S. Credit Agreement that would otherwise exist or arise upon the
consummation of the MLP Sale Transactions in the absence of such consent.
Effective as of the MLP Sale Transactions Closing Date, the Global
Administrative Agent is hereby authorized and directed to execute and deliver
such documents and instruments, including without limitation lien releases, as
may be required to release the Liens of the Global Administrative Agent upon the
MLP Interests and the MLP Note.
            III.        Effectiveness of MLP Sale Transactions. The consent
contained in Section II hereof shall be effective as of the date when the
following conditions precedent have been satisfied (the “MLP Sale Transactions
Closing Date”):
            A.      The MLP Sale Transactions shall be consummated on or prior
to December 31, 2010 and on materially the same terms and conditions described
in the Purchase Agreement (including, without limitation, the MLP Sale
Transactions shall be consummated for the consideration set forth therein).
            B.      The Global Administrative Agent shall have received
(i) copies of all material agreements evidencing the MLP Sale Transactions,
including any and all supplements, amendments or modifications thereto, which
documents, and supplements, amendments or

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modifications thereto shall be certified by the Borrower as true, correct and
complete, (ii) all conditions precedent to the effectiveness of the MLP Sale
Transactions shall have been satisfied or waived to the extent not materially
adverse to the interests of the Combined Lenders, and (iii) any other documents
and information regarding the MLP Sale Transactions reasonably requested by the
Global Administrative Agent.
            IV.        Conditions Precedent to Amendment. This Amendment shall
be effective as of the date first set forth above when the following conditions
precedent have been satisfied (the “Effective Date”):
            A.      The Global Administrative Agent shall have received
counterparts hereof duly executed by the U.S. Borrower, the Canadian Borrower,
the Global Administrative Agent, the Canadian Administrative Agent and the
Majority Lenders (or, in the case of any party as to which an executed
counterpart shall not have been received, telegraphic, telex, or other written
confirmation from such party of execution of a counterpart hereof by such
party).
            B.      The Combined Borrowers shall have paid (i) all reasonable
out-of-pocket fees and expenses of counsel for the Global Administrative Agent
incurred, to the extent the same have been invoiced and sent to the U.S.
Borrower at least two (2) Business Days prior to the Effective Date, including
all such out-of-pocket fees and expenses incurred in connection with the
preparation, negotiation and execution of this Amendment and any other Combined
Loan Documents to be executed and delivered in connection therewith and (ii) any
and all fees payable to Global Administrative Agent or certain Combined Lenders
pursuant to or in connection with this Amendment in consideration for the
agreements set forth herein.
            C.      No Default, Event of Default, Global Borrowing Base
Deficiency, U.S. Borrowing Base Deficiency or Global Availability Deficiency
shall have occurred which is continuing.
            V.        Reaffirmation of Representations and Warranties. To induce
the Combined Lenders and the Global Administrative Agent to enter into this
Amendment, the U.S. Borrower and the Canadian Borrower hereby reaffirm, as of
the date hereof, the following:
            (i)      The representations and warranties of each Loan Party (as
such term is defined in the U.S. Credit Agreement and the Canadian Credit
Agreement, collectively, the “Combined Loan Parties”) set forth in the Combined
Loan Documents to which it is a party are true and correct on and as of the date
hereof (or, if stated to have been made expressly as of an earlier date, were
true and correct in all material respects as of such date and, except to the
extent waived in writing by the Combined Lenders, the Required Lenders, the
Majority Lenders, the U.S. Lenders or the U.S. Required Lenders, as applicable).
            (ii)      Each of the Combined Loan Parties (a) is a corporation or
limited partnership duly incorporated or organized (as applicable), validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, (b) has all corporate or limited partnership
power (as applicable) and all material governmental licenses, authorizations,
consents and approvals required to carry on its businesses as now

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conducted and as proposed to be conducted, and (c) is duly qualified to transact
business as a foreign corporation or limited partnership in each jurisdiction
where a failure to be so qualified would reasonably be expected to have a
Material Adverse Effect.
            (iii)      The execution, delivery and performance of this Amendment
and the other Combined Loan Documents by each Combined Loan Party (to the extent
each Combined Loan Party is a party to this Amendment and such Combined Loan
Documents) (a) are within such Combined Loan Party’s corporate or limited
partnership powers, (b) when executed will be duly authorized by all necessary
corporate or limited partnership action, (c) require no action by or in respect
of, or filing with, any Governmental Authority (other than (1) actions or
filings pursuant to the Exchange Act and (2) actions or filings that have been
taken or made and are in full force and effect) and (d) do not contravene, or
constitute a default under, any provision of applicable Governmental Rule
(including, without limitation, Regulation U) or of the articles or certificate
of incorporation, bylaws, regulations, partnership agreement or comparable
charter documents of any Combined Loan Party or of any agreement, judgment,
injunction, order, decree or other instrument binding upon any Combined Loan
Party or result in the creation or imposition of any Lien on any Borrowing Base
Property or Collateral other than the Liens securing the Combined Obligations.
            (iv)      This Amendment and each other Combined Loan Document
constitutes, or when executed and delivered will constitute, valid and binding
obligations of each Combined Loan Party which is a party thereto, enforceable
against each such Combined Loan Party which executes the same in accordance with
its terms except as the enforceability thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium, or similar Governmental Rules affecting
creditors’ rights generally, and (b) equitable principles of general
applicability (whether enforcement is sought by proceedings at law or in
equity).
            (v)      Neither a Default nor an Event of Default has occurred and
will exist under either Combined Credit Agreement after giving effect to the
transactions contemplated by this Amendment or the other Combined Loan Documents
or the MLP Sale Transactions, after giving effect to the amendments and consents
contained herein. Neither the U.S. Borrower or any of its Subsidiaries nor the
Canadian Borrower or any of its Subsidiaries is in default under, nor has any
event or circumstance occurred which, but for the expiration of any applicable
grace period or the giving of notice, or both, would constitute a default under,
any Material Agreement to which the U.S. Borrower or any of its Subsidiaries or
the Canadian Borrower or any of its Subsidiaries is a party or by which the U.S.
Borrower or any of its Subsidiaries or the Canadian Borrower or any of its
Subsidiaries is bound which default would reasonably be expected to have a
Material Adverse Effect. The U.S. Borrower is in compliance with the financial
covenants set forth in Article VI of the U.S. Credit Agreement.
            (vi)      No event or events have occurred since December 31, 2009
which individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect.

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            VI.      Defined Terms. Capitalized terms used herein when defined
in the U.S. Credit Agreement shall have the same meanings herein unless the
context otherwise requires.
            VII.      Reaffirmation of Combined Credit Agreements.   This
Amendment shall be deemed to be an amendment to the Combined Credit Agreements,
and the Combined Credit Agreements, as amended hereby, are hereby ratified,
approved and confirmed in each and every respect. All references to the Combined
Credit Agreements herein and in any other document, instrument, agreement or
writing shall hereafter be deemed to refer to the Combined Credit Agreements as
amended hereby.
            VIII.      Governing Law.   THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
            NOTWITHSTANDING THE FOREGOING SENTENCE AND AFTER GIVING EFFECT TO
THE TEXTUAL AMENDMENTS CONTAINED IN SECTION I OF THIS AMENDMENT, (i) THE U.S.
CREDIT AGREEMENT (AS AMENDED HEREBY) SHALL CONTINUE TO BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW SPECIFIED IN SECTION 10.9(a) OF THE U.S.
CREDIT AGREEMENT, AND (ii) THE CANADIAN CREDIT AGREEMENT SHALL CONTINUE TO BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW SPECIFIED IN SECTION
10.9(a) OF THE CANADIAN CREDIT AGREEMENT.
            IX.      Severability of Provisions.   Any provision of this
Amendment held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
            X.      Counterparts.   This Amendment may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. Delivery of an executed counterpart of a
signature page of this Amendment by telecopy (or other electronic transmission
acceptable to the Global Administrative Agent) shall be effective as delivery of
a manually executed counterpart of this Amendment.
            XI.      Headings.   Article and Section headings used herein are
for convenience of reference only, are not part of this Amendment and shall not
affect the construction of, or be taken into consideration in interpreting, this
Amendment.
            XII.     Successors and Assigns.   This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of an Issuing
Bank that issues any Letter of Credit), except that neither the U.S. Borrower
nor the Canadian Borrower may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Global
Administrative Agent, each Issuing Bank and each Combined Lender (and any
attempted assignment or transfer by either the U.S. Borrower or the Canadian
Borrower without such consent shall be null and void). Nothing in this
Amendment, expressed or implied, shall be construed to confer upon any Person

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(other than the parties hereto, and their respective successors and assigns
permitted hereby) any legal or equitable right, remedy or claim under or by
reason of this Amendment.
            XIII.   No Oral Agreements.   THIS AMENDMENT, THE COMBINED CREDIT
AGREEMENTS, AS AMENDED HEREBY, AND THE OTHER COMBINED LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN AND AMONG THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
            XIV.   Loan Document.   This Amendment constitutes a “Loan
Document,” a “Canadian Loan Document” and a “Combined Loan Document” under and
as defined in the U.S. Credit Agreement, and a “Loan Document,” a “U.S. Loan
Document” and a “Combined Loan Document” under and as defined in the Canadian
Credit Agreement.
[Signature Pages to Follow]

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            IN WITNESS WHEREOF, the U.S. Borrower, the Canadian Borrower, the
undersigned Combined Lenders, the Global Administrative Agent and the Canadian
Administrative Agent have executed this Amendment as of the date first above
written.

                  U.S. BORROWER    
 
                QUICKSILVER RESOURCES INC.,         a Delaware corporation, as
U.S. Borrower    
 
           
 
           
 
  By:   /s/ Vanessa Gomez LaGatta    
 
                Name: Vanessa Gomez LaGatta         Title:    Vice President -
Treasurer    
 
           
 
                CANADIAN BORROWER    
 
                QUICKSILVER RESOURCES CANADA INC.,
an Alberta, Canada corporation, as Canadian Borrower    
 
           
 
           
 
  By:   /s/ Vanessa Gomez LaGatta    
 
                Name: Vanessa Gomez LaGatta         Title:    Vice President -
Treasurer    

Each of the undersigned (i) acknowledge, consent and agree to this Amendment and
each of the terms and provisions contained herein, and (ii) agree that the
Combined Loan Documents to which it is a party shall remain in full force and
effect and shall continue to be the legal, valid and binding obligation of such
Person, enforceable against it in accordance with its terms.

                      ACKNOWLEDGED, CONSENTED AND AGREED
TO as of the date first above written:    
 
                   
COWTOWN GAS PROCESSING L.P., a Texas
limited partnership
   
 
                    By:  
Cowtown Pipeline Management, Inc., its
general partner
   
 
               
 
               
 
      By:   /s/ Vanessa Gomez LaGatta    
 
                        Name:  Vanessa Gomez LaGatta             Title:     Vice
President - Treasurer    

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                      COWTOWN PIPELINE MANAGEMENT, INC., a Texas corporation    
 
                    By:   /s/ Vanessa Gomez LaGatta                       Name:
Vanessa Gomez LaGatta         Title:    Vice President - Treasurer    
 
               
 
                    COWTOWN PIPELINE FUNDING, INC., a Delaware corporation    
 
                    By:   /s/ Vanessa Gomez LaGatta                       Name:
Vanessa Gomez LaGatta         Title:    Vice President - Treasurer    
 
               
 
                    COWTOWN PIPELINE L.P., a Texas limited partnership    
 
                    By:   Cowtown Pipeline Management, Inc., its            
general partner    
 
               
 
               
 
      By:   /s/ Vanessa Gomez LaGatta    
 
                        Name: Vanessa Gomez LaGatta             Title:    Vice
President - Treasurer    

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                  AGENTS AND COMBINED LENDERS    
 
                JPMORGAN CHASE BANK, N.A., as Global Administrative Agent and as
a U.S. Lender    
 
           
 
           
 
  By:      /s/ Stephen L. Lescher    
 
           
 
         Stephen L. Lescher    
 
         Senior Vice President    

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                  JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as a Canadian
Administrative Agent
and as a Canadian Lender    
 
           
 
           
 
  By:   /s/ Michael N. Tam    
 
           

             
 
  Name:   Michael N. Tam    
 
           

             
 
  Title:   Senior Vice President    
 
           

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                  BANK OF AMERICA, N.A., as a U.S. Lender    
 
           
 
           
 
  By:   /s/ Ronald E. McKaig    
 
           

             
 
  Name:   Ronald E. McKaig    
 
           

             
 
  Title:     Senior Vice President    
 
           

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                  BNP PARIBAS, as a U.S. Lender    
 
           
 
           
 
  By:   /s/ Edward Pak    
 
           

             
 
  Name:   Edward Pak    
 
           

             
 
  Title:      Vice President    
 
           

             
 
           
 
  By:   /s/ Betsy Jocher    
 
           

             
 
  Name:   Betsy Jocher    
 
           

             
 
  Title:     Director    
 
           

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                  UBS LOAN FINANCE LLC, as a U.S. Lender    
 
           
 
           
 
  By:   /s/ Mary E. Evans    
 
                Name: Mary E. Evans         Title:  Associate Director    
 
           
 
           
 
  By:   /s/ Irja R. Otsa    
 
                Name: Irja R. Otsa         Title:    Associate Director    

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                  THE BANK OF NOVA SCOTIA, as a U.S.
Lender    
 
           
 
           
 
  By:   /s/ David Mills    
 
                Name: David Mills         Title: Managing Director    

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                  DEUTSCHE BANK TRUST COMPANY AMERICAS, as a U.S. Lender    
 
           
 
           
 
  By:   /s/ Paul O’Leary    
 
           

             
 
  Name:   Paul O’Leary    
 
           

             
 
  Title:   Director    
 
           

             
 
           
 
  By:   /s/ Erin Morrissey    
 
           

             
 
  Name:   Erin Morrissey    
 
           

             
 
  Title:   Vice President    
 
           

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                  THE ROYAL BANK OF SCOTLAND plc, as a
U.S. Lender    
 
           
 
           
 
  By:   /s/ Phillip Ballard    
 
                Name: Phillip Ballard         Title: Managing Director    

[Signature Page]
Ninth Amendment to Combined Credit Agreements
Quicksilver Resources Inc.

 

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                  CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK, f/k/a CALYON NEW         YORK BRANCH, as a U.S. Lender    
 
           
 
           
 
  By:   /s/ Tom Byargeon    
 
           
 
  Name:   Tom Byargeon    
 
           
 
  Title:   Managing Director    
 
             
 
           
 
  By:   /s/ Sharada Manne    
 
           
 
  Name:   Sharada Manne    
 
           
 
  Title:   Director    
 
           

[Signature Page]
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                  CITIBANK, N.A., as a U.S. Lender    
 
           
 
           
 
  By:   /s/ John F. Miller    
 
           

             
 
  Name:   John F. Miller    
 
           

             
 
  Title:   Attorney-in-Fact    
 
           

[Signature Page]
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                  UNION BANK, N.A. (formerly known as Union
Bank of California, N.A.), as a U.S. Lender      
 
           
 
  By:   /s/ Doug Gale    
 
           

             
 
  Name:   Doug Gale    
 
           

             
 
  Title:   Vice President    
 
           

[Signature Page]
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                  WELLS FARGO BANK, N.A., as a U.S. Lender    
 
           
 
           
 
  By:   /s/ David C. Brooks    
 
           

             
 
  Name:   David C. Brooks    
 
           

             
 
  Title:   Director    
 
           

[Signature Page]
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                  TORONTO DOMINION (TEXAS) LLC, as a
U.S. Lender    
 
           
 
           
 
  By:   /s/ Debbi L. Brito    
 
           

             
 
  Name:   Debbi L. Brito    
 
           

             
 
  Title:   Authorized Signatory    
 
           

[Signature Page]
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                  U.S. BANK NATIONAL ASSOCIATION, as a
U.S. Lender    
 
           
 
           
 
  By:   /s/ Heather Han    
 
           

             
 
  Name:   Heather Han    
 
           

             
 
  Title:   Vice President    
 
           

[Signature Page]
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                  SUMITOMO MITSUI BANKING
CORPORATION, as a U.S. Lender    
 
           
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

[Signature Page]
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                  COMPASS BANK, as a U.S. Lender    
 
           
 
           
 
  By:   /s/ Dorothy Marchand    
 
           

             
 
  Name:   Dorothy Marchand    
 
           

             
 
  Title:   Senior Vice President    
 
           

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                  SOCIÉTÉ GÉNÉRALE, as a U.S. Lender    
 
           
 
           
 
  By:     /s/ Stephen W. Warfel    
 
           
 
  Name:  Stephen W. Warfel    
 
  Title:  Managing Director    

[Signature Page]
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                  COMERICA BANK, as a U.S. Lender    
 
           
 
           
 
  By:   /s/ James A. Morgan    
 
           

             
 
  Name:   James A. Morgan    
 
           

             
 
  Title:   Vice President    
 
           

[Signature Page]
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                  STERLING BANK, as a U.S. Lender    
 
           
 
           
 
  By:   /s/ Jeff Forbis    
 
                Jeff Forbis         Senior Vice President    

[Signature Page]
Ninth Amendment to Combined Credit Agreements
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                  CIBC INC., as a U.S. Lender    
 
           
 
  By:   /s/ Dominic J. Sorresso    
 
                Name:  Dominic J. Sorresso         Title:     Executive Director
   
 
                CIBC World Markets Corp.         Authorized Signatory    

[Signature Page]
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Quicksilver Resources Inc.

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                  KEYBANK, N.A., as a U.S. Lender    
 
           
 
  By:   /s/ David Morris    
 
                Name:  David Morris         Title:    Vice President    

[Signature Page]
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        EXPORT DEVELOPMENT CANADA, as a U.S. Lender    
 
           
 
  By:   /s/ Janine Dopson    
 
           

 
 
  Name:  
Janine Dopson
   

 
  Title:  
Senior Loan Asset Manager
   

 
 
  By:   /s/ Matthew Devine    
 
           

 
  Name:  
Matthew Devine
   

 
  Title:  
Asset Manager
   
 
           

[Signature Page]
Ninth Amendment to Combined Credit Agreements
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            BARCLAYS BANK PLC, as a U.S. Lender

      By:  /s/ Ann E. Sutton       Name: Ann E. Sutton      Title: Director     

[Signature Page]
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            CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH [f/k/a CREDIT SUISSE Cayman
Islands Branch], as a U.S. Lender

      By:  /s/ Nupur Kumar      Name: Nupur Kumar

    Title: Vice President

              By:  /s/ Vipul Dhadda      Name: Vipul Dhadda

    Title: Associate

   

[Signature Page]
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            SCOTIABANC INC., as a U.S. Lender

      By:  /s/ J. F. Todd      Name: J. F. Todd      Title: Managing Director   
 

[Signature Page]
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            GOLDMAN SACHS BANK USA, as a U.S. Lender
 
      By:  /s/ Allison O’Connor       Name: Allison O’Connor      Title:
Authorized Signatory     

[Signature Page]
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            BANK OF AMERICA, N.A. (by its Canada branch), as a Canadian Lender

      By:  /s/ Clara McGibbon       Name: Clara McGibbon      Title: Assistant
Vice President     

[Signature Page]
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            BNP PARIBAS (CANADA), as a Canadian
Lender

      By:        Name:

      Title:

                By:        Name:

      Tile:

     

[Signature Page]
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            UBS AG, CANADA BRANCH, as a Canadian
Lender

      By:  /s/ Mary E. Evans       Name: Mary E. Evans      Title: Associate
Director              By:  /s/ Irja R. Otsa       Name: Irja R. Otsa      Title:
Associate Director     

[Signature Page]
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            THE BANK OF NOVA SCOTIA, as a Canadian
Lender

      By:  /s/ David Mills       Name: David Mills      Title:  Managing
Director              By:        Name:

      Title:

     

[Signature Page]
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            DEUTSCHE BANK AG CANADA BRANCH, as
a Canadian Lender

      By:        Name:

      Title:

                By:        Name:

      Title:

     

[Signature Page]
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            CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK, f/k/a CALYON NEW
YORK BRANCH, as a Canadian Lender

      By:  /s/ Tom Byargeon       Name:

Tom Byargeon      Title:

Managing Director              By:  /s/ Sharada Manne       Name:

Sharada Manne      Title:

Director     

[Signature Page]
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            CITIBANK, N.A., CANADIAN BRANCH, as a
Canadian Lender

      By:  /s/ Ivan Davey       Name:

Ivan Davey      Title:

Authorised Signer     

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            UNION BANK, CANADA BRANCH (formerly
known as Union Bank of California, N.A., Canada
Branch), as a Canadian Lender

      By:  /s/ Phil Taylor       Name: Phil Taylor      Title: Senior Vice
President   

[Signature Page]
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            WELLS FARGO FINANCIAL
CORPORATION CANADA, as a Canadian
Lender

      By:        Name:

      Title:

     

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            THE TORONTO-DOMINION BANK, as a
Canadian Lender

      By:  /s/ Debbi L. Brito     Name: Debbi L. Brito      Title: Authorized
Signatory     

[Signature Page]
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            U.S. BANK NATIONAL ASSOCIATION, as a Canadian Lender
      By:  /s/ Paul Rodgers     Name: Paul Rodgers      Title: Principal
Officer     

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            SUMITOMO MITSUI BANKING
CORPORATION OF CANADA, as a Canadian
Lender

      By:        Name:

      Title:

     

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            SOCIÉTÉ GÉNÉRALE (CANADA BRANCH),
as a Canadian Lender

      By:  /s/ David Baldoni       Name: David Baldoni      Title:   Managing
Director                By:  /s/ Diane Gagnon       Name: Diane Gagnon     
Title:   Director     

[Signature Page]
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            COMERICA BANK, CANADA BRANCH, as a
Canadian Lender

      By:  /s/ Omer Ahmed       Name: Omer Ahmed      Title: Portfolio Manager 
   

[Signature Page]
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            CANADIAN IMPERIAL BANK OF
COMMERCE, as a Canadian Lender

      By:  /s/ Scott Fraser       Name:

Scott Fraser      Title:

Director                By:  /s/ Dale Meger       Name:

Dale Meger      Title:

Authorized Signatory     

[Signature Page]
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            KEYBANK, N.A., as a Canadian Lender

      By:  /s/ David Morris       Name: David Morris      Title: Vice President 
   

[Signature Page]
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            BARCLAYS BANK PLC, as a Canadian Lender
        By:  /s/ Ann E. Sutton       Name: Ann E. Sutton      Title: Director   
 

[Signature Page]
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            CREDIT SUISSE, TORONTO BRANCH, as a
Canadian Lender

      By:        Name:

      Title:

                By:        Name:

      Title:

     

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EXHIBIT I
PURCHASE AGREEMENT
[attached hereto]
Exhibit I – Purchase Agreement

 

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EXECUTION COPY
PURCHASE AGREEMENT
dated as of
July 22, 2010
among
FIRST RESERVE CRESTWOOD HOLDINGS LLC,
COWTOWN GAS PROCESSING L.P.,
COWTOWN PIPELINE L.P.
AND
QUICKSILVER RESOURCES INC.

