Exhibit 10.2

 

TRANSITION SERVICES AGREEMENT

 

This Transition Services Agreement (this “Agreement”) is made and entered into
this 1st day of November, 2007 (the “Closing Date”), by and between Quicksilver
Resources Inc., a Delaware corporation (“Quicksilver”), and BreitBurn Operating
L.P., a Delaware limited partnership (“BreitBurn”).

 

RECITALS

 

1.                                       Quicksilver and BreitBurn are parties
to that certain Contribution Agreement dated as of September 11, 2007 (as
amended, the “Contribution Agreement”). Capitalized terms not otherwise defined
herein shall have the same meanings ascribed thereto in the Contribution
Agreement.

 

2.                                       In order to facilitate the orderly
transfer of the Interests from Quicksilver to BreitBurn, the parties recognize
that it is necessary and desirable for Quicksilver to provide to BreitBurn and
the Acquired Companies certain transition services in connection with the Oil
and Gas Properties for a limited period of time after the Closing Date, pursuant
to the terms of this Agreement.

 

3.                                       For purposes of this Agreement, the
Marketing Services, Land Administration Services and Accounting Services (each
as defined below) shall be collectively referred to as the “Services.”

 

NOW, THEREFORE, in consideration of the premises, the covenants set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Quicksilver and BreitBurn agree as follows:

 

TERMS AND CONDITIONS

 

1.                                      TERM. THIS AGREEMENT SHALL COMMENCE ON
THE CLOSING DATE AND TERMINATE ON THE EARLIER OF (I) MARCH 31, 2008 (PROVIDED,
IF THE CLOSING OCCURS AFTER NOVEMBER 1, 2007, THE NUMBER OF DAYS FROM, AND
INCLUDING, NOVEMBER 1, 2007 TO, AND EXCLUDING, THE CLOSING DATE SHALL BE ADDED
TO MARCH 31, 2008 TO ESTABLISH THE NEW DATE COVERED BY THIS CLAUSE (I)) OR
(II) THE DATE ON WHICH BREITBURN HAS ASSUMED RESPONSIBILITY FOR ALL OF THE
SERVICES PURSUANT TO SECTION 3. THIS AGREEMENT MAY BE EXTENDED OR TERMINATED
UPON MUTUAL WRITTEN AGREEMENT OF THE PARTIES. THE DATE ON WHICH THIS AGREEMENT
TERMINATES SHALL BE HEREINAFTER REFERRED TO AS THE “TERMINATION DATE.”  WITH
RESPECT TO EACH SERVICE, THE “TRANSITION PERIOD” SHALL BE THE PERIOD OF TIME
BETWEEN THE CLOSING DATE AND THE EARLIER OF (I) THE TERMINATION DATE OR (II) THE
DATE ON WHICH BREITBURN ASSUMES RESPONSIBILITY FOR SUCH SERVICE PURSUANT TO
SECTION 3. TERMINATION OF THIS AGREEMENT IN WHOLE OR IN PART SHALL NOT (X)
RELEASE ANY OBLIGATIONS, LIABILITIES, RIGHTS AND REMEDIES ARISING OUT ANY BREACH
OF, OR FAILURE TO COMPLY WITH, THIS AGREEMENT OCCURRING PRIOR TO SUCH
TERMINATION OR

 

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(Y) RELEASE, IMPAIR OR AFFECT THE COVENANTS AND AGREEMENTS CONTAINED IN SECTIONS
8, 12, 15, 16 AND 17, EACH OF WHICH SHALL SURVIVE SUCH TERMINATION AND CONTINUE
IN FULL FORCE AND EFFECT.