 

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TABLE OF CONTENTS
 
Page

          ARTICLE 1
Definitions
 
       
Section 1.01.  Definitions
    2
Section 1.02.  Other Definitional and Interpretative Provisions
    2
 
        ARTICLE 2
Purchase and Sale
 
       
Section 2.01.  Purchase and Sale
    3
Section 2.02.  Closing
    3
Section 2.03.  Earn-Out Payments
    4
Section 2.04.  Allocation
    4
Section 2.05.  Proration of Closing Quarterly Dividend
    5
 
        ARTICLE 3
Representations and Warranties of Seller
 
       
Section 3.01.  Corporate Existence and Power
    5
Section 3.02.  Corporate Authorization
    6
Section 3.03.  Governmental Authorization
    6
Section 3.04.  No Undisclosed Liabilities of the KWK Entities; Activities of KWK
Entities
    7
Section 3.05.  Finder’s Fee
    7
Section 3.06.  Capitalization; Ownership
    7
Section 3.07.  Ownership of KGS Note
    9
Section 3.08.  Noncontravention
    9
Section 3.09.  KGS SEC Documents
    9
Section 3.10.  Financial Statements; SOX Compliance
    10
Section 3.11.  Absence of Certain Changes
    11
Section 3.12.  No Undisclosed Material Liabilities
    11
Section 3.13.  Material Contracts
    11
Section 3.14.  Litigation
    13
Section 3.15.  Compliance with Laws and Court Orders
    13
Section 3.16.  Properties
    14
Section 3.17.  Intellectual Property
    15
Section 3.18.  Environmental Matters
    16
Section 3.19.  Employees
    17
 
        i

 

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Section 3.20.  Benefit Plans
    17
Section 3.21.  Taxes
    19
Section 3.22.  Insurance
    20
Section 3.23.  Related Party Transactions
    20
Section 3.24.  Entire Business
    20
 
        ARTICLE 4
Representations and Warranties of Buyer
 
       
Section 4.01.  Corporate Existence and Power
    21
Section 4.02.  Corporate Authorization
    21
Section 4.03.  Governmental Authorization
    21
Section 4.04.  Noncontravention
    21
Section 4.05.  Purchase for Investment
    22
Section 4.06.  Litigation
    22
Section 4.07.  Financing
    22
Section 4.08.  Finders’ Fees
    22
Section 4.09.  Inspections; No Other Representations
    22
 
        ARTICLE 5
Covenants of Seller
 
       
Section 5.01.  Conduct and Operations
    23
Section 5.02.  Access to Information
    27
Section 5.03.  Confidentiality of Seller and the Selling Subsidiaries
    28
Section 5.04.  Superior Proposals
    28
Section 5.05.  Litigation Cooperation
    31
Section 5.06.  Financing Cooperation
    32
Section 5.07.  Non-Compete/Non-Solicit
    33
Section 5.08.  Resignation of Directors
    34
Section 5.09.  Termination of Related Party Transactions
    34
Section 5.10.  Insurance Matters
    34
 
        ARTICLE 6
Covenants of Buyer
 
       
Section 6.01.  Confidentiality
    34
Section 6.02.  Access
    35
Section 6.03.  Use of Seller’s Names and Marks
    35
 
        ARTICLE 7
Covenants of Buyer and Seller
 
       
Section 7.01.  Reasonable Best Efforts; Further Assurances
    36
 
        ii

 

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Section 7.02.  Certain Filings
    37
Section 7.03.  Public Announcements
    37
Section 7.04.  Notice of Certain Events
    37
Section 7.05.  Board of Directors
    38
Section 7.06.  Surety Bonds
    38
Section 7.07.  Transaction Documents
    38
Section 7.08.  Master Services Agreements
    39
Section 7.09.  Real Estate Matters
    39
Section 7.10.  Automobiles
    40
 
        ARTICLE 8
Tax Matters
 
       
Section 8.01.  Allocation of Tax Items
    40
Section 8.02.  Tax Returns
    40
Section 8.03.  Transfer Taxes
    41
Section 8.04.  Tax Indemnification
    41
Section 8.05.  Survival; Exclusivity
    43
 
        ARTICLE 9
Employee Matters
 
       
Section 9.01.  Employee Matters
    43
 
        ARTICLE 10
Conditions to Closing
 
       
Section 10.01.  Conditions to Obligations of All Parties
    49
Section 10.02.  Conditions to Obligation of Buyer
    50
Section 10.03.  Conditions to Obligation of Seller and the Selling Subsidiaries
    50
 
        ARTICLE 11
Termination
 
       
Section 11.01.  Grounds for Termination
    51
Section 11.02.  Effect of Termination
    51
 
        ARTICLE 12
Survival; Indemnification
 
       
Section 12.01.  Survival
    52
Section 12.02.  Indemnification
    52
Section 12.03.  Third-Party Claim Procedures
    53
Section 12.04.  Direct Claim Procedures
    55
 
        iii

 

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Section 12.05.  Calculation of Damages
    55
Section 12.06.  Assignment of Claims
    57
Section 12.07.  Exclusivity
    57
 
        ARTICLE 13
Miscellaneous
 
       
Section 13.01.  Notices
    57
Section 13.02.  Amendments and Waivers
    59
Section 13.03.  Expenses
    59
Section 13.04.  Successors and Assigns
    60
Section 13.05.  Governing Law
    60
Section 13.06.  Jurisdiction
    60
Section 13.07.  WAIVER OF JURY TRIAL
    61
Section 13.08.  Counterparts; Effectiveness; Third-Party Beneficiaries
    61
Section 13.09.  Entire Agreement
    61
Section 13.10.  Severability
    61
Section 13.11.  Disclosure Schedules
    62
Section 13.12.  Specific Performance
    62
Section 13.13.  Waiver of Conflicts; Attorney-Client Privilege
    62

         
Exhibit A
  –   Transition Services Agreement
Exhibit B
  –   Determination of Earn-Out Payment
Exhibit C
  –   Joint Operating Agreement
Exhibit D
  –   Second Amendment to Gas Gathering Agreement (Lake Arlington Dry System)
Exhibit E
  –   Assignment Agreement (Holdings LLC Interests)
Exhibit F
  –   Assignment Agreement (KGS Note)
Exhibit G
  –   Second Amendment to Sixth Amended and Restated Gas Gathering and
Processing Agreement (Cowtown Facilities)
Exhibit H
  –   Amendment to Gas Gathering Agreement (Alliance System)
Exhibit I
  –   Liquids Assignment and Assumption Agreement

 iv 

 

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PURCHASE AGREEMENT
            AGREEMENT (this “Agreement”) dated as of July 22, 2010 among First
Reserve Crestwood Holdings LLC, a Delaware limited liability company (“Buyer”),
Cowtown Gas Processing L.P., a Texas limited partnership (“Cowtown Gas”),
Cowtown Pipeline L.P., a Texas limited partnership (“Cowtown Pipeline”, and
together with Cowtown Gas, the “Selling Subsidiaries”), and Quicksilver
Resources Inc., a Delaware corporation (“Seller”).
W  I  T  N  E  S  S  E  T  H :
            WHEREAS, Seller, through its 100% ownership of the Selling
Subsidiaries, owns 100% of the outstanding membership interests (the “Holdings
LLC Interests”) of Quicksilver Gas Services Holdings LLC, a Delaware limited
liability company (“Holdings LLC”);
            WHEREAS, Holdings LLC owns (i) 100% of the outstanding membership
interests (the “Gas Services GP LLC Interests”) of Quicksilver Gas Services GP
LLC, a Delaware limited liability company (“Gas Services GP”), (ii) 5,696,752
Common Units (as defined below), and (iii) 11,513,625 Subordinated Units (as
defined below);
            WHEREAS, Gas Services GP owns 469,944 General Partner Units (as
defined below) and 100% of the outstanding Incentive Distribution Rights (as
defined below);
            WHEREAS, on August 10, 2007 Quicksilver Gas Services LP, a Delaware
limited partnership (“KGS”) executed that certain Subordinated Promissory Note
payable to Seller in the original principal amount of $50,000,000 (the “KGS
Note”); and
            WHEREAS, Buyer desires to purchase the Holdings LLC Interests from
the Selling Subsidiaries and the KGS Note from Seller, and Seller desires to
sell the KGS Note to Buyer and to cause the Selling Subsidiaries to sell the
Holdings LLC Interests to Buyer, upon the terms and subject to the conditions
set forth herein.
            NOW, THEREFORE, the parties hereto agree as follows:

 

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ARTICLE 1
Definitions
            Section 1.01. Definitions. (a) As used herein, the following terms
have the following meanings:
            “Accounting Firm” means a nationally recognized firm of independent
accountants agreed upon by Seller and Buyer.
            “Affiliate” means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person; provided that after the Closing Date none of the Sold Entities
shall be considered an Affiliate of Seller and each of the Sold Entities will be
an Affiliate of Buyer.
            “Amendment to the Gas Gathering Agreement” means the Amendment to
the Gas Gathering Agreement substantially in the form attached hereto as
Exhibit H.
            “Applicable Law” means, with respect to any Person, any federal,
state or local law (statutory, common or otherwise), constitution, treaty,
convention, ordinance, code, rule, regulation, order, injunction, judgment,
decree, ruling or other similar requirement enacted, adopted, promulgated or
applied by a Governmental Authority that is binding upon or applicable to such
Person.
            “Balance Sheet Date” means December 31, 2009.
            “Benefit Plan” means any and all “employee benefit plans” within the
meaning of Section 3(3) of ERISA (including multiemployer plans within the
meaning of Section 3(37) of ERISA) and any and all employment, deferred
compensation, change in control, severance, termination, loan, employee benefit,
retention, bonus, pension, profit sharing, savings, retirement, welfare,
incentive compensation, stock or equity-based compensation, stock purchase,
stock appreciation, fringe benefit, vacation, paid time off or other similar
agreements, plans, programs, policies, understandings or arrangements, whether
oral or written, formal or informal, legally binding or not.
            “Business Day” means a day, other than Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
Applicable Law to close.
            “Business Employee” means each of the individuals set forth on
Section 3.19(c) of the Seller Disclosure Schedules.
            “Business Employee Plan” means each Benefit Plan (i) that is
sponsored, maintained, provided or contributed to or required to be sponsored,
maintained,

2

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provided or contributed to by Seller or any of its Subsidiaries, including any
of the Sold Entities, or to which Seller or any of its Subsidiaries, including
any of the Sold Entities is a party, in each case providing compensation or
benefits to any current or former employee or director of any of the Sold
Entities or any current or former Seconded Employee or (ii) under which any of
the Sold Entities has had or has any present or future liability.
            “Class B Units” has the meaning set forth in the KGS Partnership
Agreement.
            “Closing Date” means the date of the Closing.
            “Code” means the United States Internal Revenue Code of 1986.
            “Common Units” has the meaning set forth in the KGS Partnership
Agreement.
            “Contract” means a note, bond, mortgage, indenture, deed of trust,
license, lease, agreement, contract or other legally binding instrument or
contractual obligation.
            “Debt Financing” means the debt financing contemplated by the
commitment letter with the Financing Sources and the term sheets attached
thereto, and any replacement financing that Buyer may seek to obtain in the
event that the aforementioned debt financing otherwise becomes unavailable.
            “Earn-Out Payment” has the meaning assigned to such term on
Exhibit B to this Agreement.
            “Effective Hire Date” means (i) for Business Employees, the Closing
Date; and (ii) for Inactive Business Employees, if later than the Closing Date,
the date of their return to active employment with Buyer or any of its
Affiliates.
            “Environmental Laws” means any Applicable Law relating to the
protection of the environment, natural resources, wildlife or human health (to
the extent relating to exposure to toxic or hazardous materials).
            “Environmental Permits” means any and all permits, licenses,
registrations, approvals, exemptions and any other authorization in each case
required under any Environmental Law.
            “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended.

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            “ERISA Affiliate” of any entity means any other entity (whether or
not incorporated) which, together with such entity, would be treated as a single
employer under Section 414 of the Code.
            “Financing Sources” means the Persons that have committed to provide
or otherwise entered into agreements to provide debt financing in connection
with the Debt Financing, including Bank of America, N.A., Banc of America
Securities LLC, BNP Paribas, BNP Paribas Securities Corp., Royal Bank of Canada,
RBC Capital Markets and those Persons named in any joinder agreements,
indentures or credit agreements entered into pursuant thereto or relating
thereto together with their Affiliates, officers, directors, employees and
representatives involved in such debt financing and their successors and assigns
(other than, in each case, First Reserve Fund XII, L.P. and its Affiliates
together with its and their respective officers, directors, employees and
representatives).
            “GAAP” means generally accepted accounting principles in the United
States.
            “General Partner Units” has the meaning set forth in the KGS
Partnership Agreement.
            “Governmental Authority” means any transnational, domestic or
foreign federal, state or local governmental authority, department, court,
agency or official, including any political subdivision thereof, and any
arbitrating body, commission or quasi-governmental authority or self-regulating
organization of competent authority exercising or enlisted to exercise similar
power or authority.
            “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
            “Incentive Distribution Right” has the meaning set forth in the KGS
Partnership Agreement.
            “Indebtedness” means (i) any indebtedness or other liability or
obligation for borrowed money (including accrued but unpaid interest); (ii) any
indebtedness or other liability or obligation for the deferred and unpaid
purchase price of property or services (excluding, for the avoidance of doubt,
current trade payables in the ordinary course of business); (iii) any other
indebtedness or other liability or obligation that is evidenced by a note, bond
(other than surety bonds), debenture or similar instrument; (iv) any and all
indebtedness or other liabilities and amounts owed in respect of acceleration,
termination, cancellation or prepayment of any indebtedness for borrowed money;
(v) any indebtedness under financing or capital leases; (vi) any indebtedness
secured by a Lien on any property of the Sold Entities; and (vii) any
indebtedness or other liability or obligation that would otherwise be classified
as “debt” on a balance sheet of any

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Sold Entity or KGS on a consolidated basis, in any such case, prepared in
accordance with GAAP on a consistent basis.
            “Intellectual Property Right” means any trademark, service mark,
trade name, mask work, invention, patent, trade secret, copyright, Internet
domain name, and know-how (including any registrations or applications for
registration of any of the foregoing) or any other similar type of proprietary
intellectual property right.
            “Joint Operating Agreement” means a joint operating agreement among
KGS, Seller and Gas Services GP substantially in the form attached hereto as
Exhibit C.
            “KGS Balance Sheet” means the audited consolidated balance sheet of
KGS and its subsidiaries as of December 31, 2009 and the footnotes thereto set
forth in the KGS 10-K.
            “KGS Entities” means KGS and each of the Subsidiaries.
            “KGS Partnership Agreement” means the Second Amended and Restated
Agreement of Limited Partnership of Quicksilver Gas Services LP dated as of
February 19, 2008.
            “KGS 10-K” means KGS’ annual report on Form 10-K for the fiscal year
ended December 31, 2009.
            “knowledge of Seller”, “Seller’s knowledge” or any other similar
knowledge qualification in this Agreement means to the actual knowledge after
reasonable inquiry of Glenn Darden, Philip W. Cook, Thomas F. Darden and Jeff
Cook.
            “KWK Entities” means Holdings LLC and Gas Services GP.
            “Lien” means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest or encumbrance in respect of such
property or asset.
            “Liquids Assignment and Assumption Agreement” means the Liquids
Assignment and Assumption Agreement substantially in the form attached hereto as
Exhibit I.
            “Material Adverse Effect” means any change, event, circumstance,
development or occurrence that, individually or in the aggregate with all other
changes, events, circumstances, developments and occurrences, has had or would
reasonably be expected to have a material adverse effect on (a) the condition

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(financial or otherwise), business, assets, liabilities or results of operations
of the Sold Entities, taken as a whole, excluding any change, event,
circumstance, development or occurrence to the extent resulting from, arising
out of or relating to (i) this Agreement (including the execution and
announcement thereof) or the transactions contemplated hereby (provided that the
exception in this clause (i) shall not apply to Section 3.08(iii)), (ii) changes
or conditions affecting the natural gas transportation, gathering and processing
industry generally, (iii) changes in oil or natural gas commodity prices,
(iv) changes in economic, market, financial, regulatory or political conditions
generally, (v) acts of war, terrorism, earthquakes, hurricanes, tornadoes or
other natural disasters, (vi) changes in Applicable Law or GAAP, (vii) seasonal
fluctuations affecting any of the Sold Entities or the natural gas
transportation, gathering and processing industry generally, (viii) the failure
of any Sold Entity to meet any internal forecasts or budgets for any period
prior to, on or after the date of this Agreement (provided that any change,
event, circumstance, development or occurrence underlying such failure that is
not otherwise excluded from the definition of Material Adverse Effect may be
taken into account in determining whether a Material Adverse Effect has
occurred) or (ix) any change in the price of the Common Units on the New York
Stock Exchange, except to the extent any of the changes, events, circumstances,
developments or occurrences referred to in clauses (ii), (iii), (iv), (v),
(vi) or (vii) above materially and disproportionately impact the Sold Entities,
taken as a whole, as compared to other companies in the industries in which the
Sold Entities operate (in which event only the extent of such material and
disproportionate impact over the extent of the impact on such other companies
may be taken into account in determining whether a Material Adverse Effect has
occurred) or (b) the ability of Seller or the Selling Subsidiaries to perform
their respective obligations under or arising out of this Agreement or the other
Transaction Documents and to consummate the transactions contemplated hereby and
thereby, except to the extent relating to those matters set forth in
Section 1.01 of the Seller Disclosure Schedules.
            “Materials of Environmental Concern” means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactivity, and any other toxic or hazardous substances of any
kind, in each case that are regulated pursuant to or could give rise to
liability under any Environmental Law.
            “1933 Act” means the Securities Act of 1933.
            “1934 Act” means the Securities Exchange Act of 1934.

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            “Omnibus Agreement” means that Omnibus Agreement among Gas Services
GP, Seller and KGS, dated as of the date of closing of KGS’ initial public
offering.
            “Organizational Documents” means, with respect to any Person, the
articles of incorporation, certificate of incorporation, certificate of
formation, certificate of limited partnership, bylaws, limited liability company
agreement, operating agreement, partnership agreement, stockholders’ agreement
and all other similar documents, instruments or certificates executed, adopted
or filed in connection with the creation, formation or organization of such
Person, including any amendments or modifications thereto.
            “Partnership Interests” means Common Units, General Partner Units,
Incentive Distribution Rights, Class B Units and Subordinated Units.
            “Person” means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a Governmental Authority.
            “Post-Closing Tax Period” means any Tax period beginning after the
Closing Date; and, with respect to a Straddle Tax Period, the portion of such
Tax period beginning after the Closing Date.
            “Pre-Closing Tax Period” means any Tax period ending on or before
the Closing Date; and, with respect to a Straddle Tax Period, the portion of
such Tax period ending on the Closing Date.
            “Quicksilver Counties” means the following counties in the State of
Texas: Denton, Hood, Somervell, Johnson, Tarrant, Parker, Bosque and Erath.
            “Release” means any release, spill, leak, discharge, disposal of,
pumping, pouring, emitting, emptying, injecting, escaping, leaching, or dumping.
            “Second Amendment to Gas Gathering Agreement” means Second Amendment
to Gas Gathering Agreement substantially in the form attached hereto as
Exhibit D.
            “Second Amendment to Sixth Amended and Restated Gas Gathering and
Processing Agreement” means Second Amendment to Sixth Amended and Restated Gas
Gathering and Processing Agreement substantially in the form attached hereto as
Exhibit G.
            “Seconded Employee” has the meaning set forth in the Secondment
Agreement.

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            “Secondment Agreement” means the Services and Secondment Agreement,
dated as of August 10, 2007, by and between Seller and Gas Services GP.
            “Seller Disclosure Schedules” means the disclosure schedule dated
the date hereof regarding this Agreement that has been provided by Seller to
Buyer prior to the execution and delivery of this Agreement.
            “Seller’s Names and Marks” means the names and marks “Quicksilver”
and “KGS” and any name or mark confusingly similar to or including any of the
foregoing.
            “Sold Entities” means each of Holdings LLC, Gas Services GP, KGS and
the Subsidiaries.
            “Sold Entities Intellectual Property Rights” means all Intellectual
Property Rights owned by the Sold Entities.
            “SOX” means the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder.
            “Straddle Tax Period” means a Tax period that begins on or before
the Closing Date and ends after the Closing Date.
            “Subordinated Units” has the meaning set forth in the KGS
Partnership Agreement.
            “Subsidiary” means any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors, managers, general partner or other persons performing similar
functions are directly or indirectly owned or controlled by KGS.
            “Tax” means (i) any tax or like fee, charge, levy or other
assessment imposed by any Governmental Authority, including any excise,
property, income, sales, transfer, margin, franchise, payroll, withholding or
social security (including, but not limited to, withholding on amounts paid to
or by any Person), together with any interest, penalty, addition to tax or
additional amount imposed by any Governmental Authority and (ii) any liability
for the payment of any amount of the type described in the immediately preceding
clause (i) as a result of any of the Sold Entities being a member of an
affiliated, consolidated or combined group with any other corporation at any
time on or prior to the Closing Date.
            “Tax Return” means all returns, declarations, reports, forms,
estimates, information returns, statements or other documents (including any
related or

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supporting information or schedules) filed or required to be filed with or
supplied to any Governmental Authority in connection with any Taxes and
including any supplement or amendment thereof.
            “Third Party” means any Person other than Seller, Buyer or any of
their respective Affiliates.
            “Transaction Documents” means this Agreement, the Confidentiality
Agreement, the Transition Services Agreement, the Joint Operating Agreement,
Second Amendment to Sixth Amended and Restated Gas Gathering and Processing
Agreement, Amendment to the Gas Gathering Agreement, the Liquids Assignment and
Assumption Agreement and Second Amendment to Gas Gathering Agreement.
            “Transaction Expenses” means all fees and expenses of Seller and its
Affiliates (other than KGS and the Subsidiaries) in connection with the
negotiation, preparation and delivery of the Transaction Documents and the
consummation of the purchase and sale of the Holdings Interests and the
transactions contemplated by this Agreement and the other Transaction Documents.
            “Transfer Taxes” means federal, state, local or foreign or other
excise, sales, use, value added, transfer (including real property transfer or
gains), stamp, documentary, filing, recordation and other similar taxes and fees
that may be imposed or assessed as a result of the transactions contemplated by
this Agreement, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.
            “Transition Services Agreement” means a transition services
agreement between Seller and KGS substantially in the form attached hereto as
Exhibit A.
            “Treasury Regulations” means the regulations (including temporary
regulations) promulgated by the United States Department of the Treasury
pursuant to and in respect of provisions of the Code. All references herein to
sections of the Treasury Regulations shall include any corresponding provisions
or provisions of succeeding, similar or substitute, temporary or final Treasury
Regulations.
            “WARN” means the Federal Worker Adjustment and Retraining
Notification Act of 1988 or any similar state or local law.
            (b)      Each of the following terms is defined in the Section set
forth opposite such term:

9

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      Term   Section
Acceptable Confidentiality Agreement
  5.04(b)
Acquisition Proposal
  5.04(e)(i)
Agreement
  Preamble
Alternative Transaction
  13.03(b)
Allocation Schedule
  2.04(a)
Assumed FSA Balance
  9.01(i)
Buyer
  Preamble
Buyer FSA
  9.01(i)
Buyer Warranty Breach
  12.02(b)
Capex Budget
  5.01(b)
Certificate of Creditable Coverage
  9.01(e)
Closing
  2.02
Closing Payment
  2.01(a)
Confidentiality Agreement
  6.01
Continuation Coverage
  9.01(p)
Cowtown Gas
  Preamble
Cowtown Pipeline
  Preamble
Creditors’ Rights
  3.02
Current Employee
  9.01(b)
Current Representation
  13.13(a)
Damages
  12.02(a)
Designated Person
  13.13(a)
ERISA Affiliate
  3.20(d)
Fundamental Representations
  10.02(b)
Gas Services GP
  Preamble
Gas Services GP LLC Interests
  Preamble
Holdings LLC
  Preamble
Holdings LLC Interests
  Preamble
Indemnified Party
  12.03(a)
Indemnifying Party
  12.03(a)
KGS
  Preamble
KGS Note
  Preamble
KGS SEC Documents
  3.09
Legal Requirement
  3.15
Material Contracts
  3.13(c)
Master Services Agreement
  7.08
Notice
  5.04(d)(ii)
Permitted Liens
  3.16
Post-Closing Representation
  13.13(a)
Potential Contributor
  12.06
Preceding Quarter
  2.05(b)
Pro-Rata Distribution Amount
  2.05(a)
Purchase Price
  2.01

 

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

 

      Term   Section
Qualifying Buyer Warranty Breach
  12.02(b)
Qualifying Warranty Breach
  12.02(a)
Relevant Period
  9.01(c)
Representatives
  5.04(a)
Restricted Businesses
  5.07(a)
Right-of-Way
  3.16(b)
SEC
  3.09
Securities
  2.01
Seller
  Preamble
Seller FSA
  9.01(i)
Selling Subsidiaries
  Preamble
Superior Proposal
  5.04(e)(ii)
Tax Damages
  8.04(a)
Tax Indemnified Party
  8.04(d)
Tax Indemnifying Party
  8.04(d)
Third-Party Claim
  12.03(a)
Termination Date
  11.01(b)
Terminating Partnership
  8.01
Termination Fee
  13.03(a)
Third Quarter Financials
  5.06(a)
2007 Equity Plan
  3.06(a)
Warranty Breach
  12.02(a)

            Section 1.02.  Other Definitional and Interpretative Provisions. The
words “hereof”, “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. References to Articles, Sections, Exhibits and Schedules are to
Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise
specified. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise
defined therein, shall have the meaning as defined in this Agreement. Any
singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”, whether or not they are in fact followed by
those words or words of like import. “Writing”, “written” and comparable terms
refer to printing, typing and other means of reproducing words (including
electronic media) in a visible form. References to any agreement or contract are
to that agreement or contract as amended, modified or supplemented from time to
time in accordance with the

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terms hereof and thereof. References to any Person include the successors and
permitted assigns of that Person. References from or through any date mean,
unless otherwise specified, from and including or through and including,
respectively. References to “law”, “laws” or to a particular statute or law
shall be deemed to include any such law or statute as amended from time to time,
any rules and regulations promulgated thereunder and any and all Applicable Law.
ARTICLE 2
Purchase and Sale
            Section 2.01. Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement at the Closing (i) the Selling Subsidiaries shall,
and Seller shall cause the Selling Subsidiaries to, sell to Buyer, and Buyer
agrees to purchase from the Selling Subsidiaries, the Holdings LLC Interests,
free and clear of any Liens and (ii) Seller agrees to sell to Buyer, and Buyer
agrees to purchase from Seller, the KGS Note, free and clear of any Liens
(together with the Holdings LLC Interests, the “Securities”). The purchase price
for the Securities (the “Purchase Price”) shall be paid as provided in
Section 2.02 and shall be the aggregate of:
            (a)      $701,000,000 in cash payable at Closing (the “Closing
Payment”); and
            (b)      any Earn-Out Payment which may become payable after Closing
pursuant to Section 2.03.
            Section 2.02. Closing. Subject to the terms and conditions of this
Agreement, the closing (the “Closing”) of the purchase and sale of the
Securities hereunder shall take place at the offices of Davis Polk & Wardwell
LLP, 450 Lexington Avenue, New York, New York, as soon as possible, but in no
event later than two Business Days, after satisfaction of the conditions set
forth in Article 10 (other than any conditions that by their nature are to be
satisfied at the Closing but subject to the satisfaction or waiver of such
conditions at the Closing), or at such other time or place as Buyer and Seller
may agree in writing; provided that, unless otherwise agreed in writing by Buyer
and Seller, the Closing shall not occur earlier than October 7, 2010; provided
further, however, that in the event that the Closing does not occur on or prior
to October 31, 2010, the Closing shall not, unless otherwise agreed by Buyer,
occur until the later of (x) December 9, 2010 and (y) 30 days after Seller’s
delivery to Buyer of the Third Quarter Financials. At the Closing:
            (a)      Buyer shall deliver to Seller (or one or more Affiliates of
Seller as designated prior to Closing by Seller) the Closing Payment in
immediately

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available funds by wire transfer to an account of Seller (or one or more
Affiliates of Seller as designated prior to Closing by Seller) designated by
Seller, by notice to Buyer, which notice shall be delivered not later than two
Business Days prior to the Closing Date.
            (b)       Buyer and each of the Selling Subsidiaries shall execute
and deliver an agreement of assignment assigning to Buyer all of the Selling
Subsidiaries’ right, title and interest in, to and under the Holdings LLC
Interests substantially in the form attached hereto as Exhibit E;
            (c)       Buyer and Seller shall execute and deliver an agreement of
assignment assigning to Buyer all of Seller’s right, title and interest in, to
and under the KGS Note in substantially the form attached hereto as Exhibit F;
and
            (d)       Seller shall deliver to Buyer the written resignations
requested by Buyer or otherwise required to be delivered by Seller, in each
case, pursuant to Section 5.08.
            Section 2.03. Earn-Out Payments. Buyer shall pay to Seller any
Earn-Out Payment as and when determined in accordance with Exhibit B, in cash in
immediately available funds by wire transfer to an account designated by Seller
by notice to Buyer. Solely for U.S. federal income tax purposes, a portion of
any Earn-Out Payment shall be treated as interest as required by Section 483 or
1274 of the Code.
            Section 2.04. Allocation. (a) As soon as practicable after Closing
(but in no event later than 60 days after Closing), Buyer shall deliver to
Seller a schedule setting forth the fair market value of the KGS Note and the
assets of the KWK Entities and the KGS Entities (the “Allocation Schedule”) for
tax purposes (which, for the avoidance of doubt, shall be in the aggregate based
on the Purchase Price and such other items, such as liabilities of the KWK
Entities and the KGS Entities, as are appropriately taken into account). Seller
shall have the right to consent to the allocation contained in the Allocation
Schedule (such consent not to be unreasonably withheld). If Seller does not
consent to the Allocation Schedule within 20 days of its delivery by Buyer,
Buyer and Seller shall use commercially reasonable efforts to resolve such
dispute within 30 days. In the event that Buyer and Seller are unable to resolve
such dispute within 30 days, Buyer and Seller shall submit such dispute to the
Accounting Firm to resolve the disputed items. Upon resolution of the disputed
items, the allocation reflected in the Allocation Schedule shall be adjusted to
reflect such resolution. The fees and expenses of the Accounting Firm shall be
borne 50% by Buyer and 50% by Seller.
            (b)       For all Tax purposes, except as mandated by Applicable
Law, the parties hereto agree to treat, and to cause their respective Affiliates
to treat, any

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payment to any party required by Sections 2.03, 2.05, 8.02, 8.04 and 12.02 of
this Agreement as an adjustment to the Purchase Price.
            Section 2.05. Proration of Closing Quarterly Dividend. (a) Within
three Business Days after Buyer or any of its Affiliates receives the regular
quarterly cash distribution paid by KGS in respect of the quarter in which the
Closing occurs, Buyer shall pay to Seller an amount in cash equal to the Pro
Rata Distribution Amount. The “Pro Rata Distribution Amount” shall equal the
product of (a) the aggregate amount of the cash distribution received by Buyer
or any of its Affiliates from KGS in respect of the Partnership Interests to be
purchased indirectly by Buyer pursuant to this Agreement multiplied by (b) a
fraction, the numerator of which is the number of days in such quarter prior to
and including the Closing Date, and the denominator of which is the number of
days in such quarter.
            (b)      In the event that the Closing Date occurs on or before the
record date relating to the distribution by KGS for the quarter immediately
preceding the quarter in which the Closing occurs (the “Preceding Quarter”), in
addition to any amounts to be paid by Buyer to Seller pursuant to
Section 2.05(a), Buyer shall pay to Seller 100% of the quarterly cash
distribution received by Buyer or any of its Affiliates from KGS in respect of
the Partnership Interests to be purchased indirectly by Buyer pursuant to this
Agreement for the Preceding Quarter. The payment shall be made no later than
three Business Days following the receipt by Buyer or any of its Affiliates of
such distribution.
ARTICLE 3
Representations and Warranties of Seller
            Except as set forth in (i) the Seller Disclosure Schedules, subject
to the provisions of Section 13.11 or (ii) the KGS SEC Documents that are
publicly available prior to the date hereof (excluding any forward looking
disclosures set forth in any risk factor section, any disclosures in any section
relating to forward looking statements and any other disclosures included
therein to the extent they are predictive or forward-looking in nature, in each
case that are general in nature and do not contain a reasonable level of detail
about the specific risk of which they warn), Seller and the Selling Subsidiaries
jointly and severally represent and warrant to Buyer as of the date hereof and
as of the Closing Date that:
            Section 3.01. Corporate Existence and Power. Seller, each of the
Selling Subsidiaries and each of the Sold Entities is duly formed, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization and has all requisite corporate (or similar) power
and all material governmental licenses, qualifications, authorizations,
registrations, permits, consents, variances

5

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and approvals required to carry on their respective businesses as now conducted.
The Sold Entities are in material compliance with all such governmental
licenses, qualifications, authorizations, registrations, permits, consents and
approvals, and no suspension, revocation, cancellation or declaration of
invalidity of any such licenses, qualifications, authorizations, registrations,
permits, consents, variances or approvals is pending, or to the knowledge of
Seller, threatened. Each Sold Entity is duly qualified to do business as a
foreign corporation or other applicable entity and is in good standing in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. All of the
outstanding capital stock, equity interests or other voting securities of each
Subsidiary is owned by KGS, directly or indirectly, free and clear of any Lien
and free of any other limitation or restriction (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or other
voting securities).
            Section 3.02. Corporate Authorization. The execution, delivery and
performance by Seller and the Selling Subsidiaries of this Agreement and each of
the other Transaction Documents to which they are a party and the consummation
of the transactions contemplated hereby and thereby are within Seller’s and the
Selling Subsidiaries’ corporate (or similar) powers and have been duly
authorized by all necessary corporate action on the part of Seller and each of
the Selling Subsidiaries. Each of the transactions described in Section 7.07
(other than Section 7.07(a)(iii)) have been approved by the Conflicts Committee
of Gas Services GP on or prior to the date hereof. This Agreement is, and the
other Transaction Documents to which they are a party are or will be when
executed and delivered at the Closing, as applicable, duly executed and
delivered by Seller and/or the Selling Subsidiaries, as applicable. This
Agreement constitutes, and each of the other Transaction Documents entered into
or to be entered at the Closing by them will constitute when entered into a
valid and binding agreement of Seller and/or the Selling Subsidiaries, as
applicable, enforceable against Seller and/or the Selling Subsidiaries in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, moratorium and similar
laws relating to or affecting creditors’ rights generally and subject, as to
enforceability, to legal principles of general applicability governing the
availability of equitable remedies (regardless of whether such enforceability is
considered in a proceeding in equity or at law) (collectively, “Creditors’
Rights”).
            Section 3.03. Governmental Authorization. The execution, delivery
and performance by Seller and the Selling Subsidiaries of this Agreement and
each of the other Transaction Documents to which they are a party and the
consummation of the transactions contemplated hereby and thereby require no
action by or in respect of, or filing or notification by Seller or any Selling
Subsidiary with any

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Governmental Authority other than (i) compliance with any applicable
requirements of the HSR Act; (ii) compliance with any applicable requirements of
the 1934 Act; and (iii) any such action or filing as to which the failure to
make or obtain would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
            Section 3.04. No Undisclosed Liabilities of the KWK Entities;
Activities of KWK Entities. There are no liabilities of any KWK Entity of any
kind (whether accrued or fixed, absolute or contingent, matured or unmatured,
determined or determinable or otherwise), other than liabilities set forth on
Section 3.04 of the Seller Disclosure Schedule. Holdings LLC does not have any
assets (other than its equity ownership in Gas Services GP and KGS), employees
or is otherwise party to any Contract (other than its Organizational Documents).
Holdings LLC does not and has not conducted any operations or business other
than its holding of equity in Gas Services GP and KGS.
            Section 3.05. Finder’s Fee. (a) Except for UBS Securities LLC, whose
fees will be paid by Seller, there is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Seller or any of its subsidiaries or Affiliates who might be entitled to any
fee or commission in connection with the transactions contemplated by this
Agreement.
            (b)       None of the Sold Entities have incurred or will be liable
for any Transaction Expenses.
            Section 3.06. Capitalization; Ownership. (a) Seller indirectly owns
100% of the outstanding equity interests of each Selling Subsidiary. The Selling
Subsidiaries are the sole owners, beneficially and of record, of 100% of the
outstanding Holdings LLC Interests free and clear of any Lien and will transfer
and deliver to Buyer at the Closing good and valid title to the Holdings LLC
Interests free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities). Holdings LLC is the
sole owner, beneficially and of record, of (i) 100% of the outstanding Gas
Services GP LLC Interests free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other voting securities),
(ii) 5,696,752 Common Units free and clear of any Lien and, except as expressly
set forth in the KGS Partnership Agreement, free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities) and (iii) 11,513,625
Subordinated Units free and clear of any Lien and, except as expressly set forth
in the KGS Partnership Agreement, free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other voting securities). Gas Services

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GP is the sole owner, beneficially and of record, of (x) 469,944 General Partner
Units, which constitute 100% of the outstanding General Partner Units and
(y) 100% of the outstanding Incentive Distribution Rights, in each case, free
and clear of any Lien and, except as expressly set forth in the KGS Partnership
Agreement, free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other voting securities). As of the date of this Agreement, there were
16,988,429 Common Units outstanding, 11,513,625 Subordinated Units outstanding,
469,944 General Partner Units outstanding and 547,772 Phantom Units outstanding
under KGS’ Second Amended and Restated 2007 Equity Plan (the “2007 Equity
Plan”), of which 516,263 represent the right to receive 516,263 Common Units
upon vesting of such Phantom Units and 31,509 represent the right to receive a
cash payment equal to the Fair Market Value (as defined under the 2007 Equity
Plan) of a Common Unit upon the vesting of such Phantom Unit, in each case,
pursuant to the terms of the 2007 Equity Plan. There are no Class B Units
outstanding.
            (b)       All of the outstanding Holdings LLC Interests, Gas
Services GP LLC Interests, Common Units, Subordinated Units, General Partner
Units and Incentive Distribution Rights have been duly authorized and validly
issued in accordance with the KGS Partnership Agreement and are fully paid (to
the extent required under the KGS Partnership Agreement) and non-assessable
(except as such nonassessability is affected by the Delaware Revised Uniform
Limited Partnership Act) and were not issued in violation of any pre-emptive
rights, right of first refusal, right of first offer or similar rights of any
Person. Except as set forth in this Section 3.06, there are no outstanding
(i) units of capital stock, equity interests or voting securities of any of the
Sold Entities, (ii) securities of any of the Sold Entities convertible into or
exchangeable or exercisable for shares of capital stock, equity interests or
voting securities of the Sold Entities or equity-based awards or (iii) options
or other rights to acquire from Seller, the Selling Subsidiaries or any of the
Sold Entities, or other obligation (whether firm or contingent) of any of the
Sold Entities to issue, any capital stock, equity interests, voting securities
or securities convertible into or exchangeable or exercisable for capital stock,
equity interests or voting securities of any of the Sold Entities. There are no
outstanding obligations of any of the Sold Entities to repurchase, redeem or
otherwise acquire any of the securities referred to in Sections 3.06(b)(i),
3.06(b)(ii) and 3.06(b)(iii) (or Section 3.06(a)).
            (c)       None of the Sold Entities has outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into or exchangeable or exercisable for securities having
the right to vote) with the holders of equity interests in such Sold Entities on
any matter or with respect to any matter pertaining to any Sold Entity.

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            (d)       Except for its ownership of equity interests in another
Sold Entity, no Sold Entity owns any equity interests or other securities in any
other Person or has any obligation or commitment to make any investment in or
otherwise acquire any equity interests or other securities of any Person. A true
and complete list of each Subsidiary and the equityholders thereof is set forth
in Section 3.06(d) of the Seller Disclosure Schedules.
            (e)       There are no voting trusts, proxies, agreements,
commitments or understandings of any character to which Seller or the Selling
Subsidiaries are bound with respect to the voting or transfer of the equity
interests or other securities of the KWK Entities. There are no voting trusts,
proxies or other agreements, commitments or understandings of any character to
which any KGS Entity is a party or by which any of them is bound with respect to
the holding, voting or disposition of any shares of capital stock or other
equity interests or securities of any KGS Entity.
            Section 3.07. Ownership of KGS Note. Seller is the record and
beneficial owner of the KGS Note and will transfer and deliver to Buyer at the
Closing valid title to the KGS Note free and clear of any Lien.
            Section 3.08. Noncontravention. The execution, delivery and
performance by Seller and the Selling Subsidiaries of this Agreement and the
other Transactions Documents to which they are a party and the consummation of
the transactions contemplated hereby and thereby do not and will not (i) violate
or conflict with the Organizational Documents of Seller, the Selling
Subsidiaries or any of the Sold Entities, (ii) assuming compliance with the
matters referred to in Section 3.03, violate or conflict with any Applicable
Law, (iii) require any consent or other action by any Person under, constitute a
default under, result in a violation of or conflict with, or give rise to any
right of termination, cancellation, modification or acceleration of any right or
obligation of Seller, the Selling Subsidiaries or any of the Sold Entities or to
a loss of any benefit to which Seller, the Selling Subsidiaries or any of the
Sold Entities is entitled under any provision of any Contract binding upon
Seller, the Selling Subsidiaries or any of the Sold Entities or (iv) constitute
(with or without the giving of notice or the passage of time or both) an event
which would result in the creation of any Lien (other than Permitted Liens) upon
any assets or properties of the Sold Entities, except in the case of clauses
(ii), (iii) and (iv), as have not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
            Section 3.09. KGS SEC Documents. KGS has timely filed with or
furnished to the Securities and Exchange Commission (the “SEC”) all reports,
schedules, forms, statements, prospectuses, registration statements and other
documents required to be filed or furnished by KGS since January 1, 2009
(collectively, together with any exhibits and schedules thereto and other

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information incorporated therein, and as the same may have been supplemented,
modified or amended since the time of filing, the “KGS SEC Documents”). As of
its filing date (and as of the date of any amendment), each KGS SEC Document
complied as to form in all material respects with the applicable requirements of
the 1933 Act and the 1934 Act, as the case may be. As of its filing date (or, if
amended or superseded by a filing prior to the date hereof, on the date of such
filing), each KGS SEC Document did not contain any untrue statement of a
material fact required to be stated therein or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
            Section 3.10. Financial Statements; SOX Compliance. (a) The audited
consolidated financial statements and unaudited consolidated interim financial
statements of KGS included or incorporated by reference in the KGS SEC Documents
fairly present in all material respects, in conformity with GAAP applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of KGS and its consolidated Subsidiaries as of
the dates thereof and their consolidated results of operations, partners’
capital and cash flows for the periods then ended (subject to normal year-end
audit adjustments that are not expected to be, individually or in the aggregate,
material to KGS on a consolidated basis and the absence of footnotes in the case
of any unaudited interim financial statements).
            (b)       KGS is and has been since January 1, 2009, in compliance
in all material respects with the provisions of SOX applicable to it and the
certifications provided pursuant to Sections 302 and 906 thereof were accurate
when made. None of KGS or the Subsidiaries has outstanding, or has arranged any
outstanding, “extensions of credit” to directors or executive officers within
the meaning of Section 402 of SOX.
            (c)       KGS and the Subsidiaries have established and maintain
internal controls over financial reporting (as such term is defined in
Rule 13a-15(f) and 15d-15(f) under the 1934 Act) sufficient to provide
reasonable assurances regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP. KGS and the Subsidiaries have designed and maintain disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under
the 1934 Act) to ensure that material information required to be disclosed by
KGS and the Subsidiaries in the KGS SEC Documents, or in the documents to be
filed or furnished by Seller to the SEC, as applicable, that KGS or Seller, as
applicable, files or submits under the 1934 Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms and is accumulated and communicated to the KGS’s or Seller’s, as
applicable, officers

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by others as appropriate to allow timely decisions regarding required disclosure
in accordance with the requirements of the 1934 Act.
            (d)       KGS has disclosed, based on the most recent evaluation, to
its auditors, the audit committee of the Gas Services GP’s Board of Directors
and to Buyer, and Seller has disclosed, based on the most recent evaluation, to
its auditors, the audit committee of its board of directors and to Buyer (i) all
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect any of KGS’ and the Subsidiaries’ ability to record, process,
summarize and report financial and information and (ii) any fraud, whether or
not material, that involves management or other employees who have a significant
role in the KGS’ and the Subsidiaries’ internal control over financial
reporting.
            Section 3.11. Absence of Certain Changes. Since the Balance Sheet
Date there has not been any Material Adverse Effect. Since the Balance Sheet
Date through the date of this Agreement, (a) the business of each of the Sold
Entities has been conducted in the ordinary course consistent with past
practices, (b) Holdings LLC has not conducted any business or operations other
than the direct or indirect holding of equity interests in the KGS Entities
(c) the assets of the Sold Entities have been operated and maintained as a
gathering system exempt from FERC jurisdiction under Section 1(b) of the Natural
Gas Act; (d) there has not been any damage, destruction or loss to any of the
assets of the Sold Entities, whether or not covered by insurance, that would be
material to the Sold Entities, taken as a whole; and (e) none of Seller, the
Selling Subsidiaries or the Sold Entities has agreed, resolved, authorized or
committed to do or otherwise taken any action which, if it had been taken or
done after the date of this Agreement would require the prior written consent of
Buyer under Sections 5.01(b)(iv), (v), (vi), (vii), (x) or (xiv) or
Section 5.04(c).
            Section 3.12. No Undisclosed Material Liabilities. There are no
liabilities of any KGS Entity of any kind (whether accrued or fixed, absolute or
contingent, matured or unmatured, determined or determinable or otherwise),
other than (i) liabilities disclosed, reflected, reserved against or otherwise
provided for in the KGS Balance Sheet or disclosed in the notes thereto; (ii)
liabilities which, if known, would not be required under GAAP to be shown on the
KGS Balance Sheet or disclosed in the notes thereto in accordance with GAAP;
(iii) liabilities incurred in the ordinary course of business since the Balance
Sheet Date; and (iv) other undisclosed liabilities which, individually or in the
aggregate, are not material to KGS and the Subsidiaries, taken as a whole.
            Section 3.13. Material Contracts. (a) True and complete copies of
the Organizational Documents as in effect on the date hereof of each of the Sold
Entities have been provided to Buyer prior to the date hereof.