 

2.                                      FEES. IN CONSIDERATION FOR THE LAND
ADMINISTRATION SERVICES AND THE ACCOUNTING SERVICES TO BE PROVIDED BY
QUICKSILVER PURSUANT TO THIS AGREEMENT, ON THE DATE HEREOF AND ON THE FIRST DAY
OF EACH CALENDAR MONTH THEREAFTER DURING THE TERM OF THIS AGREEMENT, BREITBURN
SHALL PAY QUICKSILVER A MONTHLY FEE IN THE AMOUNT OF $30,000 FOR THE LAND
ADMINISTRATION SERVICES AND $220,000 FOR THE ACCOUNTING SERVICES. IF
QUICKSILVER’S OBLIGATION TO PROVIDE LAND ADMINISTRATION SERVICES OR ACCOUNTING
SERVICES CEASES PRIOR TO THE TERMINATION DATE, THEN BREITBURN’S OBLIGATION TO
PAY THE AFORESAID FEE FOR SUCH CATEGORY OF SERVICES SHALL TERMINATE ON THE SAME
DATE AS SUCH OBLIGATION OF QUICKSILVER CEASES. IF THIS AGREEMENT COMMENCES ON A
DAY OTHER THAN THE FIRST DAY OF A CALENDAR MONTH OR THIS AGREEMENT OR
QUICKSILVER’S PROVISION OF LAND ADMINISTRATION SERVICES OR ACCOUNTING SERVICES
TERMINATES ON A DAY OTHER THAN THE LAST DAY OF A CALENDAR MONTH, THEN THE
MONTHLY FEE TO BE PAID TO QUICKSILVER FOR EACH SUCH MONTH (OR THE MONTHLY FEE
FOR SUCH TERMINATED CATEGORY OF SERVICES FOR SUCH MONTH) SHALL BE PRORATED. IN
ADDITION, IN CONSIDERATION FOR THE MARKETING SERVICES TO BE PROVIDED BY
QUICKSILVER PURSUANT TO THIS AGREEMENT, BREITBURN SHALL PAY QUICKSILVER A
MONTHLY FEE DETERMINED BY MULTIPLYING THE TOTAL NUMBER OF MCFE SOLD DURING THE
PREVIOUS MONTH PURSUANT TO THE MARKETING SERVICES MULTIPLIED BY $0.02. BY WAY OF
CLARIFICATION, THE MARKETING SERVICES SHALL NOT COVER ANY HYDROCARBONS SOLD
PURSUANT TO THE SUBJECT CONTRACTS REFERENCED IN SECTION 6.23(D) OF THE
CONTRIBUTION AGREEMENT.

 

3.                                      SERVICES. THE SERVICES TO BE PROVIDED BY
QUICKSILVER TO BREITBURN, THE ACQUIRED COMPANIES AND THEIR RESPECTIVE AFFILIATES
PURSUANT TO THIS AGREEMENT ARE AS FOLLOWS:

 

(A)                                  LAND ADMINISTRATION SERVICES. FROM THE
CLOSING DATE THROUGH THE TERMINATION DATE (OR UNTIL SUCH EARLIER DATE AS
BREITBURN NOTIFIES QUICKSILVER IN WRITING THAT BREITBURN ASSUMES RESPONSIBILITY
FOR SUCH LAND ADMINISTRATION ACTIVITIES FOR THE OIL AND GAS PROPERTIES),
QUICKSILVER SHALL PROVIDE THE FOLLOWING LEASE, DIVISION ORDER, AND LAND
ADMINISTRATION SERVICES WITH RESPECT TO THE OIL AND GAS PROPERTIES
(COLLECTIVELY, THE “LAND ADMINISTRATION SERVICES”), EXCEPT TO THE EXTENT THAT A
THIRD PARTY OPERATOR IS RESPONSIBLE FOR SUCH MATTERS:

 

(I)                                     ADMINISTERING AND MAINTAINING IN FORCE
ALL OIL AND GAS PROPERTIES;

 

(II)                                  MAINTAINING AND UPDATING ALL LEASE,
OWNERSHIP, CONTRACT, AND PROPERTY RECORDS AND DATABASES RELATING TO THE OIL AND
GAS PROPERTIES;

 

(III)                               MAINTAINING AND UPDATING ALL ROYALTY PAYMENT
AND DIVISION ORDER REPORTS AND DATABASES;

 