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            (b)       As of the date hereof, no Sold Entity is a party to or
bound by:
           (i)       any lease (whether of real or personal property) providing
for annual rentals of $250,000 or more that cannot be terminated by any Sold
Entity on not more than 60 days’ notice without payment by such Sold Entity of
any material penalty;
           (ii)       except as contemplated by the Capex Budget, any agreement
for the purchase of materials, supplies, goods, services, equipment or other
assets that cannot be terminated by any Sold Entity on not more than 60 days’
notice without payment by any of the Sold Entities of any material penalty;
           (iii)       any sales, distribution or other similar agreement
providing for the sale by any of the Sold Entities of materials, supplies,
goods, services, equipment or other assets that provides for annual payments to
any of the Sold Entities of $100,000 or more;
           (iv)       any partnership, joint venture or other similar agreement
or arrangement;
           (v)       any Contract relating to the acquisition or disposition of
any business or assets (whether by merger, sale of stock, sale of assets or
otherwise) with a purchase price of $100,000 or more;
           (vi)       any Contract relating to the creation, incurrence,
assumption or guarantee of any Indebtedness, except any such Contract with an
aggregate outstanding principal amount not exceeding $5,000,000;
           (vii)       any Contract that limits the freedom of any of the Sold
Entities and/or their Affiliates to compete in any line of business or with any
Person or in any area;
           (viii)       any material Contract that relates to any commodity or
interest rate swap, cap or collar or other similar hedging or derivate
transactions;
           (ix)        any Contract relating to the gathering, processing,
treating, transportation, storage, sale or purchase of natural gas, condensate
or other liquid or gaseous hydrocarbons or the products therefrom, or the
provision of services related thereto (including any operation, operation
servicing or maintenance Contract) in each case that involves annual revenues or
payments in excess of $5,000,000;

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           (x)       except as contemplated by the Capex Budget, any Contract
relating to the construction of capital assets or other capital expenditures; or
           (xi)       any Contract with Seller or any of its Affiliates (other
than the Sold Entities) or any director or officer of Seller or any of its
Affiliates that will not be terminated at or prior to the Closing without
premium, penalty or payment on the part of any party thereto.
            (c)       As of the date hereof, each Contract required to be
disclosed pursuant to Section 3.13(b) or Section 3.17(b) (collectively, the
“Material Contracts”) is a valid and binding agreement of a Sold Entity and is
in full force and effect. As of the date hereof, no Sold Entity or, to the
knowledge of Seller, any other party thereto is in default or breach in any
respect under the terms of any such Contract, except for any such defaults or
breaches which would not, individually or in the aggregate, reasonably be
expected to be material to the Sold Entities, taken as a whole. Except as
contemplated by the Transaction Documents, as of the date hereof, no party to
any Material Contract has, to the knowledge of Seller, threatened or intends to
cancel, terminate or modify any Material Contract. Seller has made available to
Buyer prior to the date hereof a true and correct copy of each Material
Contract.
            Section 3.14. Litigation. There are no actions, suits,
investigations or proceedings pending against or, to the knowledge of Seller,
threatened (including any cease and desist letter and invitation to take a
license) against, Holdings LLC or Gas Services GP (other than in its capacity as
general partner of KGS) before any Governmental Authority. There is no action,
suit, investigation or proceeding pending against, or, to the knowledge of
Seller, threatened (including any cease and desist letter and invitation to take
a license) against, Gas Services GP (in its capacity as general partner of KGS)
or the KGS Entities before any Governmental Authority which is reasonably likely
to be, individually or in the aggregate, material to the KGS Entities, taken as
a whole, or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement or any of the
other Transaction Documents; provided that, for purposes of Seller’s
indemnification obligations for Warranty Breaches pursuant to Section 12.02(a),
the representation and warranty made in the second sentence of this Section 3.14
will be deemed to be made only as of the date of this Agreement.
            Section 3.15. Compliance with Laws and Court Orders. (a) Each Sold
Entity is and has been since January 1, 2009 in compliance with, and no Sold
Entity is, or has been since January 1, 2009, in violation of (or has received
any notices of violation with respect to) any Applicable Law, except, in the
case of the KGS Entities and Gas Services GP in its capacity as general partner
of KGS, for

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violations which would not, individually or in the aggregate, reasonably be
expected to be material to the Sold Entities, taken as a whole. None of the Sold
Entities, or any of their respective assets or properties, is, or has been since
January 1, 2009, subject to, or bound by, any order, injunction, judgment,
decree, ruling or other similar requirement (each, a “Legal Requirement”)
enacted, adopted, promulgated or applied by a Governmental Authority (other than
Legal Requirements of general applicability) except, in the case of the KGS
Entities and Gas Services GP in its capacity as general partner of KGS, such
Legal Requirements as would not reasonably be expected to be, individually or in
the aggregate, material to the Sold Entities taken as a whole, interfere in any
material respect with the conduct of the business of the Sold Entities taken as
a whole, or materially delay or impair the ability of Seller and the Selling
Subsidiaries to consummate the transactions contemplated by the Transaction
Documents.
            (b)       None of the Sold Entities are subject to regulation under
any applicable U.S. state laws or regulations (1) as a “public utility”, “public
service company” or similar designation(s), or as a “holding company” or similar
designation of such regulated entity, or (2) respecting the rates charged by, or
the financial or organizational regulation of, public utilities, common carriers
or their affiliates. Neither the assets nor the business of the Sold Entities as
currently owned and operated is subject to regulation under the Natural Gas Act
or the Natural Gas Policy Act of 1978, as amended.
            Section 3.16. Properties. (a) KGS and the Subsidiaries have good and
valid fee title to, or have valid interests by easement, Contract or otherwise
in, all property and assets (whether real, personal, tangible or intangible)
reflected on the KGS Balance Sheet or acquired after the Balance Sheet Date in
all material respects to all real and personal property that is necessary for
KGS and the Subsidiaries to conduct its business as currently being conducted.
Gas Services GP and each of the KWK Entities have good and valid fee title to,
or have valid rights of interests by easement, Contract or otherwise in, all
property and assets (whether real, personal, tangible or intangible) used in the
business of Gas Services GP or the KWK Entities, as applicable. None of any of
the aforementioned property or assets is subject to any Lien, except (i) Liens
disclosed on Section 3.16 of the Seller Disclosure Schedules; (ii) Liens
disclosed on the KGS Balance Sheet or notes thereto; (iii) Liens for taxes,
assessments and similar charges that are not yet due or are being contested in
good faith; (iv) mechanic’s, materialman’s, carrier’s, repairer’s and other
similar Liens arising or incurred in the ordinary course of business or that are
not yet due and payable or are being contested in good faith; (v) Liens incurred
in the ordinary course of business since the Balance Sheet Date none of which
are material to the ownership, use or operation of the assets of the Sold
Entities; or (vi) other Liens which are not, individually or in the aggregate,
material to the ownership, use or

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operation of the assets of the Sold Entities, taken as whole (clauses (i) –(vi)
of this Section 3.16 are, collectively, the “Permitted Liens”).
            (b)       Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect: (i) each Sold
Entity has such easements, licenses, rights-of-way, permits, servitudes,
leasehold estates, instruments creating an interest in real property, and other
similar real estate interests (each, a “Right-of-Way”) that are necessary for
the Sold Entities to own, use and operate their respective assets and properties
in the manner that such assets and properties are currently owned, used and
operated, and each such Right-of-Way is valid and free and clear of all Liens
(other than Permitted Liens), (ii) the Rights-of-Way grant the rights purported
to be granted thereby, (iii) each Sold Entity conducts its business and has and
is being operated in a manner that does not violate in any material respect any
of the Rights-of-Way, (iv) each Sold Entity has fulfilled and performed all of
its material obligations with respect to such Rights-of-Way and (v) no event has
occurred or circumstance exists that allows, or after the giving of notice or
the passage of time, or both, would allow limitation, revocation or termination
of any Right-of-Way or would result in any impairment of the rights of the
holder of any such Rights-of-Way. All pipelines operated by the Sold Entities
are subject to Rights-of-Way, and there are no gaps (including any gap arising
as a result of any breach by any Sold Entity of the terms of any Rights-of-Way)
in the Rights-of-Way other than gaps that have not and would not reasonably be
expected to, individually or in the aggregate, materially impair the conduct of
the business of the Sold Entities, taken as a whole, as currently, and as
currently planned by the Sold Entities to be, conducted.
            (c)       All tangible personal property owned, leased or licensed
by the Sold Entities is adequate for its present uses in all material respects.
             Section 3.17. Intellectual Property. (a) Section 3.17(a) of the
Seller Disclosure Schedules contains a complete and accurate list, and
identifies the owner, of all material registrations and applications for
registration included in the Sold Entities Intellectual Property Rights. Except
as would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, the Sold Entities own, license or otherwise have a
valid right to use, free and clear of all Liens (other than Permitted Liens),
all Intellectual Property Rights necessary to the conduct of the business of the
Sold Entities as currently conducted.
            (b)        Section 3.17(b) of the Seller Disclosure Schedules sets
forth a list of all material agreements (excluding licenses for commercial off
the shelf software with annual fees of less than $100,000 that are generally
available on nondiscriminatory pricing terms) to which any of the Sold Entities
is a party and

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pursuant to which any Sold Entity obtains the right to use any Licensed
Intellectual Property Right.
            (c)       No Sold Entities Intellectual Property Right is subject to
any outstanding judgment, injunction, order, decree or agreement restricting the
use thereof by any of the Sold Entities or restricting the licensing thereof by
any of the Sold Entities to any Person, except for any judgment, injunction,
order, decree or agreement which would not reasonably be expected to be,
individually or in the aggregate, material to the Sold Entities, taken as a
whole.
            (d)       The conduct of each Sold Entity’s business has not
infringed or misappropriated any Intellectual Property Right of any Third Party,
except for such infringements or misappropriations that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
            Section 3.18. Environmental Matters. Except as to matters that would
not reasonably be expected to be, individually or in the aggregate, material to
the Sold Entities, taken as a whole:
            (a)     (i) no written notice, order, request for information,
complaint or penalty has been received by any of Seller, the Selling
Subsidiaries or the Sold Entities, and (ii) there are no actions, suits,
investigations or proceedings pending or, to the knowledge of Seller,
threatened, in the case of each of (i) and (ii), which allege a violation of, or
liability under, any Environmental Law and relate to any of the Sold Entities;
            (b)     the Sold Entities have all Environmental Permits necessary
for their operations as currently conducted to comply with all applicable
Environmental Laws and are in compliance with all of, and since January 1, 2009
have not violated any of, the terms of such Environmental Permits and are in
compliance with all, and since January 1, 2009 have not violated any, applicable
Environmental Laws;
            (c)     there is and has been no Release or threatened Release of
any Materials of Environmental Concern by any Sold Entity or, to the knowledge
of Seller, any other Person at, on, under or about any real property currently
or, to the knowledge of Seller, formerly owned, leased, or operated by any of
the Sold Entities (during the period owned, leased or operated by any of the
Sold Entities) or, to the knowledge of Seller, at any other location, in each
case that could reasonably be expected to give rise to any liability of any Sold
Entity under any Environmental Law;
            (d)       none of the Sold Entities has entered into any consent
decree or other written agreement with any Governmental Authority under any

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Environmental Law, and none of the Sold Entities is subject to any judgment,
decree or order relating to compliance with any Environmental Law; and
            (e)       there is no written environmental audit, assessment,
report, study or similar document in the possession or control of Seller, the
Selling Subsidiaries or any Sold Entity concerning any issue of actual or
potential noncompliance with or actual or potential liability under any
Environmental Law and relating to the business of the Sold Entities or any
property currently or formerly owned, operated or leased by the Sold Entities
that has not been delivered to Buyer prior to the date hereof.
            Except as set forth in this Section 3.18, no representations or
warranties are being made with respect to matters arising under or relating to
Environmental Laws or other environmental matters.
            Section 3.19. Employees. (a) No Business Employee is a member of,
represented by or otherwise subject to a labor union or other similar
organization or a collective bargaining agreement or other similar agreement
with any labor union or organization, or work rules or practices agreed to with
any labor organization, in each case with respect to such Business Employee’s
employment by Seller or any of its Affiliates.
            (b)     Since the Balance Sheet Date, there has been no, and there
currently is no, labor strike, dispute, request for representation, union
organization attempt, walkout, slowdown or stoppage actually pending or, to
Seller’s knowledge, threatened against or affecting Seller or any of its
Affiliates with respect to the Business Employees, and no question concerning
representation has been raised or is, to Seller’s knowledge, threatened with
respect to the Business Employees.
            (c)     Section 3.19(c) of the Seller Disclosure Schedules sets
forth a complete and correct list, as of the date hereof, of all Business
Employees, including each Business Employee’s title, base salary or hourly rate
of pay, bonus payment for 2009, start date, service reference date (if different
from the start date), work location (including the entity by which such Business
Employee is employed) and an indication of whether or not such Business Employee
is on leave of absence and, if so, the type of leave.
            (d)     None of the Sold Entities employs nor has ever employed any
employees and, to Seller’s knowledge, has not retained nor has ever retained the
services of any independent contractors, other than pursuant to the Secondment
Agreement.
            Section 3.20. Benefit Plans. (a) Section 3.20(a) of the Seller
Disclosure Schedules sets forth a complete and correct list of each material
Business Employee Plan.

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            (b)     Each Business Employee Plan (and each related trust,
insurance contract or fund) complies in all respects in form and in operation
with the applicable requirements of ERISA, the Code and all other Applicable
Laws, and has been administered in all respects in compliance with its terms
except as would not, individually or in the aggregate, reasonably be expected to
be material to the Sold Entities taken as a whole.
            (c)     Each Business Employee Plan which is intended to be
qualified within the meaning of Section 401(a) of the Code is so qualified and
has received a favorable determination letter from the Internal Revenue Service
that such plan is so qualified. To Seller’s knowledge, nothing has occurred,
whether by action or failure to act, that could reasonably be expected to cause
the loss of such qualification. With respect to each Business Employee Plan,
Seller has provided to Buyer a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument and
(ii) the most recent determination letter, if applicable.
            (d)     Except as would not reasonably be expected to, individually
or in the aggregate, be material to the Sold Entities, taken as a whole: no
event has occurred and no condition exists that would subject Seller or any of
its subsidiaries, including the Sold Entities, either directly or by reason of
their affiliation with any Person that, together with any of the Sold Entities,
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code (an “ERISA Affiliate”), to any tax, fine, lien, penalty or other liability
imposed by ERISA, the Code or other Applicable Law.
            (e)     With respect to any Business Employee Plan, except as would
not reasonably be expected to, individually or in the aggregate, be material to
the Sold Entities, taken as a whole, (i) no actions, suits or claims (other than
routine claims for benefits in the ordinary course) are pending or, to the
knowledge of Seller, threatened, (ii) no facts or circumstances exist that would
give rise to any such actions, suits or claims and (iii) no administrative
investigation, audit or other administrative proceeding by the Department of
Labor, the Department of Treasury, the Internal Revenue Service or other
governmental agencies are pending or, to the knowledge of Seller, threatened.
            (f)     No Business Employee Plan is subject to the requirements of
Title IV of ERISA. No Business Employee Plan is a “multiemployer plan” (as
defined in Section 4001(a)(3) of ERISA) and neither Seller, the Sold Entities
nor any of their ERISA Affiliates has at any time sponsored or contributed to,
or has or had any liability or obligation in respect of, any multiemployer plan.
No Business Employee Plan provides post-employment welfare (including health,
medical or life insurance) benefits and neither Seller nor any of its
subsidiaries, including the

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Sold Entities, has any obligation to provide any such post-employment welfare
benefits now or in the future, other than as required by Section 4980B of the
Code or any other Applicable Law. No Business Employee Plan provides short term
disability or similar benefits.
            (g)     No Business Employee Plan exists that, as a result of the
execution and delivery of the Transaction Documents, nor the consummation of the
transactions contemplated hereby or thereby, will (alone or together with any
other event) (i) entitle any current or former employee or director of any of
the Sold Entities or any current or former Seconded Employee to severance,
termination, change in control, retention or any similar compensation, benefits,
or property, (ii) accelerate the time of payment or vesting, or increase the
amount of any compensation due to, or in respect of, any current or former
employee or director of any of the Sold Entities or any current or former
Seconded Employee or (iii) result in or satisfy a condition to the payment of
compensation that would, in combination with any other payment, result in an
“excess parachute payment” within the meaning of Section 280G of the Code.
            Section 3.21. Taxes. (a) All material Tax Returns required to be
filed by or with respect to the Sold Entities with respect to the Pre-Closing
Tax Period have been timely filed and to the best of Seller’s knowledge, each
such Tax Return is true, complete and correct in all material respects. All
material Taxes whether or not shown to be due on any Tax Returns and all Taxes
required to be withheld by or with respect to the Sold Entities have been timely
paid or, if applicable, withheld and paid to the appropriate Governmental
Authority. Adequate provision has been made for any material Taxes not yet due.
There are (i) no asserted or threatened deficiencies or assessment of Taxes from
any taxing authority with respect to or attributable to the Sold Entities,
(ii) no ongoing audits or examinations of any of the Tax Returns relating to or
attributable to the Sold Entities and no such audit or examination is threatened
in writing, and (iii) the Sold Entities have not granted any requests,
agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes. No Sold Entity has any material
obligation under any Tax sharing or Tax indemnity agreement or similar contract
or arrangement. No closing agreement pursuant to Section 7121 of the Code (or
any similar provision of state, local or foreign law) has been entered into by
or with respect to any Sold Entity. No Sold Entity has any material liability
for Taxes of any other person as a transferee or successor, by contract, or
otherwise.
            (b)     There is no material lien for Taxes upon any of the assets
of any of the Sold Entities other than liens for Taxes that are not yet due and
payable or for Taxes the validity or amount of which is being contested by
Seller in good faith by appropriate action and for which appropriate provision
has been made in accordance with GAAP.

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            (c)     No Sold Entity has engaged in a transaction that would be
reportable by or with respect to any KGS Entity pursuant to Treasury
Regulation Section 1.6011-4 or any predecessor thereto.
            (d)     KGS has not elected to be treated as a corporation for
federal Tax purposes, and KGS qualifies as a “publicly traded partnership”
within the meaning of Section 7704(b) of the Code and has met, and continues to
meet, the “gross income requirements” (within the meaning of Section 7704(c) of
the Code) in each Tax year since its formation. KGS has filed a federal income
tax return that has in effect an election pursuant to Section 754 of the Code.
            (e)     Each of the KWK Entities is, and has been from the date of
its formation, a partnership or a disregarded entity for U.S. federal income tax
purposes.
            (f)     Neither of the Selling Subsidiaries nor Seller is a “foreign
person” as defined in Section 1445 of the Code.
            Section 3.22. Insurance. The Sold Entities and their assets and
properties are, and since January 1, 2009 have been, covered by valid insurance
policies that are adequate to comply with the requirements of any applicable
agreements to which any Sold Entity is a party and are in all material respects
at least the minimum amounts required by, and are otherwise sufficient for
purposes of, any currently Applicable Law and/or Governmental Authority.
Section 3.22 of the Seller Disclosure Schedules contains a true and complete
list of all material insurance policies (all of which are in full force and
effect) that cover the Sold Entities and their assets and properties. There is
no material claim pending under any such policies which has been denied or
disputed by the insurer other than customary indications as to reservation of
rights by insurers. As of the date of this Agreement, there are no outstanding
claims under the policies set forth in Section 3.22 of the Seller Disclosure
Schedule related to any of the Sold Entities or any of their assets, properties
or personnel in excess of $100,000 individually or $1,000,000 in the aggregate
with respect to a particular line of coverage.
            Section 3.23. Related Party Transactions. Except for matters
approved by the Conflicts Committee of the Board of Directors of Gas Services
GP, none of Seller or its subsidiaries (other than any Sold Entity) (i) has
borrowed money from or loaned money to any Sold Entity, (ii) has any material
ownership interest in any property or asset used by the Sold Entities in the
conduct of their business, or (iii) is engaged in any ongoing material
transaction with any Sold Entity.
            Section 3.24. Entire Business. On the Closing Date, taking into
account the services available pursuant to the Transition Services Agreement,
and the transactions contemplated by the other Transaction Documents, KGS will
own and control, license and/or otherwise have the valid and legal right to use
all of

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the assets or properties necessary for KGS and the Subsidiaries to conduct the
business of KGS and the Subsidiaries in all material respects as currently
conducted.
ARTICLE 4
Representations and Warranties of Buyer
            Buyer represents and warrants to Seller as of the date hereof and as
of the Closing Date that:
            Section 4.01. Corporate Existence and Power. Buyer is a limited
liability company duly formed validly existing and in good standing under the
laws of Delaware and has all limited liability company powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted.
            Section 4.02. Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement and the other Transaction Documents to
which it is a party and the consummation of the transactions contemplated hereby
and thereby are within the limited liability company powers of Buyer and have
been duly authorized by all necessary limited liability company action on the
part of Buyer. This Agreement constitutes, and each of the other Transaction
Documents entered into or to be entered at the Closing by it will constitute
when entered into a valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms except as enforceability may be limited by
Creditors’ Rights.
            Section 4.03. Governmental Authorization. The execution, delivery
and performance by Buyer of this Agreement and each of the other Transaction
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby require no action by or in respect of, or filing
or notification by Buyer with any Governmental Authority other than
(i) compliance with any applicable requirements of the HSR Act, (ii) compliance
with any applicable requirements of the 1934 Act and (iii) any such action,
notification or filing as to which the failure to make or obtain would not
reasonably be expected to, individually or in the aggregate, materially delay
Buyer’s ability to perform its obligations hereunder and thereunder.
            Section 4.04. Noncontravention. The execution, delivery and
performance by Buyer of this Agreement and the other Transaction Documents to
which it is a party and the consummation of the transactions contemplated hereby
and thereby do not and will not (i) violate or conflict with the Organizational
Documents of Buyer, (ii) assuming compliance with the matters referred to in

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Section 4.03, violate or conflict with any Applicable Law or (iii) require any
consent or other action by any Person under, constitute a default under, result
in a violation of or conflict with, or give rise to any right of termination,
cancellation, modification or acceleration of any right or obligation of Buyer
or to a loss of any benefit to which Buyer is entitled under any provision of
any Contract binding upon Buyer, except, in the cases of clauses (ii) and (iii),
as would not reasonably be expected to, individually or in the aggregate,
materially delay Buyer’s ability to perform its obligations hereunder.
            Section 4.05. Purchase for Investment. Buyer is purchasing the
Securities for investment for its own account and not with a view to, or for
sale in connection with, any distribution thereof. Buyer (either alone or
together with its advisors) has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the Securities and is capable of bearing the economic risks of
such investment.
            Section 4.06. Litigation. As of the date of this Agreement, there is
no action, suit, investigation or proceeding pending against, or, to the
knowledge of Buyer, threatened against, Buyer before any Governmental Authority
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated by this Agreement.
            Section 4.07. Financing. Buyer has, or will have on the Closing
Date, sufficient cash, available lines of credit or other sources of immediately
available funds to enable it to consummate the Closing pursuant to the terms of
this Agreement.
            Section 4.08. Finders’ Fees. There is no investment banker, broker,
finder or other intermediary that has been retained by or is authorized to act
on behalf of Buyer who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement where such fee or
commission would be payable by Seller or any of its Affiliates.
            Section 4.09. Inspections; No Other Representations. Buyer is an
informed and sophisticated purchaser, and has engaged expert advisors,
experienced in the evaluation and purchase of the Securities and companies such
as the Sold Entities as contemplated hereunder. Buyer has undertaken a
sufficient investigation to enable it to make an informed and intelligent
decision with respect to the execution, delivery and performance of this
Agreement. Buyer agrees to accept the Securities and the Sold Entities in the
condition they are in on the Closing Date based upon its own inspection,
examination and determination with respect thereto as to all matters and without
reliance upon any express or implied representations or warranties of any nature
made by or on behalf of or imputed to Seller, except as expressly set forth in
this Agreement. Without

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limiting the generality of the foregoing, Buyer acknowledges that Seller makes
no representation or warranty with respect to (i) any projections, estimates or
budgets delivered to or made available to Buyer of future revenues, future
results of operations (or any component thereof), future cash flows or future
financial condition (or any component thereof) of the Sold Entities or the
future business and operations of the Sold Entities or (ii) any other
information or documents made available to Buyer or its counsel, accountants or
advisors with respect to the Securities or the Sold Entities or their respective
businesses or operations, except as expressly set forth in this Agreement.
ARTICLE 5
Covenants of Seller
            Seller agrees that:
            Section 5.01. Conduct and Operations. (a) From the date of this
Agreement until the Closing Date, Seller and the Selling Subsidiaries shall
cause the Sold Entities, to: (i) conduct their respective businesses in the
ordinary course consistent with past practice; (ii) use their reasonable best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees; and (iii) comply in all material respects with all Applicable Laws.
            (b)     Without limiting the generality of the foregoing in
Section 5.01(a), from the date of this Agreement until the Closing Date, except
as (i) disclosed on Section 5.01 of the Seller Disclosure Schedules, (ii) as
consented to or approved in writing by Buyer (such consent or approval not to be
unreasonably withheld, conditioned or delayed), (iii) as contemplated by the
capital expenditure budget set forth in Section 5.01(b) of the Seller Disclosure
Schedules (the “Capex Budget”) (provided that in connection with the
transactions contemplated by the Capex Budget, such transactions shall be
permitted only for so long as any Indebtedness incurred with respect thereto
shall not result in the aggregate principal amount outstanding under KGS’
existing revolving credit facility to exceed $270 million) or (iv) as expressly
contemplated by this Agreement or the other Transaction Documents, Seller and
the Selling Subsidiaries shall cause each of the Sold Entities not to:
         (i)     adopt or propose any change in any of its Organizational
Documents, or waive any rights thereunder;
         (ii)     transfer, issue, sell or dispose of any shares of capital
stock, equity interests or other equity or debt securities (including any
securities convertible into or exercisable or exchangeable for such securities
or

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interests, including any equity-based awards) or repurchase, redeem or otherwise
acquire any shares of capital stock, equity interests or other equity or debt
securities (including any securities convertible into or exercisable or exchange
for such securities or interests, including any equity-based awards) of a Sold
Entity;
         (iii)    split, combine or reclassify any of its capital stock, equity
interests or other equity securities;
         (iv)     incur any capital expenditures or any obligations or
liabilities in respect thereof, except any unbudgeted capital expenditures of
KGS or any Subsidiary not to exceed $250,000 individually or $1,000,000 in the
aggregate;
         (v)     acquire (by merger, consolidation, acquisition of stock or
assets or otherwise), directly or indirectly, any assets, securities,
properties, interests or businesses, other than supplies in the ordinary course
of business of the Sold Entities in a manner that is consistent with past
practice and acquisitions by KGS and the Subsidiaries with a purchase price that
does not exceed $250,000 individually or $1,000,000 in the aggregate;
         (vi)     sell, license, assign, lease or otherwise transfer, pledge or
create or incur any Lien on, any of the Sold Entities’ assets, securities,
properties, rights, interests or businesses, other than (A) sales of inventory
in the ordinary course of business consistent with past practice and (B) sales
of obsolete assets;
         (vii)     make any loans, advances or capital contributions to, or
investments in, any other Person, other than in the ordinary course of business
consistent with past practice;
         (viii)     except as otherwise expressly permitted by this
Section 5.01(b), merge with or into, or consolidate with, any other Person;
         (ix)     create, incur, assume, guarantee, suffer to exist or otherwise
be liable with respect to any Indebtedness other than borrowings under KGS’
existing revolving credit facility in the ordinary course of business and in
amounts and on terms consistent with past practices, provided that in no event
shall the aggregate principal amount outstanding under KGS’ existing revolving
credit facility exceed $270 million;
         (x)     change any of the Sold Entities’ methods of accounting, except
as required by concurrent changes in GAAP, as agreed to by its independent
public accountants;