(IV)                              IDENTIFYING, PAYING, AND APPROPRIATELY
INVOICING ALL RENTALS, SURFACE DAMAGE PAYMENTS, RIGHT OF WAY PAYMENTS, SHUT IN
PAYMENTS, AND OTHER PAYMENTS REQUIRED BY THE OIL AND GAS PROPERTIES;

 

(V)                                 MAINTAINING ALL LAND, CONTRACT, DIVISION OF
INTEREST, LEASE FILES, AND OTHER FILES RELATING TO THE SUBJECT LAND
ADMINISTRATION FUNCTIONS; AND

 

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(VI)                              SUCH OTHER ADMINISTRATIVE SERVICES AS
QUICKSILVER MAY REASONABLY DEEM NECESSARY OR ADVISABLE TO ADMINISTER OR MAINTAIN
THE OIL AND GAS PROPERTIES INCLUDING WITH RESPECT TO SUSPENSE ACCOUNTS.

 

(B)                                 ACCOUNTING SERVICES. FROM CLOSING DATE
THROUGH THE TERMINATION DATE (OR UNTIL SUCH EARLIER DATE AS BREITBURN NOTIFIES
QUICKSILVER IN WRITING THAT BREITBURN ASSUMES RESPONSIBILITY FOR SUCH ACCOUNTING
ACTIVITIES FOR THE OIL AND GAS PROPERTIES), QUICKSILVER SHALL PROVIDE THE
FOLLOWING FINANCIAL, REVENUE, AND EXPENSE ACCOUNTING SERVICES RELATING TO THE
OIL AND GAS PROPERTIES (COLLECTIVELY, THE “ACCOUNTING SERVICES”):

 

(I)                                     EVERY MONTH, QUICKSILVER AND BREITBURN
SHALL IDENTIFY ALL CASH, CHECKS OR OTHER PROCEEDS RECEIVED AND EXPENSES PAID
WHICH RELATE TO PERIODS ON OR AFTER THE EFFECTIVE TIME. ON OR BEFORE THIRTY (30)
DAYS AFTER THE END OF EVERY CALENDAR MONTH, QUICKSILVER SHALL PREPARE A
SETTLEMENT STATEMENT INDICATING ALL SUCH RECEIPTS AND DISBURSEMENTS DURING THE
PREVIOUS CALENDAR MONTH. THE FORM AND CONTENT OF SUCH STATEMENT SHALL BE IN
SUBSTANTIALLY THE SAME FORM AS THE ATTACHED EXHIBIT A (THE “MONTHLY SETTLEMENT
STATEMENT”). ON OR BEFORE THIRTY (30) DAYS AFTER THE END OF EACH CALENDAR MONTH,
QUICKSILVER SHALL REMIT TO BREITBURN, THE NET AMOUNT CALCULATED AS SET FORTH ON
THE MONTHLY SETTLEMENT STATEMENT. ALL REMITTANCES SHALL BE MADE BY WIRE TRANSFER
OF IMMEDIATELY AVAILABLE FUNDS TO THE ACCOUNT OF BREITBURN TO SUCH BANK OR
ACCOUNT AS MAY BE SPECIFIED BY BREITBURN IN WRITING;

 

(II)                                  EXCEPT TO THE EXTENT THAT A THIRD PARTY
OPERATOR IS RESPONSIBLE FOR SUCH MATTERS, QUICKSILVER SHALL PERFORM ALL REVENUE
ACCOUNTING FUNCTIONS RELATING TO THE OIL AND GAS PROPERTIES INCLUDING THE
DISBURSEMENT OF REVENUE PROCEEDS TO ALL WORKING INTEREST, THIRD PARTY, ROYALTY
AND OVERRIDING ROYALTY OWNERS AS WELL AS ALL RENTAL, SEVERANCE OR PRODUCTION
TAXES, AD VALOREM OR PROPERTY TAXES, AND RIGHT OF WAY PAYMENTS AND ANY AND ALL
LEASEHOLD, MINIMUM OR ADVANCE PAYMENTS DUE IN THE NORMAL COURSE OF BUSINESS;

 

(III)                               QUICKSILVER SHALL COMPLY WITH ALL STATE AND
FEDERAL REGULATORY REPORTING AND FILING REQUIREMENTS, INCLUDING ANY REPORTS
REQUIRED BY THE REGULATORY AGENCIES;

 

(IV)                              EXCEPT TO THE EXTENT THAT A THIRD PARTY
OPERATOR IS RESPONSIBLE FOR SUCH MATTERS, QUICKSILVER SHALL PERFORM ALL
EXPENDITURE ACCOUNTING FUNCTIONS RELATING TO THE OIL AND GAS PROPERTIES
INCLUDING THE PAYMENT OF ALL INVOICES AND SUBSEQUENT BILLING OF SAME TO ALL
WORKING INTEREST OWNERS;

 

(V)                                 WITHIN TWELVE (12) BUSINESS DAYS FOLLOWING
THE END OF A CALENDAR MONTH, QUICKSILVER SHALL PROVIDE BREITBURN WITH ESTIMATES
OF PRODUCTION VOLUMES, REVENUE, DIRECT OPERATING EXPENSES, PRODUCTION TAXES AND
CAPITAL EXPENDITURES ATTRIBUTABLE TO THE OIL AND GAS PROPERTIES FOR THE
PROCEEDING CALENDAR MONTH AND ANY OTHER SUCH INFORMATION RELATING TO THE OIL AND
GAS

 

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PROPERTIES THAT THE BREITBURN WOULD NEED TO PREPARE ACCRUAL BASIS FINANCIAL
STATEMENTS IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES;

 

(VI)                              EXCEPT TO THE EXTENT THAT A THIRD PARTY
OPERATOR IS RESPONSIBLE FOR SUCH MATTERS QUICKSILVER SHALL PREPARE MONTHLY GAS
AND OIL BALANCING AND PAYOUT STATEMENTS;

 

(VII)                           QUICKSILVER SHALL PROVIDE INFORMATION ON
PROPERTY REVENUES, EXPENSES, TAXES AND CAPITAL EXPENDITURES TO BREITBURN FROM
QUICKSILVER’S LEASE OPERATING STATEMENTS WITH EACH MONTHLY SETTLEMENT. IF
AVAILABLE, THIS INFORMATION WILL BE PROVIDED TO BREITBURN ELECTRONICALLY;

 

(VIII)                        PAYROLL ADMINISTRATION SERVICES WITH RESPECT TO
FORMER QUICKSILVER EMPLOYEES HIRED BY BREITBURN WHICH WILL BE SUBSTANTIALLY
SIMILAR TO THE PAYROLL ADMINISTRATION SERVICES PROVIDED WITH RESPECT TO SUCH
EMPLOYEES PRIOR TO THE CLOSING DATE; AND

 

(IX)                                QUICKSILVER SHALL CONTINUE TO APPLY
SUBSTANTIALLY THE SAME SARBANES-OXLEY RELATED PROCESSES THAT QUICKSILVER HAS
HISTORICALLY UTILIZED AND QUICKSILVER SHALL USE REASONABLE EFFORTS TO COOPERATE
WITH BREITBURN’S INTERNAL AUDIT DEPARTMENT IN FACILITATING THE INTEGRATION OF
SUCH SARBANES-OXLEY RELATED PROCESSES INTO BREITBURN’S CONTROL PROCESSES.

 

For the avoidance of doubt, the Accounting Services shall not include the
preparation of any income Tax Returns on behalf of BreitBurn or any of the
Transferred Companies.