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         (xi)     settle, or offer or propose to settle, any material action,
suit, investigation or proceeding involving or against any of the Sold Entities;
         (xii)     take any action with respect to or in contemplation of any
plan of complete or partial liquidation, dissolution, restructuring,
recapitalization, reorganization or other winding up;
         (xiii)    other than in the ordinary course consistent with past
practice, (1) increase the compensation or benefits of any current or former
director of any of the Sold Entities or current or former Seconded Employee;
(2) grant or pay any change-in-control, retention bonus, severance or
termination pay to any current or former director of any of the Sold Entities or
current or former Seconded Employee; (3) loan or advance any money or other
property to, or sell, transfer or lease any properties, rights or assets to, any
current or former director of any of the Sold Entities or current or former
Seconded Employee; (4) establish, adopt, enter into, amend, terminate or grant
any waiver or consent under any Business Employee Plan or any plan, agreement,
program, policy, trust, fund or other arrangement that would be a Business
Employee Plan if it were in existence as of the date of this Agreement;
         (xiv)     make any material change to its Tax methods of accounting,
make or change any material Tax election, file any amended material Tax Return,
settle or compromise any material Tax liability, agree to an extension or waiver
of the statute of limitations with respect to the assessment or determination of
material Taxes, enter into any closing agreement with respect to any material
Tax or surrender any right to claim a material Tax refund;
         (xv)     cancel, materially modify, terminate, fail to use its
commercially reasonable efforts to renew any Material Contract described in
clauses (iv), (vii), or (ix) of Section 3.13(b) or enter into any Contract that
is or would be (if existing on the date of this Agreement) a Material Contract
described in clauses (iv), (vii) or (ix) of Section 3.13(b), or waive, release,
cancel, convey, encumber or otherwise assign any material rights or claims under
any such Material Contract or other Contract that would constitute a Material
Contract if existing on the date of this Agreement; or
         (xvi)     agree, resolve, authorize or commit to do any of the
foregoing.
            (c)     From the date of this Agreement until the Closing Date,
except as disclosed on Section 5.01(c) of the Seller Disclosure Schedules or as
consented to

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or approved in writing by Buyer (such consent or approval not to be unreasonably
withheld, conditioned or delayed):
         (i)     Seller shall, and shall cause its Affiliates to, continue to
provide or cause to be provided to KGS and the Subsidiaries, the Services (as
defined in the Omnibus Agreement) and such other services as are being provided
currently and have been provided to KGS and the Subsidiaries (including under
any master services agreement arrangements) during the 3 months prior to the
date hereof, on substantially the same terms (including with respect to the
amount of expense reimbursement charged for service provided) and in
substantially the same scope and quality as provided during such 3 month period.
         (ii)     Except as otherwise contemplated by the Transaction Documents,
Seller shall not and shall cause its Affiliates other than KGS and the
Subsidiaries not to: (A) acquire or construct any Subject Assets (as such term
is defined in the Omnibus Agreement); (B) seek the approval of the Conflicts
Committee of Gas Services GP’s board of directors with respect to any Restricted
Business (as such term is defined in the Omnibus Agreement) or any other
transaction, Contract or arrangement between Seller and/or its Affiliates (other
than KGS and the Subsidiaries), on the one hand, and KGS or any of the
Subsidiaries, on the other hand; (C) except as required by Applicable Law or the
terms of any Business Employee Plan in effect as of the date hereof and
disclosed in Section 3.20(a) of the Seller Disclosure Schedules, or as expressly
provided for in this Agreement: (1) other than in the ordinary course consistent
with past practice increase the compensation or benefits of any Business
Employee or Inactive Business Employee; (2) other than in the ordinary course
consistent with past practice grant or pay any change-in-control, retention
bonus, severance or termination pay to any Business Employee or Inactive
Business Employee; (3) other than in the ordinary course consistent with past
practice loan or advance any money or other property to, or sell, transfer or
lease any properties, rights or assets to, any Business Employee or Inactive
Business Employee; (4) establish, adopt, enter into, amend, terminate or grant
any waiver or consent under any Business Employee Plan or any plan, agreement,
program, policy, trust, fund or other arrangement that would be a Business
Employee Plan if it were in existence as of the date of this Agreement;
(5) grant any equity or equity-based awards to any Business Employee or Inactive
Business Employee; (6) terminate the employment of any Business Employee; (7)
effectuate any layoffs of Business Employees without compliance with any state
or local law or regulation to the extent applicable; or (8) take any action to
accelerate the vesting or payment of any compensation or benefit under any
Business Employee Plan or awards made thereunder; or (D) enter into

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any Contract or arrangement between Seller and/or its Affiliates (other than the
Sold Entities), on the one hand, and any of the Sold Entities, on the other
hand.
            (d)        From the date of this Agreement until the Closing Date,
Seller and the Selling Subsidiaries shall cause the Sold Entities not to
directly or indirectly declare or pay any distributions in respect of any of its
equity interests except, (i) in the case of KGS, the declaration and payment of
regular quarterly cash distributions of Available Cash from Operating Surplus
(in each case as defined in the KGS Partnership Agreement), not in excess of
$0.42 per Common Unit per quarter, plus any corresponding distribution on the
Subordinated Units, General Partner Units and Incentive Distribution Rights; and
(ii) the declaration and payment of distributions from any direct or indirect
wholly owned Subsidiary to KGS.
            Section 5.02.  Access to Information.  (a) From the date hereof
until the Closing Date, Seller and the Selling Subsidiaries will (i) give, and
will cause the Sold Entities to give, Buyer and its Representatives reasonable
access to the offices, properties, books and records (including Contracts) of
the Sold Entities and to the books and records and employees of Seller and its
Affiliates relating to the Sold Entities, (ii) furnish, and will cause the Sold
Entities to furnish, to Buyer and its Representatives such financial and
operating data and other information relating to the Sold Entities as such
Persons may reasonably request and (iii) instruct designated employees, counsel
and financial advisors of Seller, the Sold Entities and Seller’s other
Affiliates to cooperate with Buyer in its investigation of the Sold
Entities.  Any investigation pursuant to this Section 5.02 shall (i) be
conducted in such manner as not to interfere unreasonably with the conduct of
the business of Seller and the Sold Entities and, to the extent so requested by
Seller, under the supervision of a Representative of Seller and (ii) not be
conducted without prior notice to, and approval of, Seller.  Notwithstanding the
foregoing, Buyer shall not (x) have access to personnel records of Seller or the
Sold Entities relating to individual performance or evaluation records, medical
histories or other information which in Seller’s good faith opinion is sensitive
or the disclosure of which could subject Seller or any of its subsidiaries or
Affiliates to risk of liability (unless such information is sufficiently
redacted in order to allow such disclosure) or (y) conduct any invasive sampling
or testing of any soil, surface water, groundwater, building materials or other
environmental media without prior written consent of Seller.
            (b)        On and after the Closing Date, Seller will afford
promptly to Buyer and its agents reasonable access to its and its Affiliates’
books of account, financial and other records (including accountant’s work
papers), information, employees and auditors to the extent necessary or useful
for Buyer in connection with any audit, investigation, dispute or litigation or
any other reasonable business

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purpose relating to the Sold Entities; provided that any such access by Buyer
shall not unreasonably interfere with the conduct of the business of Seller or
any of its Affiliates and, at Seller’s option, shall be conducted under the
supervision of a Representative of Seller.  Buyer shall bear all of the
out-of-pocket costs and expenses (including attorneys’ fees, but excluding
reimbursement for general overhead, salaries and employee benefits) reasonably
incurred in connection with the foregoing.
            Section 5.03.  Confidentiality of Seller and the Selling
Subsidiaries.  Seller and the Selling Subsidiaries each hereby agree that Seller
and the Selling Subsidiaries will not, and Seller will cause each of its
Affiliates not to, at any time on or after the Closing Date, directly or
indirectly, without the prior written consent of Buyer, disclose or knowingly
use in any manner detrimental to Buyer or any of the Sold Entities any
confidential or proprietary information of the Sold Entities or any confidential
or proprietary information concerning Buyer or any of its Affiliates; provided
that the information subject to the foregoing provisions of this sentence will
not include any information (i) that was publicly available prior to the Closing
Date or thereafter becomes publicly available, in each case, without any
violation of this Agreement on the part of Seller or any of its Affiliates, or
(ii) with respect to information relating to Buyer or any of its Affiliates,
that was available to Seller or the Selling Subsidiaries on a non-confidential
basis prior to its disclosure to Seller or the Selling Subsidiaries, as
applicable, by Buyer or its Representatives or becomes available to Seller or
the Selling Subsidiaries from a Person other than Buyer and its Representatives
who is not, to the knowledge of Seller and the Selling Subsidiaries, subject to
any legally binding obligation to keep such information confidential; and
provided further that the provisions of this Section 5.03 will not prohibit any
disclosure (i) required by any Applicable Law so long as reasonable prior notice
is given to Buyer of such disclosure and a reasonable opportunity is afforded to
contest the same and/or for Buyer to seek, at Buyer’s cost, a protective order
(and if Buyer so seeks such an order, Seller and the Selling Subsidiaries will
provide such cooperation as reasonably requested by Buyer), and in any event
such disclosure shall only be to the extent legally required, or (ii) made in
connection with the enforcement of any right or remedy relating to this
Agreement or any other Transaction Document or the transactions contemplated
hereby or thereby.
            Section 5.04.  Superior Proposals.  (a) Subject to Section 5.04(b),
neither Seller nor any of its subsidiaries (including the Selling Subsidiaries)
shall, and Seller shall cause its subsidiaries and its and their officers,
directors, employees, investment bankers, attorneys, accountants, consultants or
other agents or advisors (“Representatives”) to not, directly or indirectly
through another Person, (i) solicit, initiate or knowingly take any action to
facilitate or encourage the submission of any Acquisition Proposal, (ii) enter
into or participate in any discussions or negotiations with, furnish any
information relating to the Sold

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Entities or the Securities or afford access to the business, properties, assets,
books or records of the Sold Entities to, or otherwise cooperate in any way
with, any Third Party that is seeking to make, or has made, an Acquisition
Proposal, (iii) enter into, approve or resolve to approve or publicly propose to
approve any agreement in principle, letter of intent, term sheet, merger
agreement, acquisition agreement, option agreement or other similar instrument
or agreement constituting or related to an Acquisition Proposal (other than an
Acceptable Confidentiality Agreement permitted pursuant to Section 5.04(b),
subject to the requirements set forth in such Section) or (iv) waive, terminate,
modify or fail to enforce any provision of any “standstill” or similar
obligation of any Third Party.  Seller shall, and shall cause its subsidiaries
and each of its and their Representatives to, immediately cease and cause to be
terminated all existing discussions or negotiations with any Third Party
conducted prior to the date of this Agreement with respect to any Acquisition
Proposal.
            (b)        Notwithstanding Section 5.04(a), at any time from the
date of this Agreement until consummation of the Closing, if Seller receives a
bona fide written Acquisition Proposal made after the date of this Agreement
that was unsolicited and did not otherwise result from a breach of
Section 5.04(a) and that the Board of Directors of Seller reasonably believes
would be expected to lead to a Superior Proposal, Seller may, directly or
indirectly through its Representatives, subject to compliance with this
Section 5.04 and after providing written notice to Buyer of its intention to
take any such actions, (i) negotiate the terms of, and enter into, a
confidentiality agreement with terms and conditions no less restrictive in the
aggregate on such Third Party as the Confidentiality Agreement is on Buyer and
its Affiliates (an “Acceptable Confidentiality Agreement”), (ii) furnish to such
Third Party or its Representatives or financing sources non-public information
relating to the Sold Entities pursuant to an Acceptable Confidentiality
Agreement, (iii) engage in negotiations or discussions with any Third Party and
its Representatives and financing sources and (iv) subject to compliance with
the procedures set forth in Section 5.04(c) and (d) and Section 11.01(d),
terminate this Agreement to enter into a definitive agreement with respect to
such Acquisition Proposal that the Board of Directors of Seller reasonably
determines constitutes a Superior Proposal.
            (c)        Seller will as promptly as practicable advise Buyer
orally and in writing of the existence of any proposal or inquiry received after
the date of this Agreement by Seller or any of its subsidiaries or its or their
Representatives with respect to any Acquisition Proposal, the material terms and
conditions of any such proposal or inquiry or Acquisition Proposal (including
any changes thereto) and the identity of the Person making any such proposal,
inquiry or Acquisition Proposal.

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            (d)       Notwithstanding anything herein to the contrary, Seller
shall not be entitled to exercise its right to terminate this Agreement pursuant
to Section 11.01(d) unless:
              (i)        Seller has received a bona fide written Acquisition
Proposal made after the date of this Agreement that was unsolicited and did not
otherwise result from a breach of Section 5.04(a) that the Board of Directors of
Seller (whether at the time of receipt or after any negotiations or discussions
with respect thereto in accordance with Section 5.04(b)(iii)) reasonably
determines constitutes a Superior Proposal;
              (ii)      Seller has provided to Buyer three Business Days’ prior
written notice (a “Notice”) advising Buyer that Seller intends to take such
action and specifying the reasons therefor;
              (iii)      Seller has provided to Buyer all material documentation
and information delivered or made available to the Third Party making any
Acquisition Proposal in connection with such Acquisition Proposal (to the extent
such documentation and information has not been previously provided to Buyer);
and
              (iv)      (A) the Notice includes the terms and conditions of the
Acquisition Proposal that is the basis of the proposed termination by Seller
(and that the Board of Directors of Seller reasonably determines constitutes a
Superior Proposal) and the identity of the Third Party making the proposal (it
being understood and agreed that any amendment to the financial terms or any
material amendment to any other material term of such Acquisition Proposal shall
require a new Notice and a new three Business Day period); (B) during such three
Business Day period, if requested by Buyer, Seller has engaged in good faith
negotiations with Buyer to amend this Agreement in such a manner that such
Acquisition Proposal which was determined to constitute a Superior Proposal no
longer is a Superior Proposal; and (C) at the end of such three Business Day
period, such Acquisition Proposal has not been withdrawn and the Board of
Directors reasonably believes that such Acquisition Proposal continues to
constitute a Superior Proposal (taking into account any changes to the financial
and other terms of this Agreement proposed by Buyer following a Notice, as a
result of the negotiations between Buyer and Seller pursuant to clause (B) or
otherwise).
            (e)       For purposes of this Agreement:
              (i)        “Acquisition Proposal” means, other than the
transactions contemplated by this Agreement, any offer, proposal, or inquiry
relating to (i) any acquisition or purchase, direct or indirect, of 25% or more
of the

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assets of the KGS Entities or 25% or more of any class of equity or voting
securities of any of the KGS Entities whose assets, individually or in the
aggregate, constitute 25% or more of the consolidated assets of the KGS
Entities, (ii) any tender offer (including a self-tender offer) or exchange
offer that, if consummated, would result in such Third Party’s beneficially
owning 25% or more of any class of equity or voting securities of Gas Services
GP, KGS or any Subsidiary whose assets, individually or in the aggregate,
constitute 25% or more of the consolidated assets of the KGS Entities, (iii) a
merger, consolidation, share exchange, business combination, sale of
substantially all the assets, reorganization, recapitalization, liquidation,
dissolution or other similar transaction involving Gas Services GP, KGS or any
Subsidiary whose assets, individually or in the aggregate, constitute 25% or
more of the consolidated assets of the KGS Entities or (iv) any acquisition,
whether direct or indirect, of more than 25% of Seller’s ownership interest in
Gas Services GP or Seller’s aggregate ownership of Common Units and Subordinated
Units.
              (ii)      “Superior Proposal” means any bona fide, written
proposal by a Third Party that, if consummated, would result in such Third Party
(or its equityholders) owning, directly or indirectly, not less than 51% of
Seller’s ownership interest in Gas Services GP (and correspondingly, the General
Partner Units and Incentive Distribution Rights held by Gas Services GP) and 75%
of Seller’s aggregate ownership of Common Units and Subordinated Units and
(A) that the Board of Directors of Seller reasonably determines in good faith
(after consultation with its outside legal and financial advisors) to be more
favorable to Seller from a financial point of view than the transactions
contemplated by this Agreement (after giving effect to any changes to the
financial terms of this Agreement proposed by Parent in response to such offer
or otherwise) and (B) which is, in the good faith judgment of the Board of
Directors of Seller, reasonably likely to be consummated on the terms set forth
in the proposal, taking into consideration (with respect to both subsections
(A) and (B) hereof) all financial, regulatory, legal, timing, conditionality and
other aspects of such proposal (including any break-up fee and conditions to
consummation) and the Person making the proposal.
            Section 5.05.  Litigation Cooperation.  (a) Prior to any termination
of this Agreement in accordance with its terms, Seller shall give Buyer the
opportunity to participate in the defense of any shareholder litigation against
Seller, Gas Services GP, KGS or its or their directors or officers relating to
the transactions contemplated by this Agreement or the other Transaction
Documents; provided, however, that no such settlement by Seller, Gas Services GP
or KGS of any such litigation shall be agreed to without Buyer’s prior consent
(whether or not Buyer

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is participating in the defense thereof), which consent shall not be
unreasonably withheld, conditioned or delayed.
            (b)        In the event and for so long as Buyer or any of its
Affiliates actively is prosecuting, contesting or defending any action, suit,
charge, proceeding or demand by or against a Third Party in connection with any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the Sold Entities, Seller and the Selling Subsidiaries shall, and Seller shall
cause its subsidiaries and its and their Representatives to, cooperate with
Buyer (or its Affiliates, as applicable) and its counsel in the prosecution,
contest or defense, make available its personnel, and provide such testimony and
access to its books and records and facilities as shall be reasonably necessary
in connection with the prosecution, contest or defense, all at the sole control,
cost and expense of Buyer (unless Buyer is entitled to indemnification therefor
or Seller elects to assume the defense of such action under Article 8 or
Article 12, as applicable).
            Section 5.06.  Financing Cooperation.
            (a)        Seller and the Selling Subsidiaries shall, and, prior to
the Closing, Seller and the Selling Subsidiaries shall cause the Sold Entities
and its and their Representatives to, provide such cooperation to Buyer as Buyer
may reasonably request in connection with the arrangements by Buyer to obtain
the Debt Financing (provided, that such cooperation does not unreasonably
interfere with the ongoing operations of Seller, the Selling Subsidiaries or the
Sold Entities or unreasonably interfere with or hinder or delay the performance
of their obligations hereunder or allow for any invasive sampling or testing of
any soil, surface water, groundwater, building materials or other environmental
testing without the prior written consent of Seller), including by
(i) participating in rating agency and bank investor meetings and assisting
Buyer in the preparation of a confidential information memorandum and marketing
materials for the Debt Financing, (ii) preparing and furnishing Buyer as
promptly as practicable with the unaudited consolidated balance sheet of KGS as
of the end of June 30, 2010 and as of September 30, 2010 and the related
unaudited statements of income, partners’ capital and cash flows for such
periods (the “Third Quarter Financials”), and (iii) to the extent requested by
Buyer, seeking the approval of the Conflicts Committee of the Board of Directors
of Gas Services GP with respect to any refinancing of KGS’ existing revolving
credit facility and any matters related thereto.
            (b)        Seller shall reasonably cooperate with and provide such
assistance as reasonably requested by Buyer to provide for the settlement of the
KGS Note concurrently with but effective as of after the Closing, including
submitting

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matters relating thereto to the Conflicts Committee of the Board of Directors of
Gas Services GP.
            Section 5.07.  Non-Compete/Non-Solicit.  (a) Except as provided in
Section 5.07(a) of the Seller Disclosure Schedules or as permitted by the
Transaction Documents, during the period from the Closing Date and ending on the
second anniversary of the Closing Date, Seller and the Selling Subsidiaries
shall not, and Seller shall cause each of its controlled Affiliates not to,
engage in, whether by acquisition, ownership, construction or otherwise, any of
the following businesses (the “Restricted Businesses”): the gathering, treating
or processing of natural gas in the Quicksilver Counties, or the transportation
of natural gas liquids in the Quicksilver Counties.
            (b)        For a period of two years after the Closing Date, Seller
and the Selling Subsidiaries shall not, and Seller shall cause its controlled
Affiliates not to, directly or indirectly, (i) solicit or (ii) hire or engage,
as an officer, employee, consultant, independent contractor or otherwise, any
Current Employee or other employee of KGS or its Subsidiaries without the prior
written consent of Buyer; provided, nothing in clause (i) of this
Section 5.07(b) shall prohibit Seller or its controlled Affiliates from engaging
in general solicitations of employment to the public, general advertising or the
use of an independent employment agency or search firm whose efforts are not
specifically directed at Current Employees or any employees of KGS or its
Affiliates.
            (c)        For a period of two years after the Closing Date, Buyer
will cause KGS and its controlled Affiliates not to, directly or indirectly,
(i) solicit or (ii) hire or engage, as an officer, employee, consultant,
independent contractor or otherwise, any employee of Seller or any of its
subsidiaries without the prior written consent of Seller; provided, nothing in
clause (i) of this Section 5.07(c) shall prohibit KGS or its controlled
Affiliates from engaging in general solicitations of employment to the public,
general advertising or the use of an independent employment agency or search
firm whose efforts are not specifically directed at such employees of Sellers
and its subsidiaries.
            (d)        Each party hereto agrees and acknowledges that the other
parties hereto do not have any adequate remedy at law for the breach by the
other party or any of its Affiliates or its or their Representatives of the
covenants and agreements set forth in this Section 5.07 and that such breach
would result in irreparable injury to the non-breaching party.  Each party
agrees and acknowledges that the other party may, in addition to the other
remedies which may be available to such party, file a suit in equity to enjoin
the breaching party or any of its controlled Affiliates from such breach, and
consents to the issuance of injunctive relief under this Agreement.

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            Section 5.08.  Resignation of Directors.  At the Closing, Seller
shall, unless otherwise agreed by Buyer in writing, deliver to Buyer evidence
reasonably satisfactory to Buyer of the resignation, effective as of the
Closing, of all directors of Gas Services GP other than the persons set forth in
Section 5.08 of the Seller Disclosure Schedules.  Upon the request of Buyer, as
specified by Buyer reasonably in advance of the Closing, Seller and the Selling
Subsidiaries will seek to obtain the resignation of any or all directors of the
Sold Entities other than Gas Services GP and any and all officers of the Sold
Entities, in each case, effective at the Effective Time.
            Section 5.09.  Termination of Related Party Transactions.  All
Contracts or other arrangements between Seller or its Affiliates (other than the
Sold Entities) and officers, directors and employees thereof, on the one hand,
and the Sold Entities, on the other hand, shall be terminated on or prior to the
Closing without any loss, liability or expense of the Sold Entities paid or
remaining thereunder, except for (a) the Transaction Documents and (b) those
other Contracts or arrangements set forth in Section 5.09 of the Seller
Disclosure Schedules.
            Section 5.10.  Insurance Matters.  With respect to events or
circumstances relating to the Sold Entities that occurred or existed prior to
the Closing Date that are covered by Seller’s or its Affiliates’
occurrence-based liability insurance policies, Buyer may make claims under such
policies and programs to the extent such coverage and limits are available under
such policies and programs; provided, that, except as otherwise expressly
provided herein, Buyer shall reimburse Seller or its Affiliates for the amount
of any “deductibles” associated with claims under such policies and programs and
shall be liable for all uninsured or uncovered amounts of such claims.
ARTICLE 6
Covenants of Buyer
            Buyer agrees that:
            Section 6.01.  Confidentiality.  All information provided or made
available to Buyer or any of its Representatives will be subject to the
Confidentiality Agreement dated as of September 10, 2009, between Seller and
First Reserve XII Advisors, L.L.C (the “Confidentiality Agreement”), which
agreement shall remain in full force and effect until the Closing and shall
thereupon terminate except that the disclosure, but not the use (to the extent
necessary to operate the Sold Entities in the ordinary course) of any Evaluation
Material (as defined in the Confidentiality Agreement) to the extent related
solely to Seller or its Affiliates (for the avoidance of doubt, other than the
Sold Entities) shall continue to be

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governed by the terms of the Confidentiality Agreement.  Buyer acknowledges and
agrees that it shall be deemed to be a “Representative” under the
Confidentiality Agreement
            Section 6.02.  Access.  Except as determined in good faith to be
necessary to (A) ensure compliance with any Applicable Law, or (B) preserve any
applicable privilege (including the attorney-client privilege), Buyer will, at
Seller’s cost, cause the Sold Entities, on and after the Closing Date, to afford
promptly to Seller and its agents reasonable access to their properties, books,
records, employees and auditors to the extent necessary to permit Seller to
determine any matter relating to its rights and obligations hereunder or to any
period ending on or before the Closing Date; provided that any such access by
Seller shall not unreasonably interfere with the conduct of the business of
Buyer or the Sold Entities.  Seller will hold, and will use its reasonable best
efforts to cause its Representatives to hold, in confidence all confidential
information concerning the Sold Entities in accordance with Section 5.03.
            Section 6.03.  Use of Seller’s Names and Marks.  (a) As soon as
practicable following the Closing, but in no event later than 90 days after
Closing, Buyer shall, and shall cause its Affiliates to, (i) change the name of
the Sold Entities to a name that does not include any of Seller’s Names and
Marks; (ii) cease and discontinue all uses of Seller’s Names and Marks,
including as internet domain names and on the internet and other electronic
communications platforms, and remove or cover all Seller’s Names and Marks from,
or destroy, any publications, signage, corporate letterhead, stationary,
business cards, marketing material or content and the like, as well as all other
information or other materials of Buyer or any of its Affiliates bearing any
Seller Name and Mark and (iii) change KGS’ New York Stock Exchange ticker symbol
so that it does not include any of Seller’s Names and Marks.
            (b)        In no event shall Buyer or any of its Affiliates use any
of Seller’s Names and Marks after Closing in any manner or for any purpose
different from the use of such Seller’s Names and Marks by Sellers or its
Subsidiaries preceding the Closing.  Buyer, for itself and its Affiliates,
agrees that, after the Closing Date, Buyer and its Affiliates will not do
business or represent themselves as Seller or any of its subsidiaries.
            (c)        Notwithstanding anything in this Section 6.03 to the
contrary, nothing in this Section 6.03 shall prevent Buyer from using
descriptive elements of Seller’s Names and Marks or making any fair use of
Seller’s Names and Marks.

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ARTICLE 7
Covenants of Buyer and Seller
            Section 7.01.  Reasonable Best Efforts; Further
Assurances.  (a) Subject to the terms and conditions of this Agreement, each
party hereto will use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary or desirable
under Applicable Law to consummate the transactions contemplated by this
Agreement.  The parties hereto agree, and Seller and the Selling Subsidiaries,
prior to the Closing, and Buyer, after the Closing, agree to cause the Sold
Entities, to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement in accordance with the terms hereof.
            (b)        In furtherance and not in limitation of the foregoing,
each of Buyer and Seller shall make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby as promptly as reasonably practicable and in any event
within ten (10) Business Days after the date hereof and shall supply as promptly
as reasonably practicable any additional information and documentary material
that may be requested pursuant to the HSR Act. Each of Buyer and Seller agree to
consult and cooperate with the other party with respect to, and to permit, to
the extent reasonably practicable, the other party to be present at conferences
and meetings for the purpose of obtaining, clearance under the HSR Act.
            (c)        If any objections are asserted with respect to the
transactions contemplated hereby under the HSR Act or if any suit or proceeding
is instituted or threatened by any Governmental Authority or any private party
challenging any of the transactions contemplated hereby as violative of the HSR
Act, each of Buyer and Seller shall use its best efforts to promptly resolve
such objections; provided that none of Seller nor any of its Affiliates shall
have any obligation to hold separate or divest any property or assets of Seller
or any of its Affiliates or to defend against any lawsuit, action or proceeding,
judicial or administrative, challenging this Agreement or the transactions
contemplated hereby.  In furtherance of the foregoing, Buyer shall, and shall
cause its subsidiaries and Affiliates to, take all action, including agreeing to
hold separate or to divest any of the businesses or properties or assets of
Buyer or any of its Affiliates and to terminate any existing relationships and
contractual rights and obligations, as may be required (i) by the applicable
Governmental Authority in order to resolve any objections that such Governmental
Authority may have to such transactions under the HSR Act or (ii) by any court
or other tribunal, in any action or proceeding brought by a private party or
Governmental Authority challenging such transactions as violative of the HSR
Act, in order to avoid the entry of, or to effect

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the dissolution, vacating, lifting, altering or reversal of, any order that has
the effect of restricting, preventing or prohibiting the consummation of the
transactions contemplated by this Agreement.
            Section 7.02.  Certain Filings.  The parties hereto shall cooperate
with one another (i) in determining whether any action by or in respect of, or
filing with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
Contracts, in connection with the consummation of the transactions contemplated
by this Agreement and the other Transaction Documents and (ii) in taking such
actions or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers.
            Section 7.03.  Public Announcements.  Prior to and with respect to
the Closing, the parties agree to consult with each other before issuing any
press release or making any public statement with respect to this Agreement or
the transactions contemplated hereby and, except for any press releases and
public announcements the making of which may be required by Applicable Law or
any listing agreement with any national securities exchange where such prior
consultation is not reasonably practicable, will not issue any such press
release or make any such public statement prior to such consultation.
            Section 7.04.  Notice of Certain Events. Each party hereto shall
promptly notify the other of:
            (a)        any notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement or the other Transaction
Documents;
            (b)        any event, condition or development that, individually or
in the aggregate, has resulted in (or, in the case of representations and
warranties, would result in) the inaccuracy or breach of any representation or
warranty, covenant or agreement contained in this Agreement made or to be made
by or to be complied with by such notifying party at any time during the term
hereof and that would reasonably be expected to result in any of the conditions
set forth in Article 10 not to be satisfied; provided, however, that no such
notification shall be deemed to cure any such breach of or inaccuracy in such
notifying party’s representations and warranties or covenants and agreements or
in the Seller Disclosure Schedules for any purpose under this Agreement and no
such notification shall limit or otherwise affect the remedies available to the
other parties, including any right to indemnification;
            (c)        any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
and

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            (d)        any proceedings, claims, actions or investigations
commenced or threatened in writing that would reasonably be expected to prevent
or materially delay the consummation of the transactions contemplated by this
Agreement or the other Transaction Documents or materially impair the notifying
party’s ability to perform its obligations under this Agreement or the other
Transaction Documents.
            Section 7.05.  Board of Directors.  Buyer and Seller agree that
immediately after the Closing the Board of Directors of Gas Services GP will
include no fewer than 9 members and will, subject to the prior consent of Buyer,
include those individuals set forth in Section 5.08 of the Seller Disclosure
Schedules (unless any such Person declines or is otherwise unable to
serve).  Buyer agrees that Seller shall be entitled to appoint one member to the
Board of Directors of Gas Services GP (or any successor general partner of KGS)
until the later of (x) the second anniversary of the Closing Date and (y) such
time as Seller and its controlled Affiliates cease to purchase goods and
services from KGS and the Subsidiaries which generate revenues constituting 50%
or more of the consolidated revenues of KGS and its subsidiaries in any fiscal
year.
            Section 7.06.  Surety Bonds.  As soon as practicable after the
Closing, Buyer will use its reasonable best efforts to obtain Seller’s and any
of its Affiliates’ release from any surety bonds of KGS and the Subsidiaries set
forth in Section 7.06 of the Seller Disclosure Schedules.
            Section 7.07.  Transaction Documents.  (a) Immediately after
consummation of the Closing:
              (i)        Seller shall enter into, and Buyer shall cause Cowtown
Pipeline Partners, L.P., a Texas limited partnership, and Cowtown Gas Processing
Partners L.P., a Texas limited partnership, to enter into, Second Amendment to
Sixth Amended and Restated Gas Gathering and Processing Agreement;
              (ii)      Seller shall enter into, and Buyer shall cause Cowtown
Pipeline Partners, L.P., a Texas limited partnership, to enter into, Amendment
to Gas Gathering Agreement;
              (iii)      Seller shall enter into, and Buyer shall cause KGS to
enter into, the Transition Services Agreement;
              (iv)      Seller shall enter into, and Buyer shall cause Cowtown
Pipeline Partners, L.P., a Texas limited partnership, to enter into, Second
Amendment to Gas Gathering Agreement; and

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              (v)        Seller shall enter into, and Buyer shall cause KGS and
Gas Services GP to enter into, the Joint Operating Agreement.
            (b)        Immediately prior to the Closing, Seller shall enter
into, and shall cause Cowtown Gas Processing Partners L.P., a Texas limited
partnership, to enter into, the Liquids Assignment and Assumption Agreement.
            Section 7.08.  Master Services Agreements.  Promptly after
consummation of the Closing, Seller will, to the extent so requested by Buyer in
writing, use its commercially reasonable efforts to assign to KGS all or that
portion of any master services agreement to which Seller or any of its
subsidiaries is a party and that is applicable to KGS or any of the Subsidiaries
(each, a “Master Services Agreement”).  Seller shall not be required to assign
all or any portion of a Master Services Agreement if such assignment, without
the consent of a third party thereto, would constitute a breach or other
contravention of such Master Services Agreement or in any way adversely affect
the rights of Seller, KGS or any of their respective Affiliates thereunder.
Seller will, and Buyer will cause KGS to, use their respective commercially
reasonable efforts (but without any payment of money by Seller or Buyer) to
obtain the consent of the other parties to the assignment, in whole or in part,
of any Master Services Agreement.  If such consent is not obtained, or if an
attempted assignment thereof would be ineffective or would adversely affect the
rights of Seller thereunder so that KGS would not in fact receive all such
rights, to the extent requested by Buyer in writing, Seller and Buyer will
cooperate in a mutually agreeable arrangement under which Buyer would cause KGS
to obtain the benefits and assume the obligations under the Master Services
Agreements, including sub-contracting, sub-licensing, or sub-leasing to KGS, or
under which Seller would enforce for the benefit of KGS, with Buyer causing KGS
to assume Seller’s obligations and any and all rights of Seller against a third
party thereto.
            Section 7.09.  Real Estate Matters.  (a) Promptly after the date
hereof, Buyer and Seller shall negotiate in good faith and use commercially
reasonable efforts to enter into a lease effective as of Closing pursuant to
which KGS will lease office space on commercially reasonable terms in the
building owned by Seller in Glen Rose, Texas; provided that failure to enter
into any such lease shall have no impact on the satisfaction of the conditions
to Closing set forth in Article 10.
            (b)        Prior to Closing, Seller will assign to KGS a portion of
the lease set forth on Section 7.09(b) of the Seller Disclosure Schedules
pursuant to which KGS will lease approximately 16,000 square feet of space on
substantially the same terms as set forth in the such lease; provided that
failure to assign such lease shall have no impact on the satisfaction of the
conditions to Closing set forth in Article 10.

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            Section 7.10.  Automobiles.  Prior to the Closing, Seller shall use
its commercially reasonable efforts to work together in good faith with Buyer to
identify any leased or owned motor vehicles used by a Current Employee.  Seller
and Buyer shall cooperate in good faith to implement an arrangement so that
(i) from, or as promptly as practicable after, the Closing Date, each Current
Employee may continue to use the leased or owned motor vehicle used by each such
Current Employee immediately prior to the Closing and (ii) on, or as promptly as
practicable after, the Closing Date, title (in the case of owned vehicles) and
the applicable leases (in the case of leased vehicles) are transferred to
KGS.  If the parties are unable to transfer title (in the case of owned
vehicles) or the applicable leases (in the case of leased vehicles), Seller
shall, and Buyer shall cause KGS to, work together in good faith to pass the
economic benefits and burdens of title (in the case of owned vehicles) and the
applicable leases (in the case of leased vehicles) to KGS on, or as promptly as
practicable after, the Closing Date.
ARTICLE 8
Tax Matters
            Section 8.01.  Allocation of Tax Items. Seller and Buyer acknowledge
and agree that (i) the sale of the Holdings LLC Interests by the Selling
Subsidiaries to Buyer will result in a “technical” termination of Holdings LLC
and KGS (the “Terminating Partnerships”) under Section 708(b)(1)(B) of the Code,
and (ii) such termination will result in the closing of the taxable years of the
Terminating Partnerships under Section 706(c)(1) of the Code.  Seller and Buyer
agree that the Terminating Partnerships shall determine the allocation of all
items for tax purposes between the Pre-Closing Tax Period and the Post-Closing
Tax Period based upon an actual “closing of the books” of each Terminating
Partnership as of the Closing Date.
            Section 8.02.  Tax Returns.  (a) Buyer shall prepare or cause to be
prepared, file or cause to be filed when due, all Tax Returns of the KWK
Entities and the KGS Entities, in accordance with past practice, relating to any
Pre-Closing Tax Period that have not been filed as of the Closing Date. Seller
shall reasonably cooperate in preparing and filing all such Tax Returns,
including using reasonable best efforts to maintain and make available all
records necessary in connection therewith.
            (b)        Not later than 30 Business Days prior to the due date,
including extensions, of any Tax Return covering a Pre-Closing Tax Period, Buyer
shall deliver to Seller for its review a copy of such Tax Return and, with
respect to any KWK Entity, a statement setting forth Buyer’s calculation of the
amount of Tax shown as due on such Tax Return that is allocable to the
Pre-Closing Tax Period

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under Section 8.01.  Subject to Buyer’s approval, not to be unreasonably
withheld, Buyer shall make or cause to be made such changes in such Tax Returns
as Seller may reasonably request, which changes shall be delivered to Buyer at
least 10 Business Days prior to the due date, including extensions.  Not later
than 5 Business Days prior to the due date of any such Tax Return of a KWK
Entity, Seller shall pay to Buyer (or Buyer pay to Seller, if appropriate) the
amount of Tax shown as due on such Tax Return that is allocable to the
Pre-Closing Tax Period.  Buyer shall file or cause to be filed all such Tax
Returns and shall pay all Taxes shown to be due thereon.
            (c)        Buyer shall not file any amended Tax Returns with respect
to any KWK Entity or KGS Entity that includes a period ending on or before the
Closing Date without Seller’s written consent, not to be unreasonably withheld.
            Section 8.03.  Transfer Taxes.  All Transfer Taxes shall be borne
50% by Buyer and 50% by Seller.  Notwithstanding anything to the contrary in
this Article 8, any Tax Returns that must be filed in connection with Transfer
Taxes shall be prepared and filed when due by the party primarily or customarily
responsible under the applicable local law for filing such Tax Returns, and such
party will use reasonable best efforts to provide such Tax Returns to the other
party at least ten days prior to the due date, including extensions, for such
Tax Returns. Upon the filing of Tax Returns in connection with Transfer Taxes,
the filing party shall provide the other party with evidence satisfactory to the
other party that such Transfer Taxes have been filed and paid.
            Section 8.04.  Tax Indemnification.  (a) Effective at and after the
Closing, Seller shall indemnify, defend and hold harmless Buyer from and
against, and reimburse each such Person for, any loss or damage (including any
interest or penalty, reasonable expenses of investigation and reasonable
attorney’s fees and expenses in connection with any action, suit or proceeding
whether involving a third party claim or a claim solely between the parties
hereto) (“Tax Damages”) with respect to (i) any Taxes imposed on the KWK
Entities for any Pre-Closing Tax Period (for the portion of any Straddle Period
ending on or before the Closing Date, as determined in accordance with the
allocations under Section 8.04(g)), or (ii) any failure by Seller or any of its
Affiliates to perform any of its covenants or agreements set forth in this
Article 8.
            (b)        Effective at and after the Closing, Buyer shall
indemnify, defend and hold harmless Seller from and against, and reimburse each
such Person for, any loss or damage (including any interest or penalty, expenses
of investigation and attorney’s fees and expenses in connection with any action,
suit or proceeding whether involving a third party claim or a claim solely
between the parties hereto) with respect to (i) any Taxes imposed on the KWK
Entities for any Post-Closing Tax Period (for the portion of any Straddle Period
ending on or before the Closing

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Date, as determined in accordance with the allocations under Section 8.04(g)),
or (ii) any failure by Buyer or any of its Affiliates to perform any of its
covenants or agreements set forth in this Article 8.
            (c)        Buyer shall cause the KWK Entities to pay to Seller any
amounts recovered from any Governmental Authority on account of Taxes imposed on
the KWK Entities paid with respect to any Pre-Closing Tax Period, and Buyer
agrees to cooperate with Seller in any reasonable effort to seek any such
recovery; provided that, in no instance shall Buyer be required to take any
action that Buyer reasonably determines would subject Buyer or any Sold Entity
to an unreimbursed cost.
            (d)        Buyer or Seller, as the case may be (the “Tax Indemnified
Party”) will promptly notify the other party (the “Tax Indemnifying Party”) of
the receipt by the Tax Indemnified Party or any Affiliate of the Tax Indemnified
Party of any written communication from any taxing authority concerning Taxes
for which indemnification may be claimed from the Tax Indemnifying Party
pursuant to the provisions of this Section 8.04.  In addition, the Tax
Indemnified Party will notify the Tax Indemnifying Party at least 15 Business
Days prior to the date on which the Tax Indemnified Party or any Affiliate of
the Tax Indemnified Party intends to make a payment of any Taxes that are
indemnifiable by the Tax Indemnifying Party pursuant to the provisions of this
Section 8.04.  The failure by the Tax Indemnified Party to notify the Tax
Indemnifying Party pursuant to this Section 8.04 will not constitute a waiver of
any claim to indemnification under this Section 8.04 except to the extent that
the Tax Indemnifying Party is materially prejudiced by such failure.
            (e)        Except as otherwise set forth in this Section 8.04(e),
the Tax Indemnifying Party will have the right to control any audit or other
administrative or judicial proceeding relating to any of the KWK Entities in
respect of any Tax liability with respect to which the Tax Indemnifying Party
provides indemnification under this Section 8.04.  The Tax Indemnifying Party
shall (i) consult with the Tax Indemnified Party and(ii) permit the Tax
Indemnified Party, at its expense, to participate in the defense of such audit,
controversy or other proceeding. Neither the Tax Indemnifying Party nor the Tax
Indemnified Party shall enter into any settlement or other resolution of any
audit or other administrative or judicial proceeding with respect of any Tax
liability without the consent of the other party, such consent not to be
unreasonably withheld. Any audit or other administrative or judicial proceeding
relating to any of the KWK Entities in respect of any Straddle Tax Period shall
be jointly controlled by Buyer and Seller.
            (f)        If the Tax Indemnifying Party’s indemnification
obligation under this Section 8.04 arises in respect of the payment of any Tax
Damages which

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makes allowable to the Tax Indemnified Party, any of its Affiliates or, in the
case of Buyer, effective upon the Closing, a Sold Entity any deduction,
amortization, exclusion from income or other allowance which would not, but for
the payment of such Tax Damages, be allowable, then the Tax Indemnified Party
shall pay to the Tax Indemnifying Party an amount equal to the Tax benefit
resulting therefrom if, as and when such Tax benefit is actually realized in
cash or a reduction in Taxes otherwise due.
            (g)        For purposes of this Section 8.04, in the case of any
Straddle Tax Period, the amount of Taxes allocable to the portion of such
taxable period ending on the Closing Date shall be deemed to be: (i) in the case
of Taxes imposed on a periodic basis (such as real or personal property Taxes),
the amount of such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the immediately
preceding period) multiplied by a fraction, the numerator of which is the number
of calendar days in the Pre-Closing Tax Period and the denominator of which is
the number of calendar days in the entire relevant taxable period and (ii) in
the case of Taxes not described in the previous sentence (such as franchise
Taxes, Taxes that are based upon or related to income or receipts, based upon
occupancy or imposed in connection with any sale or other transfer or assignment
of property (real or personal, tangible or intangible)), the amount of any such
Taxes shall be determined as if such taxable period ended as of the close of
business on the Closing Date.
            Section 8.05.  Survival; Exclusivity.  Notwithstanding anything to
the contrary in this Agreement, (i) the covenants and agreements under this
Article 8 shall survive until the close of business on the 60th day following
the expiration of the applicable statute of limitations (giving effect to any
waiver, mitigation or extension thereof), and (ii) Section 8.04 shall be the
exclusive provision relating to indemnification for matters relating to Taxes of
the KWK Entities.
ARTICLE 9
Employee Matters
            Section 9.01.  Employee Matters.  (a) Except as set forth in the
Transition Services Agreement, as of the Closing Date, each Business Employee
shall cease to accrue future benefits under the Business Employee Plans.  Except
as set forth in the Transition Services Agreement, Seller and its Affiliates
shall retain sponsorship of, shall remain solely responsible for and shall
retain all liabilities, obligations and commitments under, the Business Employee
Plans, whether arising before, on or after the Closing Date other than as
specifically provided in this Article 9.  Except as set forth in the Transition
Services Agreement, Buyer shall not, and from and after the Closing Date the
Sold Entities shall not, except to the extent provided herein, assume
sponsorship of, contribute to or maintain, or

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have any responsibility, liability, obligation or commitment with respect to,
the Business Employee Plans.
            (b)        On or before the Closing Date, Buyer shall, or shall
cause any of its Affiliates to, offer employment, effective as of the Closing,
to each Business Employee who is not an Inactive Business Employee as of the
Closing Date, on the terms and conditions set forth in this Section 9.01.  Those
Business Employees who accept such offers of employment on the Closing Date and
all Inactive Business Employees who return to active employment with Buyer or
one of its Affiliates on or prior to 180 days following the Closing Date, once
actively employed again, shall herein be referred to as the “Current
Employees”.  Effective immediately prior to the Closing or the Effective Hire
Date, as applicable, Seller or the applicable Affiliate of Seller shall
terminate the employment of each Current Employee.  For purposes of
clarification, (i) Buyer shall be solely responsible for any and all severance
liabilities relating to the termination of employment of any Current Employee by
Buyer or its Affiliates after the Closing Date and (ii) Seller and its
Affiliates, as applicable, shall be solely responsible for any and all severance
liabilities relating to the termination of employment of any employees of Seller
and its Affiliates, including without limitation, any Business Employees who do
not become Current Employees, on or prior to the Closing Date.
            (c)        For the duration of the period commencing on the
Effective Hire Date and ending on the first anniversary of the Closing Date (the
“Relevant Period”), Buyer shall, or shall cause its Affiliates to, provide
(i) to each Current Employee who is employed by Buyer or any of its Affiliates
base wages or salaries, as applicable, at least equal to those provided to such
Current Employee immediately prior to the Closing Date and (ii) to Current
Employees in the aggregate variable incentive compensation opportunities
(excluding equity-based compensation and change in control and retention and
benefits), annual bonus opportunities and employee benefit plans, programs,
policies and arrangements that are not less favorable in the aggregate
(excluding for these purposes any tax treatment applicable to such benefits,
programs, policies or arrangements which has or may change as a result of
material changes in Applicable Law) to the variable incentive compensation
opportunities (excluding equity-based compensation and change in control and
retention and benefits), annual bonus opportunities and employee benefit plans,
programs, policies and arrangements that are provided Current Employees
immediately prior to the Closing Date and disclosed in Section 3.20(a) of the
Seller Disclosure Schedules.  Buyer shall, or shall cause its Affiliates to
provide severance benefits to any Current Employee whose employment with Buyer
or its Affiliates is terminated by Buyer or its Affiliates during the Relevant
Period for a reason other than cause (as reasonably determined by Buyer or its
Affiliates in good faith), that are no less favorable than

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the severance benefits provided to such Current Employee immediately prior to
the Closing and disclosed in Section 3.20(a) of the Seller Disclosure Schedules.
            (d)        For Current Employees, effective as of their Effective
Hire Date, Buyer shall, or shall cause its Affiliates to, cause each
compensation or employee benefit plan, program, or arrangement maintained or
contributed to by Buyer or any of its Affiliates and in which any Current
Employee becomes eligible to participate, to treat the prior service of such
Current Employee with Seller or any of its Affiliates as service rendered to
Buyer or its Affiliates, as the case may be, for all purposes (including
vesting, eligibility, level of benefit (including for purposes of severance and
vacation/paid time off benefits)) and future benefit accrual purposes, to the
extent that such prior service was recognized under the applicable Business
Employee Plan immediately prior to such Current Employee’s Effective Hire Date,
to the extent that such service credit does not result in duplication of
benefits for the same service period of service.
            (e)        Buyer shall, or shall cause its Affiliates to (i) waive
any limitation on health and welfare coverage of any Current Employee and his or
her eligible dependents due to pre-existing conditions and/or waiting periods,
active employment requirements, and requirements to show evidence of good health
under the applicable health and welfare plan of Buyer or any Affiliate of Buyer
to the extent such Current Employee and his or her eligible dependents is
covered under a health and welfare benefit plan of Seller or any of its
Affiliates (as the case may be), and such conditions, periods or requirements
are satisfied or waived under such plan, immediately prior to the Closing Date;
provided that Seller has provided to Buyer a “Certificate of Creditable
Coverage” with respect to each such Current Employee and his or her eligible
dependents and (ii) credit each Current Employee and his or her eligible
dependents with all deductible payments, co-payments and co-insurance paid by
such employee and covered dependents under the medical employee benefit plan of
Seller or any of its Affiliates (as the case may be) during the year prior to
the applicable Effective Hire Date for the purpose of determining the extent to
which any such employee and his or her dependents have satisfied their
deductible and whether they have reached the out-of-pocket maximum under any
medical plan of Buyer or any Affiliate of Buyer for such year.
            (f)        With respect to each Inactive Business Employee, any such
employee on long-term disability leave shall remain on Seller’s long-term
disability plan in accordance with the terms of the applicable Business Employee
Plan.
            (g)        Effective from and after the Closing Date, except as
otherwise provided for in the Transition Services Agreement, with respect to any
claims for hospital, medical, dental or other health, disability, life insurance
or accidental

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death or dismemberment benefits, expenses or other reimbursement provided to or
in respect of any Current Employee (or his or her eligible dependents),
(i) Seller shall remain responsible and liable for any such claims incurred by
such Current Employee on or prior to the Closing Date and (ii) Buyer or its
Affiliates shall assume responsibility and liability under Buyer’s plans for any
such claims incurred by such Current Employee after the Closing Date.  For
purposes of the foregoing, claims for medical, dental or other health or
disability benefits shall be considered incurred when the services are rendered
or supplies are provided, and not when the condition arose or the applicable
claim was submitted, claims for hospitalization shall be considered incurred at
the time of hospital admission and claims for life insurance or accidental death
or dismemberment benefits shall be considered incurred on the date of death or
dismemberment.
            (h)        For the period beginning on the Closing Date and ending
on the last day of the calendar year in which the Closing occurs, Buyer shall or
shall cause its Affiliates to provide for planned and unplanned time-off
policies for Current Employees that are no less favorable to such employees than
planned and unplanned time-off policies provided by Buyer or its Affiliates to
their similarly situated employees.  Buyer shall or shall cause its Affiliates
to, credit each Current Employee with all paid time off accrued and unused by
such Current Employee through the Closing Date, solely to the extent such paid
time off was properly reserved on the balance sheet.
            (i)        During the period beginning on the Closing Date and
ending on the last day of the calendar year in which the Closing occurs, except
as otherwise provided for in the Transition Services Agreement, Buyer shall or
shall cause its Affiliates, as the case may be, to (i) maintain health care,
limited purpose healthcare spending and dependent care flexible spending
accounts established under Section 125 of the Code (the “Buyer FSA”),
(ii) permit the Current Employees to participate in the Buyer FSA to the extent
coverage under such Buyer FSA replaces coverage under a comparable Benefit Plan
or other benefit plan of Seller or its Affiliates in which such Current Employee
participated immediately before the Closing (the “Seller FSA”), (iii) credit
Current Employees under the Buyer FSA immediately following their Effective Hire
Date with amounts available for reimbursement equal to such amounts as were
credited under the Seller FSA with respect to such person immediately prior to
their Effective Hire Date and (iv) give effect under the Buyer FSA to any
elections made by such Current Employees with respect to the Seller FSA for the
year in which the Closing occurs.  As soon as reasonably practicable following
the Closing, except as otherwise provided for in the Transition Services
Agreement, if the net difference between (x) the aggregate employee
contributions under the Buyer FSA made under the Seller FSA as of the Closing
Date made during the year of the Closing Date and (y) the aggregate employee
reimbursements under the Buyer FSA made under the Seller FSA as of the Closing
Date made during the

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year of the Closing Date, in each case with respect to Current Employees for the
2010 plan year, (the “Assumed FSA Balance”) is (1) a positive number, then
Seller shall transfer to Buyer an amount, in cash, equal to the Assumed FSA
Balance or (2) a negative number, then Buyer shall transfer to Seller an amount,
in cash, equal to the positive value of the Assumed FSA Balance.  The parties
hereto agree to make reasonable, good faith efforts to implement the provisions
of this Section 9.01(i) to take into account the complexity of transferring
flexible spending accounts.
            (j)        In the event that a Current Employee makes a voluntary
election pursuant to Section 401(a)(31) of the Code to roll over his or her
account balance in Seller’s tax-qualified defined contribution plan to a
tax-qualified defined contribution plan sponsored by Buyer or one of its
Affiliates, Buyer agrees to cause such tax-qualified defined contribution plan
to accept such rollovers in cash or in instruments evidencing participant loans.
            (k)        Notwithstanding anything herein to the contrary, except
as otherwise provided for in the Transition Services Agreement, Seller agrees to
reimburse Buyer or one of its Affiliates, within 30 days following the end of
the calendar year in which the Closing Date occurs, for a pro-rata portion of
the profit-sharing contribution Current Employees would otherwise be entitled to
receive under the terms of Seller’s tax-qualified defined contribution plan for
the year in which the Closing Date occurs.  As soon as practicable following the
date hereof, Seller agrees to amend the applicable Employee Benefit Plan to
reflect the provisions of this Section 9.01(k), to the extent required.  For the
avoidance of doubt, Buyer or one of its Affiliates, as applicable, agrees to
contribute the amounts provided by Seller under this Section 9.01(k) to the
applicable tax-qualified defined contribution plan for the benefit of Current
Employees, to the extent not previously contributed.
            (l)        Notwithstanding anything herein to the contrary, except
as otherwise provided for in the Transition Services Agreement, Seller shall pay
to the Current Employees, as soon as administratively feasible following the
Closing Date, a pro-rated portion of the bonus amounts otherwise payable to the
Current Employees in respect of the year in which the Closing Date occurs under
the Employee Benefit Plan(s) that are cash incentive plan(s), determined in
accordance with the terms of the applicable plan(s), based upon performance and
the percentage of the applicable fiscal year that shall have elapsed through the
Closing Date.  For the avoidance of doubt, Buyer shall not assume any obligation
in respect of such plan(s).
            (m)        Seller and Buyer hereby agree to follow the standard
procedure for employment tax withholding as provided in Section 4 of Rev. Proc.
2004-53, I.R.B. 2004-35.  Accordingly, Seller shall have employment tax
reporting

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responsibilities for the wages and other compensation it pays with respect to
the Current Employees and Buyer shall have employment tax reporting
responsibilities for the wages and other compensation it pays with respect to
the Current Employees.
            (n)        In the event that Buyer determines to terminate any
Current Employee during the 90-day period following the Closing Date, Buyer and
Seller agree to cooperate and exchange such data and information as is
reasonably necessary to determine whether such terminations would reasonably be
expected to result in liability to Buyer or Seller under WARN.  Buyer, on the
one hand, and Seller, on the other hand, hereby agrees to indemnify and hold the
other and its Affiliates harmless from and against any and all damages arising
out of or otherwise in respect of any suit or claim of violation brought against
such other party or any of its Affiliates under WARN for any actions taken by,
as applicable, Buyer after the Closing Date with respect to any facility, site
or operating unit of the Current Employees or Seller prior to the Closing Date
with respect to any facility, site or operating unit of the Business Employees.
            (o)        Effective from and after the Closing Date, with respect
to any workers compensation claims of any Current Employee (or his or her
eligible dependents), (i) Seller shall remain responsible for any such claims
incurred by such Current Employee on or prior to the Closing Date and (ii) Buyer
shall assume responsibility for any such claims incurred by such Current
Employee after the Closing Date.  For purposes of the foregoing, a claim for
workers compensation benefits shall be deemed to be incurred when the event
giving rise to the claim occurs.
            (p)        Seller shall be responsible for providing any Business
Employee (and such Business Employee’s “qualified beneficiaries” within the
meaning of Section 4980B(f) of the Code) whose “qualifying event,” within the
meaning of Section 4980B(f) of the Code, occurs on or prior to the Closing Date
with the continuation of group health coverage required by Section 601 et. seq.
of ERISA and Section 4980B(f) of the Code (“Continuation Coverage”) under the
terms of a health plan maintained by Seller or any of its Affiliates.  Except as
otherwise provided for in the Transition Services Agreement, Buyer shall be
responsible for providing Continuation Coverage for any Current Employee (and
such Current Employee’s qualified beneficiaries) whose qualifying event occurs
after the Closing Date.
            (q)        From and after the Closing, Buyer shall indemnify and
hold harmless Seller or its Affiliates against all liabilities or losses which
Seller or its Affiliates may suffer or incur as a result of any claim, action or
other proceeding made by any Current Employee against Seller or its Affiliates
from and after the Closing Date arising from any breach of the obligations of
Buyer and its Affiliates

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under this Section 9.01.  Except as otherwise expressly provided for herein,
from and after the Closing, Seller shall indemnify and hold harmless Buyer and
its Affiliates against all liabilities or losses which Buyer or its Affiliates
may suffer or incur as a result of any claim, action or other proceeding:
(i) related to the Business Employee Plans, (ii) made by any current or former
employee of Seller or any of its Affiliates or any current or former Seconded
Employee (including any Current Employee) against Buyer or its Affiliates from
and after the Closing Date arising from any breach of the obligations of Seller
and its Affiliates under this Section 9.01 or (iii) relating to any current or
former employee of Seller or any of its Affiliates or any current or former
Seconded Employee (including any Current Employee) arising on or prior to the
Closing Date.
            (r)        Without limiting the generality of Section 13.08, the
provisions of this Section 9.01 are for the sole benefit of the parties to this
Agreement and nothing herein, expressed or implied, is intended or shall be
construed to confer upon or give to any person (including, for the avoidance of
doubt, any Current Employee or other current or former employee of Seller or any
of its Affiliates, other than the parties hereto and their respective permitted
successors and assigns, any legal or equitable or other rights or remedies
(including with respect to the matters provided for in this Section 9.01) under
or by reason of any provision of this Agreement.  Nothing in this Section 9.01
shall amend, or be deemed to amend (or prevent the amendment or termination of)
any Benefit Plan or any compensation or benefit plan of Seller or Buyer or any
of their respective Affiliates.  Nothing in this Section 9.01 is intended to
represent a guarantee of employment or otherwise restrict the authority of Buyer
or any of its Affiliates to terminate the employment of any Current Employee,
subject to Applicable Laws.
ARTICLE 10
Conditions to Closing
            Section 10.01.  Conditions to Obligations of All Parties.  The
obligations of the parties hereto to consummate the Closing are subject to the
satisfaction of the following conditions:
            (a)        Any applicable waiting period under the HSR Act relating
to the transactions contemplated hereby shall have expired or been terminated.
            (b)        No order, injunction or decree issued by a court of
competent jurisdiction preventing the consummation of the Closing or any of the
material transactions contemplated by the Joint Operating Agreement or the
Transition Services Agreement shall be in effect.

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            Section 10.02.  Conditions to Obligation of Buyer.  The obligation
of Buyer to consummate the Closing is subject to the satisfaction of the
following further conditions:
            (a)        Seller and the Selling Subsidiaries shall have performed
in all material respects all of its obligations hereunder required to be
performed by them at or prior to the Closing.
            (b)        (i) The representations and warranties of Seller and the
Selling Subsidiaries contained in Section 3.06(a)(other than the last two
sentences thereof), 3.07 and the first sentence of Section 3.11 shall be true
and correct in all respects at and as of the Closing Date, as if made at and as
of such date (other than such representations and warranties that by their terms
address matters only as of another specific time, which shall be true in all
respects only as of such time), (ii) the representations and warranties of
Seller and the Selling Subsidiaries contained in Sections 3.01, 3.02, 3.04,
3.05, 3.06(b), 3.06(c) and in the last two sentences of Section 3.06(a)
(together with the representations and warranties contained in Section 3.06(a)
(other than the last two sentences thereof) and 3.07, collectively, the
“Fundamental Representations”) shall be true and correct in all material
respects at and as of the Closing Date, as if made at and as of such date (other
than such representations and warranties that by their terms address matters
only as of another specified time, which shall be true in all material respects
only as of such time), (iii) the other representations and warranties of Seller
and the Selling Subsidiaries contained in this Agreement (disregarding all
materiality and Material Adverse Effect qualifications contained therein) shall
be true and correct at and as of the Closing Date as if made at and as of such
date (other than such representations and warranties that by their terms address
matters only as of another specified time, which shall be true only as of such
time) with only such exceptions as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect and (iv) Buyer shall
have received a certificate signed by an executive officer of Seller to the
foregoing effect.
            (c)        Since the date of this Agreement, there shall not have
occurred and be continuing any change, event, circumstance, development or
occurrence which, individually or in the aggregate, has had a Material Adverse
Effect.
            (d)        Each of the Selling Subsidiaries and Seller shall have
delivered a certification to the effect that it is not a “foreign person” within
the meaning of Section 1445 of the Code.
            Section 10.03.  Conditions to Obligation of Seller and the Selling
Subsidiaries.  The obligation of Seller and the Selling Subsidiaries to
consummate the Closing is subject to the satisfaction of the following further
conditions:

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            (a)        Buyer shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
Closing Date.
            (b)        (i) The representations and warranties of Buyer contained
in this Agreement shall be true at and as of the Closing Date, as if made at and
as of such date, except as would not reasonably be expected to have a material
adverse effect on Buyer’s ability to consummate the transactions contemplated
hereby and (ii) Seller shall have received a certificate signed by an executive
officer of Buyer to the foregoing effect.
ARTICLE 11
Termination
            Section 11.01.  Grounds for Termination.  This Agreement may be
terminated at any time prior to the Closing:
            (a)        by mutual written agreement of Seller and Buyer;
            (b)        by either Seller or Buyer if the Closing shall not have
been consummated on or before December 22, 2010 (the “Termination Date”);
provided that the right to terminate this Agreement pursuant to this
Section 11.01(b) shall not be available to any party whose breach of any
provision of this Agreement results in the failure of the Closing to be
consummated by such time;
            (c)        by either Seller or Buyer if consummation of the
transactions contemplated hereby or by the Joint Operating Agreement or the
Transition Services Agreement would violate any nonappealable final order,
decree or judgment of any Governmental Authority having competent jurisdiction;
or
            (d)        by Seller, in order for Seller or any of its subsidiaries
to enter into definitive documentation concerning a Superior Proposal provided
that (x) Seller and the Selling Subsidiaries have complied and are in compliance
in all material respect with the terms and conditions of this Agreement,
including Section 5.04 and (y) in connection with such termination, Seller pays
the Termination Fee payable pursuant to Section 13.03(a).
The party desiring to terminate this Agreement pursuant to this Section 11.01
shall give notice of such termination to the other parties.
            Section 11.02.  Effect of Termination.  Other than as specifically
set forth in Section 11.01(d) and Section 13.03, if this Agreement is terminated
as permitted by Section 11.01, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent, consultant
or

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representative of such party) to the other parties to this Agreement; provided
that if such termination shall result from the willful (i) failure of either
party to fulfill a condition to the performance of the obligations of the other
party or (ii) failure to perform a covenant of this Agreement, such party shall
be fully liable for any and all damage, loss and expense (including reasonable
expenses of investigation and reasonable attorneys’ fees and expenses in
connection with any action, suit or proceeding whether involving a third party
claim or a claim solely between the parties hereto) incurred or suffered by the
other party as a result of such failure or breach. Nothing herein shall relieve
any party from any liability for fraud by such party.  The provisions of this
Section 11.02 and Sections 6.01, 13.01, 13.02(a), 13.03, 13.05, 13.06, 13.07,
13.10, 13.12 and 13.13 shall survive any termination hereof pursuant to
Section 11.01.
ARTICLE 12
Survival; Indemnification
            Section 12.01.  Survival.  The representations and warranties of the
parties under this Agreement shall survive the Closing until the first
anniversary of the Closing; provided that the Fundamental Representations and
the representations and warranties set forth in Section 3.21 shall survive the
Closing until the three year anniversary of the Closing.  The covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Closing indefinitely or for the shorter period explicitly specified
therein.  Notwithstanding the preceding sentences, any breach of representation,
warranty, covenant or agreement in respect of which indemnity may be sought
under this Agreement (other than Article 8) shall survive the time at which it
would otherwise terminate pursuant to the preceding sentences, if notice of the
inaccuracy or breach thereof giving rise to such right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time.
            Section 12.02.  Indemnification.  (a) Effective after the Closing,
subject to the terms and conditions of this Article 12, Seller hereby
indemnifies Buyer and its Affiliates against and shall hold each of them
harmless from any and all damage, loss, fines, settlement payments, awards,
penalties, interest and expense (including reasonable expenses of investigation
and attorneys’ fees and expenses in connection with any action, suit or
proceeding involving a Third-Party Claim) (“Damages”) actually incurred or
suffered by Buyer or any of its Affiliates arising out of any misrepresentation
or breach or inaccuracy of any of the representations and warranties of Seller
and the Selling Subsidiaries contained in this Agreement (each such
misrepresentation or breach or inaccuracy, a “Warranty Breach”) or breach of
covenant or agreement made or to be performed by Seller or the Selling
Subsidiaries pursuant to this Agreement (other than a covenant or agreement made
or to be performed pursuant to Article 8);

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provided that with respect to indemnification by Seller for Warranty Breaches
pursuant to this Section 12.02(a), (i) Seller shall not be liable for any
individual Warranty Breach (other than any Warranty Breach to the extent
relating to a representation or warranty relating to a KWK Entity, a Fundamental
Representation or the representations and warranties set forth in Section 3.21)
unless the aggregate amount of Damages with respect to such Warranty Breach (or
series of Warranty Breaches arising from or relating to the same or
substantially similar facts or circumstances) exceeds $125,000 (each such
Warranty Breach, a “Qualifying Warranty Breach”); (ii) except in respect of any
Warranty Breach to the extent relating to a representation or warranty relating
to a KWK Entity, any Fundamental Representation or the representations and
warranties set forth in Section 3.21, Seller shall not be liable unless the
aggregate amount of Damages with respect to all Qualifying Warranty Breaches
exceeds $7,780,000 and then only to the extent of such excess and (iii) Seller’s
maximum liability for all Warranty Breaches shall not exceed
$75,000,000.  Effective after the Closing, subject to the terms and conditions
of this Article 12, Seller hereby indemnifies Buyer and its Affiliates against
and shall hold each of them harmless from any and all Damages actually incurred
or suffered by Buyer or any of its Affiliates arising out of Gas Services GP’s
indemnification obligations set forth in Section 3.2(c) and 3.2(d) of the
Omnibus Agreement.
            (b)        Effective after the Closing, subject to terms and
conditions of this Article 12, Buyer hereby indemnifies Seller and its
Affiliates against and agrees to hold each of them harmless from any and all
Damages actually suffered by Seller or any of its Affiliates arising out of any
misrepresentation or breach or inaccuracy of any of the representations and
warranties of Buyer contained in this Agreement (each such misrepresentation or
breach of warranty a “Buyer Warranty Breach”) or breach of covenant or agreement
made or to be performed by Buyer pursuant to this Agreement (other than a
covenant or agreement made or to be performed pursuant to Article 8); provided
that with respect to indemnification by Buyer for Buyer Warranty Breaches
pursuant to this Section 12.02(b), (i) Buyer shall not be liable for any
individual Buyer Warranty Breach unless the aggregate amount of Damages with
respect to such Buyer Warranty Breach (or series of Buyer Warranty Breaches
arising from or relating to the same or substantially similar facts or
circumstances) exceeds $125,000 (each such Buyer Warranty Breach, a “Qualifying
Buyer Warranty Breach”); (ii) Buyer shall not be liable unless the aggregate
amount of Damages with respect to all Qualifying Buyer Warranty Breaches exceeds
$7,780,000 and then only to the extent of such excess and (iii) Buyer’s maximum
liability for all Qualifying Buyer Warranty Breaches shall not exceed
$75,000,000.
            Section 12.03.  Third-Party Claim Procedures.  (a) The party seeking
indemnification under Section 12.02 (the “Indemnified Party”) agrees to give
prompt notice in writing to the party against whom indemnity is to be sought
(the

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“Indemnifying Party”) of the assertion of any claim or the commencement of any
suit, action or proceeding by any third party (“Third-Party Claim”) in respect
of which indemnity may be sought under Section 12.02.  Such notice shall set
forth in reasonable detail such Third-Party Claim and the basis for
indemnification (taking into account the information then available to the
Indemnified Party).  The failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations or liability hereunder, except
to the extent such failure shall have actually adversely prejudiced the
Indemnifying Party.
            (b)        The Indemnifying Party shall be entitled to participate
in the defense of any Third-Party Claim and, subject to the limitations set
forth in this Section 12.03, shall be entitled to control and appoint lead
counsel for such defense, in each case at its own expense; provided, that the
Indemnified Party is hereby authorized, prior to the Indemnifying Party’s
delivery of a written election to the Indemnified Party of its agreement to
defend such Third-Party Claim, to file any motion, answer or other pleading that
it shall reasonably deem necessary to protect its interests or those of the
Indemnifying Party.
            (c)        If the Indemnifying Party elects to assume the defense of
any such Third Party Claim, it shall within 30 days notify the Indemnified Party
in writing of its intent to do so.  The Indemnifying Party will have the right
to assume control of such defense of the Third-Party Claim only for so long as
it conducts such defense with reasonable diligence.  The Indemnifying Party
shall keep the Indemnified Parties advised of the status of such Third-Party
Claim and the defense thereof on a reasonably current basis and shall consider
in good faith the recommendations made by the Indemnified Parties with respect
thereto.  If the Indemnifying Party assumes the control of the defense of any
Third-Party Claim in accordance with the provisions of this Section 12.03,
(i) the Indemnifying Party shall obtain the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld, conditioned or
delayed) before entering into any settlement of such Third-Party Claim, if
(A) the settlement does not release the Indemnified Party and its Affiliates
from all liabilities and obligations with respect to such Third-Party Claim,
(B) the amount of any damages to be paid with respect to the settlement of such
Third Party Claim is in excess of the $75,000,000 cap, (C) the settlement
imposes injunctive or other equitable relief against the Indemnified Party or
any of its Affiliates, or (D) the Indemnifying Party does not agree in writing
to pay such amounts payable pursuant to such settlement, and (ii) the
Indemnified Party shall be entitled to participate in the defense of any such
Third-Party Claim and to employ, at its expense, separate counsel of its choice
for such purpose; provided, that if the Indemnifying Party assumes the defense
of any such Third-Party Claim but fails to diligently prosecute such claim, or
if the Indemnifying Party does not assume the defense of any such claim, the
Indemnified Party may assume control of such defense and the Indemnifying

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Party will bear the reasonable costs and expenses of such defense (including
reasonable attorneys’ fees and expenses); and provided, further, that
notwithstanding the foregoing, the Indemnifying Party shall pay the reasonable
costs and expenses of such defense (including reasonable attorneys’ fees and
expenses) of the Indemnified Party if (x) the Indemnified Party’s counsel shall
have reasonably concluded and advised that there are defenses available to such
Indemnified Party that are different from or additional to those available to
the Indemnifying Party, or (y) the Indemnified Party’s counsel shall have
advised the Indemnified Party that there is a conflict of interest that could
make it inappropriate under applicable standards of professional conduct to have
common counsel for the Indemnifying Party and the Indemnified Party.
Notwithstanding anything to the contrary in this Agreement, the Indemnifying
Party will not be permitted to settle, compromise, take any corrective or
remedial action or enter into an agreed judgment or consent decree, in each
case, that subjects the Indemnified Party to any criminal liability, requires an
admission of guilt or wrongdoing on the part of the Indemnified Party or imposes
any continuing obligation on or requires any payment from the Indemnified Party
without the Indemnified Party’s prior written consent, not to be unreasonably
withheld, conditioned or delayed.
            (d)        Each party shall reasonably cooperate, and cause their
respective Affiliates to reasonably cooperate, in the defense or prosecution of
any Third-Party Claim and shall furnish or cause to be furnished such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials or appeals, as may be reasonably requested in connection
therewith.
            Section 12.04.  Direct Claim Procedures.  If the Indemnified Party
has a claim for indemnity under Section 12.02 against the Indemnifying Party
that does not involve a Third-Party Claim, the Indemnified Party agrees to give
prompt notice in writing of such claim to the Indemnifying Party. Such notice
shall set forth in reasonable detail such claim and the basis for
indemnification (taking into account the information then available to the
Indemnified Party).  The failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder, except to the
extent such failure shall have adversely prejudiced the Indemnifying Party.
            Section 12.05.  Calculation of Damages.  (a) The amount of any
Damages payable under Section 12.02 by the Indemnifying Party shall be net of
any amounts actually recovered by the Indemnified Party under applicable
insurance policies or from any other Person alleged to be responsible
therefor.  If the Indemnified Party receives any amounts under applicable
insurance policies, or from any other Person alleged to be responsible for any
Damages, subsequent to an indemnification payment by the Indemnifying Party,
then the Indemnified Party shall promptly reimburse the Indemnifying Party for
any payment made or

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expense incurred by the Indemnifying Party in connection with providing such
indemnification payment up to the amount actually received by the Indemnified
Party, net of any expenses incurred by the Indemnified Party in collecting such
amount.  The Indemnified Party shall use commercially reasonable efforts to
collect any amounts available under insurance coverage, or from any other Person
alleged to be responsible, for any Damages payable under Section 12.02.
            (b)        If the Indemnifying Party’s indemnification obligation
under Section 12.02 arises in respect of the payment of any Damages which makes
allowable to the Indemnified Party, any of its Affiliates or, in the case of
Buyer, effective upon the Closing, a Sold Entity any deduction, amortization,
exclusion from income or other allowance which would not, but for the payment of
such Damages, be allowable, then the Indemnified Party shall pay to the
Indemnifying Party an amount equal to the Tax benefit resulting therefrom if, as
and when such Tax benefit is actually realized in cash or a reduction in Taxes
otherwise due.
            (c)        The Indemnifying Party shall not be liable under
Section 12.02 for any (i) consequential, punitive or indirect or special Damages
or (ii) Damages for lost profits, except with respect to Damages for lost
profits, to the extent a court of competent jurisdiction determined that lost
profits is the appropriate measure of direct damages with respect to the matters
giving rise to the claim for Damages (it being understood and agreed that such
calculation of Damages shall not be based on any application of revenue or
earnings multiples to direct damages); provided that nothing herein shall
prevent any Indemnified Party from recovering for all components of awards
against them in Third Party Claims for which recovery is provided under this
Article 12, including consequential, punitive or indirect or special Damages and
Damages for lost profits.
            (d)        The Indemnified Party must mitigate in accordance with
Applicable Law any loss for which the Indemnified Party seeks indemnification
under this Agreement.  If the Indemnified Party mitigates losses after the
Indemnifying Party has paid the Indemnified Party under any indemnification
provision of this Agreement in respect of that loss, the Indemnified Party must
notify the Indemnifying Party and pay to the Indemnifying Party the extent of
the value of the benefit to the Indemnified Party of that mitigation (less the
Indemnified Party’s reasonable costs of mitigation) promptly after the benefit
is received.
            (e)        Seller shall have no obligation to indemnify Buyer or its
Affiliates pursuant to Section 12.02 to the extent the related Damages result or
arise from any action (including disclosure or other communication to any
Governmental Authority or other third party or any invasive sampling or testing
of any soil, surface water, groundwater, building materials or other
environmental media) by or on behalf of Buyer or any of its Affiliates that is
not required by an Applicable Law.

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            Section 12.06.  Assignment of Claims.  If the Indemnified Party
receives any payment from an Indemnifying Party in respect of any Damages
pursuant to Section 12.02 and it is reasonably likely that the Indemnified Party
could have recovered all or a part of such Damages from a third party (a
“Potential Contributor”) based on the underlying claim asserted against the
Indemnifying Party, the Indemnified Party shall assign such of its rights to
proceed against the Potential Contributor as are necessary to permit the
Indemnifying Party to recover from the Potential Contributor the amount of such
payment.
            Section 12.07.  Exclusivity.
            (a)        After the Closing and except as otherwise set forth in
Section 8.05 with respect to matters relating to Taxes, Section 12.02 will (in
the absence of fraud) provide the exclusive remedy for each of the parties
hereto for any misrepresentation, breach of warranty, covenant or other
agreement or other claim arising out of this Agreement or the transactions
contemplated hereby (other than equitable remedies as they relate to breaches of
covenants or other agreements contained herein to the extent such covenants or
agreements are to be performed after the Closing).
            (b)        Except as specifically set forth in this Agreement,
effective as of the Closing, Buyer waives any rights and claims Buyer may have
against Seller, whether in law or equity, relating to claims for contribution
and other rights of recovery arising out of or relating to any Environmental Law
(whether now or hereinafter in effect).
ARTICLE 13
Miscellaneous
            Section 13.01.  Notices.  All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given,
            if to Buyer, to:
First Reserve Crestwood Holdings LLC
c/o Crestwood Midstream Partners, LLC
717 Texas Avenue, Suite 3150
Houston, Texas 77002
Attention: Robert G. Phillips
Facsimile No.: 832-519-2250

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            with copies to:
First Reserve Management, L.P.
One Lafayette Place
Greenwich, Connecticut 06830
Attention: Alan G. Schwartz
Facsimile No.: 203-661-6729
and
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: William E. Curbow
Facsimile No.: 212-455-2502
            if to Seller or the Selling Subsidiaries, to:
Quicksilver Resources Inc.
777 West Rosedale
Fort Worth, Texas 76104
Attention: John C. Cirone
Facsimile No.: 817-665-5004
            with a copy to:
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
Attention: Leonard Kreynin
Facsimile No.: 212-701-5800
or such other address or facsimile number as such party may hereafter specify in
writing for the purpose by notice to the other parties hereto.  All such
notices, requests and other communications shall be deemed duly given when
delivered personally (including by courier or overnight courier with
confirmation), via facsimile (with confirmation) or delivered by an overnight
courier (with confirmation), if, in any such case, confirmation is obtained
prior to 5 p.m. in the place of receipt and such day is a Business Day.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day.

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            Section 13.02.  Amendments and Waivers. (a) Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective.
            (b)       No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Except as
otherwise provided herein, the rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
            Section 13.03.   Expenses. (a) Except as otherwise provided herein,
all costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense. If this Agreement is terminated by
Seller pursuant to Section 11.01(d), then Seller shall (i) pay to Buyer in
immediately available funds $23,340,000 (the “Termination Fee”), concurrently
with such termination and (ii) shall reimburse Buyer and its Affiliates, no
later than five Business Days after Buyer’s submission of reasonable
documentation thereof, for 100% of Buyer’s and its Affiliates’ reasonable and
documented out-of-pocket fees and expenses (including reasonable fees and
expenses of their counsel) up to $2,000,000 actually incurred by Buyer and its
Affiliates in connection with this Agreement.
            (b)       If (i) this Agreement is terminated by Seller or Buyer
pursuant to Section 11.01(b), (ii) prior to such termination Seller provides or
is otherwise obligated to provide to Buyer the notice of an Acquisition Proposal
as contemplated by Section 5.04(b) and (iii) within 90 days of such termination,
Seller enters into definitive documentation with respect to an Alternative
Transaction with the party who made such Acquisition Proposal or any of its
Affiliates, then Seller shall pay to Buyer the Termination Fee prior to or on
the date, if any, that such transaction is consummated and shall reimburse Buyer
and its Affiliates, no later than five Business Days after Buyer’s submission of
reasonable documentation thereof, for 100% of Buyer’s and its Affiliates’
reasonable and documented out-of-pocket fees and expenses (including reasonable
fees and expenses of their counsel) up to $2,000,000 actually incurred by Buyer
and its Affiliates in connection with this Agreement. For purposes of this
Agreement, the term “Alternative Transaction” means a transaction in which
Seller or its subsidiaries sell, directly or indirectly, not less than 51% of
Seller’s ownership interest in Gas Services GP (and correspondingly, the General
Partner Units and Incentive Distribution Rights held by Gas Services GP) at an
implied purchase price for such ownership interest that is greater than that
portion

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of the Purchase Price payable by Buyer pursuant to this Agreement for such
ownership interest.
            (c)       Buyer agrees that, upon any termination of this Agreement
in compliance with Section 11.01(d) and where such Termination Fee is paid in
full, Buyer shall be precluded from any other remedy against Seller, at law or
in equity or otherwise, and Buyer shall not shall seek to obtain any recovery,
judgment, or damages of any kind, including consequential, indirect, or punitive
damages, against Seller or any of Seller’s subsidiaries or any of their
respective directors, officers, employees, partners, managers, members,
shareholders or Affiliates or their respective Representatives in connection
with this Agreement or the transactions contemplated hereby.
            Section 13.04.  Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto; provided, however,
that notwithstanding the foregoing Buyer may assign all or any portion of this
Agreement to any subsidiary or Affiliate of Buyer provided that no such
assignment by Buyer shall in any way affect Buyer’s obligations or liabilities
under this Agreement.
            Section 13.05.  Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of Delaware, without
regard to the conflicts of law rules thereof.
            Section 13.06.  Jurisdiction. The parties hereto (i) agree and
consent that any suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby shall be subject to the exclusive
jurisdiction of the Delaware Chancery Court in Wilmington, Delaware, or, if such
court shall not have jurisdiction, any federal court located in the State of
Delaware or other Delaware state court (and, in each case, of the appropriate
appellate courts therefrom), and (ii) irrevocably waive, to the fullest extent
permitted by law, any objection that they may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or proceeding
may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 13.01 shall
be deemed effective service of process on such party. Each of the parties hereto
agrees that it will not, and will not permit its Affiliates to, bring or support
any action, cause of action, claim, cross-claim or third-party claim of any kind
or description, whether in law or in equity, whether

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in contract or in tort or otherwise, against the Financing Sources in any way
relating to this Agreement or any of the transactions contemplated by this
Agreement, including with respect to any dispute arising out of or relating in
any way to the Debt Financing or the performance thereof, in any forum other the
United States District Court for the Southern District of New York or any court
of the State of New York sitting in the Borough of Manhattan in the City of New
York and agree that the waiver of jury trial set forth in Section 13.07 hereof
shall be applicable to any such proceeding.
            Section 13.07.  WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
            Section 13.08.  Counterparts; Effectiveness; Third-Party
Beneficiaries. This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other parties hereto. Until and unless each party has received a counterpart
hereof signed by the other parties hereto, this Agreement shall have no effect
and no party shall have any right or obligation hereunder (whether by virtue of
any other oral or written agreement or other communication). No provision of
this Agreement is intended to confer any rights, benefits, remedies,
obligations, or liabilities hereunder upon any Person other than the parties
hereto and their respective successors and assigns, except, with respect to
Section 13.13, Davis Polk & Wardwell LLP, and provided that the Financing
Sources shall have the right to enforce their rights under Sections 13.06 and
13.07.
            Section 13.09.  Entire Agreement. This Agreement and the other
Transaction Documents constitute the entire agreement between the parties with
respect to the subject matter of this Agreement and supersedes all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter of this Agreement.
            Section 13.10.  Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other Governmental Authority to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties shall negotiate in good faith to
modify this Agreement

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so as to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
            Section 13.11.  Disclosure Schedules. Seller has set forth
information on the Seller Disclosure Schedules in a section thereof that
corresponds to the section of this Agreement to which it relates. A matter set
forth in one section of the Seller Disclosure Schedules need not be set forth in
any other section so long as its relevance to such other section of the Seller
Disclosure Schedules or section of this Agreement is reasonably apparent on the
face of the information disclosed therein to the Person to which such disclosure
is being made. The parties acknowledge and agree that (a) the Seller Disclosure
Schedules may include certain items and information solely for informational
purposes for the convenience of Buyer and (b) the disclosure by Seller of any
matter in the Seller Disclosure Schedules shall not be deemed to constitute an
acknowledgment by Seller that the matter is required to be disclosed by the
terms of this Agreement or that the matter is material.
            Section 13.12.  Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in equity.
If, prior to the Termination Date, either party brings any action to enforce
specifically the performance of the terms and provisions of this Agreement by
the other party, the Termination Date shall automatically be extended by (i) the
amount of time during which such action is pending, plus 20 Business Days, or
(ii) such other time period established by the court presiding over such action.
            Section 13.13.  Waiver of Conflicts; Attorney-Client Privilege.
(a) Buyer waives and will not assert, and Buyer agrees to cause its Affiliates
to waive and not to assert, any conflict of interest arising out of or relating
to the representation, after the Closing (the “Post-Closing Representation”), of
Seller or any of its Affiliates or any shareholder, officer, employee or
director of Seller or any of its Affiliates (any such Person, a “Designated
Person”) in any matter involving this Agreement or any other agreements or
transactions contemplated thereby, by any legal counsel currently representing
Seller or any of its Affiliates in connection with this Agreement or any other
agreements or transactions contemplated thereby (the “Current Representation”).
            (b)       Buyer waives and will not assert, and Buyer agrees to
cause its Affiliates to waive and not assert, any attorney-client privilege with
respect to any communication between any legal counsel and any Designated Person
occurring

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during the Current Representation in connection with any Post-Closing
Representation, including in connection with a dispute with Buyer or any of its
Affiliates, it being the intention of the parties hereto that all such rights to
such attorney-client privilege and to control such attorney-client privilege
shall be retained by Seller; provided that the foregoing waiver and
acknowledgement of retention shall not extend to any communication not involving
this Agreement or any other agreements or transactions contemplated thereby, or
to communications with any Person other than the Designated Persons.

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            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date first
written above.

                      QUICKSILVER RESOURCES INC.    
 
               
 
                    By:     /s/ Glenn Darden                  
 
      Name:   Glenn Darden    
 
      Title:   President and    
 
          Chief Executive Officer    
 
               
 
                    COWTOWN GAS PROCESSING L.P.    
 
               
 
                    By:     Cowtown Pipeline Management,               Inc., its
general partner    
 
                    By:     /s/ Glenn Darden                  
 
      Name:   Glenn Darden    
 
      Title:   President and    
 
          Chief Executive Officer    
 
               
 
                      COWTOWN PIPELINE L.P.    
 
               
 
                    By:     Cowtown Pipeline Management,               Inc., its
general partner    
 
                    By:     /s/ Glenn Darden                  
 
      Name:   Glenn Darden    
 
      Title:   President and    
 
          Chief Executive Officer    
 
               
 
                      FIRST RESERVE CRESTWOOD
     HOLDINGS LLC    
 
               
 
                    By:     /s/ Robert G. Phillips                  
 
      Name:        
 
      Title:        

[Signature Page to Purchase Agreement]

 

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EXHIBIT B
DETERMINATION OF EARN-OUT PAYMENTS
            1.  Definitions.  Each capitalized term used and not otherwise
defined herein shall have the meaning assigned such term in the Purchase
Agreement dated as of July 22, 2010 (the “Agreement”) between First Reserve
Crestwood Holdings LLC, a Delaware limited liability company (“Buyer”), Cowtown
Gas Processing L.P., a Texas limited partnership, Cowtown Pipeline L.P., a Texas
limited partnership, and Quicksilver Resources Inc., a Delaware corporation
(“Seller”). In addition, the following terms as used herein shall have the
following meanings:
            “Average Daily Volume” means, for any period, the sum of (x) the
average daily total cumulative gathering volumes measured in MMcf received by,
or made available to, KGS and its Affiliates from Seller and its Affiliates
during such period, (y) Third Party Volumes for such period and (z) the sum of
Unconnected Well Volumes for such period.
            “Completed Well” means a well owned by Seller or any of its
Affiliates that is ready for connection and for which all necessary permits and
Right-of-Ways have been obtained.
            “Earn-Out Payment” means the Initial Earn-Out Payment, the
Subsequent Earn-Out Payment and the Third Earn-Out Payment.
            “Initial Earn-Out Period” means the period from January 1, 2011
through December 31, 2011.
            “Initial Earn-Out Payment” means $50 million multiplied by a
fraction the numerator of which is (x) the Average Daily Volume for the Initial
Earn-Out Period less 334 MMcfd and the denominator of which is (y) 156 MMcfd.
            “MMcfd” means million cubic feet per day.
            “Project Areas” means each of Cowtown Gathering System, Alliance
Gathering System and Lake Arlington Gathering System, as applicable.
            “Subsequent Earn-Out Payment” means (A) $72 million less the amount
of the Initial Earn-Out Payment multiplied by (B) a fraction the numerator of
which is (x) the Average Daily Volume for the Subsequent Earn-Out Period less
490 MMcfd (but not less than zero) and the denominator of which is (y) 45 MMcfd.

 

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            “Subsequent Earn-Out Period” means the period from January 1, 2012
through December 31, 2012.
            “Third Earn-Out Payment” means, subject to Section 3 hereof, the
amount, if any, by which the Initial Earn-out Payment exceeds $50 million plus
the amount by which the Subsequent Earn-Out Payment exceeds $22 million;
provided that in no event shall the Third Earn-Out Payment exceed $50 million.
            “Third Party Volumes” means, for any period, the amount, if any, by
which (x) the average daily total cumulative gathering volumes measured in MMcfd
received by, or made available to, KGS and its Affiliates from all third party
providers exceeds (y) 13.313 MMcfd.
            “Unconnected Well Volumes” means, for each well in a Project Area
that becomes a Completed Well after commencement of the Initial Earn-Out Period,
(A) the average daily total cumulative gathering volumes for such well (measured
in MMcfd) determined in accordance with the decline curve set forth on Annex A
for the applicable Project Area (the “Theoretical Production”) for the period
from the date that such well becomes a Completed Well until end of the Initial
Earn-Out Period or Subsequent Earn-Out Period (as applicable) plus (B) the
actual average daily total cumulative gathering volumes (measured in MMcfd) of
such Completed Well for the period from the date that such well comes online
until the end of the Initial Earn-Out Period or Subsequent Earn-Out Period (as
applicable) less (C) the Theoretical Production for the period from the date
that the well was online during the Initial Earn-Out Period or the Subsequent
Earn-Out Period (as applicable).
            2.       Earn-Out Payments.  Buyer shall pay to Seller the Initial
Earn-Out Payment, the Subsequent Earn-Out Payment and the Third Earn-Out
Payment, if any, by wire transfer of immediately available funds. Each Earn-Out
Payment shall be due and payable as provided in Section 4. Notwithstanding
anything herein to the contrary, the payment of the excess of the amount of the
Initial Earn-Out Payment over $50 million (if any) and the excess of the amount
of the Subsequent Earn-Out Payment over $22 million (if any) shall be made not
as part of the Initial Earn-Out Payment or the Subsequent Earn-Out Payment, as
applicable, but only in a Third Earn-Out Payment.
            3.       Maximum Earn-Out.  Notwithstanding anything in this
Exhibit B to the contrary, in no event shall the sum of the Initial Earn-Out
Payment, the Subsequent Earn-Out Payment and the Third Earn-Out Payment exceed
$72 million.
            4.       Payments; Disputes.  (a) No later than January 15, 2012 (in
the case of the Initial Earn-Out Period) and January 15, 2013 (in the case of
the Subsequent Earn-Out Period), Seller shall deliver to Buyer a written report
(each such written report, a “Well Report”) specifying in reasonable detail (and

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including supporting documentation) the Unconnected Well Volumes for the Initial
Earn-Out Period or the Subsequent Earn-Out Period (as applicable).
            (b)       No later than 30 days after Seller’s delivery to Buyer of
a Well Report, Buyer shall deliver to Seller a written report (each such written
report, an “Earn-Out Statement”) specifying in reasonable detail (and including
supporting documentation) (i) Average Daily Volumes for the Initial Earn-Out
Period or the Subsequent Earn-Out Period (as applicable); (ii) Third Party
Volumes for the Initial Earn-Out Period or the Subsequent Earn-Out Period (as
applicable) and (iii) Buyer’s calculation of the Initial Earn-Out Payment or the
Subsequent Earn-Out Payment, as applicable. Each Earn-Out Statement shall also
include Buyer’s disagreement, if any, with Seller’s calculation of Unconnected
Well Volumes contained in the applicable Well Report and specifying in
reasonable detail Buyer’s grounds for such disagreement. Buyer shall be deemed
to have agreed with all other items and amounts contained in such Well Report.
If Buyer objects to any of Seller’s calculations in such Well Report, Buyer’s
calculation of the applicable Earn-Out Payment(s) contained in such Earn-Out
Statement shall be calculated based on Buyer’s calculation of Unconnected Well
Volumes. Otherwise Buyer’s calculations of the applicable Earn-Out Payment(s)
shall be made using the calculation of Unconnected Well Volumes set forth in
such Well Report.
            (c)       If Seller agrees with Buyer’s calculations contained in an
Earn-Out Statement, Seller shall notify Buyer of such agreement in writing (each
such written notice, an “Agreement Notice”) and Buyer shall, upon the date that
is the later of the date that is five Business Days after receipt of an
Agreement Notice and February 15th of the relevant year in which such payment is
payable, pay to Seller the amount of the Initial Earn-Out Payment or Subsequent
Earn-Out Payment (as applicable) set forth in such Earn-Out Statement. If no
Agreement Notice or Disagreement Notice (as defined below) is delivered by
Seller within 30 days of Seller’s receipt of an Earn-Out Statement, Seller shall
be deemed to have agreed with all items and amounts contained in such Earn-Out
Statement and Buyer shall, upon the date that is the later of the date that is
five Business Days after expiration of such 30 day period and February 15th of
the relevant year in which such payment is payable, pay to Seller the amount of
the Initial Earn-Out Payment or Subsequent Earn-Out Payment (as applicable) set
forth in such Earn-Out Statement. The Third Earn-Out Payment is payable
hereunder, if at all, within 5 Business Days of February 15, 2014.
            (d)       If Seller disagrees with any of Buyer’s calculations
contained in an Earn-Out Statement, Seller may, within 30 days after receipt of
such Earn-Out Statement, deliver a written notice to Buyer disagreeing with such
calculations and specifying in reasonable detail (and including supporting
documentation) Seller’s calculation of the applicable Earn-Out Payment(s) (each
such written notice, a “Disagreement Notice”). Any Disagreement Notice shall
specify those items or amounts as to which Seller disagrees, and Seller shall be
deemed to have

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agreed with all other items and amounts contained in the applicable Earn-Out
Statement. If a Disagreement Notice shall be duly delivered pursuant to this
Section 4(d), Buyer and Seller shall, during the 15 days following such
delivery, use their best efforts to reach agreement on the disputed items or
amounts in order to determine the amount of the applicable Earn-Out Payment(s),
which amount shall not be less than the amount thereof set forth in the
applicable Earn-Out Statement nor more than the amount thereof set forth in the
applicable Disagreement Notice. If Buyer and Seller are able to reach agreement
during such period, Buyer shall promptly (and in no event later than five days
after such agreement) pay to Seller the agreed amount of the applicable Earn-Out
Payment(s). If Buyer and Seller are unable to reach such agreement during such
period, Buyer and Seller shall promptly cause independent accountants of
nationally recognized standing reasonably satisfactory to Buyer and Seller (who
shall not have any material relationship with Buyer or Seller) promptly to
review the Agreement, this Exhibit B, the applicable Earn-Out Statement and the
applicable Disagreement Notice for the purpose of calculating the applicable
Earn-Out Payment(s), which amount in each case shall not be less than the amount
thereof set forth in the applicable Earn-Out Statement nor more than the amount
thereof set forth in the applicable Disagreement Notice. In making such
calculation, such independent accountants shall consider only those items or
amounts in the Earn-Out Statement as to which Seller has disagreed. Such
independent accountants shall deliver to Buyer and Seller, as promptly as
practicable, a report (the “Final Report”) setting forth the calculation of the
applicable Earn-Out Payment(s). Such report shall be final and binding upon
Buyer and Seller, and Buyer shall promptly (and in no event later than 5
Business Days after receipt of the Final Report (unless receipt of such Final
Report is prior to February 15 in the year in which such Earn-Out Payment is
payable, in which case on February 15) pay to Seller the amount of the Earn-Out
Payment(s) contained in the applicable Final Report.
            (e)       Buyer and Seller agree that each will cooperate and make
available books, records, work papers and personnel as reasonably requested by
the independent accountant in connection with the preparation of the Final
Report.
            5.        Late Payments. Any Earn-Out Payments or portions thereof
due hereunder which are not paid when due shall bear interest at a rate equal to
the lesser of (x) the thirty (30) day U.S. dollar LIBOR rate effective for the
Business Day immediately following the date such Earn-Out Payment or portion
thereof was due, as published by The Wall Street Journal, U.S. Internet Edition
at www.wsj.com, plus an additional five percent (5%) and (y) the maximum rate
permitted by Applicable Law, in each case calculated based on the number of days
such Earn-Out Payment or portion thereof is delinquent. This Section 5 shall in
no way limit any other remedies available to Seller.

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