 

(C)                                  MARKETING SERVICES. FROM CLOSING DATE
THROUGH THE TERMINATION DATE (OR UNTIL SUCH EARLIER DATE AS BREITBURN NOTIFIES
QUICKSILVER IN WRITING THAT BREITBURN ASSUMES RESPONSIBILITY FOR MARKETING
ACTIVITIES FOR THE OIL AND GAS PROPERTIES), QUICKSILVER SHALL PROVIDE MARKETING,
TRANSPORTATION, GAS CONTROL, GAS SCHEDULING, AND CONTRACT ADMINISTRATION
SERVICES AS REASONABLY REQUESTED BY BREITBURN NECESSARY TO TRANSPORT AND SELL
THE OIL, GAS, AND OTHER PRODUCTION FROM THE OIL AND GAS PROPERTIES (THE
“MARKETING SERVICES”). NOTWITHSTANDING ANYTHING HEREIN PROVIDED TO THE CONTRARY,
QUICKSILVER’S OBLIGATION TO PROVIDE THE MARKETING SERVICES SHALL BE CONDITIONED
UPON BREITBURN TIMELY PROVIDING QUICKSILVER WITH WRITTEN NOTICE AND DIRECTION AS
TO THE QUANTITY OF OIL, GAS AND OTHER PRODUCTION FROM THE OIL AND GAS PROPERTIES
THAT SHOULD BE NOMINATED BY QUICKSILVER ON BEHALF OF BREITBURN AS WELL AS ALL
OTHER INFORMATION REQUIRED BY QUICKSILVER TO PERFORM THE MARKETING SERVICES
HEREUNDER, INCLUDING, WITHOUT LIMITATION, WRITTEN DESIGNATION OF THE PARTIES TO
WHOM SUCH PRODUCTION SHOULD BE SOLD.

 

(D)                                 SCOPE OF SERVICES. THE MARKETING SERVICES,
LAND ADMINISTRATION SERVICES AND ACCOUNTING SERVICES DESCRIBED ABOVE SHALL BE
SUBSTANTIALLY THE SAME AS SUCH MARKETING, LAND ADMINISTRATION AND ACCOUNTING
SERVICES WITH RESPECT TO THE OIL AND GAS PROPERTIES THAT QUICKSILVER PROVIDED
FOR ITS OWN BEHALF (OR ON BEHALF OF THE ACQUIRED COMPANIES OR THEIR AFFILIATES)
FOR THE MANAGEMENT OF THE OIL AND GAS PROPERTIES PRIOR TO THE CLOSING DATE.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, QUICKSILVER IS NOT
OBLIGATED TO PROVIDE ANY SERVICES THAT QUICKSILVER DID NOT PERFORM WITH RESPECT
TO THE OIL AND GAS PROPERTIES FOR ITS OWN ACCOUNT (OR THE ACCOUNT OF THE
ACQUIRED COMPANIES) IMMEDIATELY PRIOR TO THE CLOSING

 

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or perform any such Services in a manner substantially different from the manner
in which Quicksilver performed such Services for its own account (or the account
of the Acquired Companies) immediately prior to the Closing. At Quicksilver’s
election all or any part of the Services may be performed or provided by any
Affiliate or Affiliates of Quicksilver or any service provider who has
historically provided the applicable Service to Quicksilver. To the extent any
Services are performed or provided by an Affiliate of Quicksilver or any such
service provider, such Services shall nevertheless be considered as having been
performed or provided by Quicksilver hereunder.

 

4.                                      PAYMENTS AND REIMBURSEMENTS.

 

(a)                                  Notwithstanding anything in this Agreement
to the contrary, Quicksilver shall not be obligated to make or advance any
payments on behalf of BreitBurn, the Acquired Companies or any of their
Affiliates pursuant to any of the Services except to the extent that at least
five (5) Business Days before such payment is due (i) BreitBurn has advanced
adequate immediately available funds to Quicksilver for such purpose or
(ii) Quicksilver has received and is then holding adequate immediately available
funds of BreitBurn, the Acquired Companies or their Affiliates pursuant to the
Services rendered by Quicksilver pursuant to this Agreement.

 

(b)                                 Quicksilver, at its option, may advance any
funds needed to make any payments on behalf of BreitBurn, the Acquired Companies
or any of their Affiliates pursuant to any of the Services, and BreitBurn shall
reimburse Quicksilver for all such advances. In lieu of advancing such funds,
Quicksilver may, at its election, require BreitBurn to advance to Quicksilver
the estimated amount of the payments required to be made on behalf of BreitBurn,
the Acquired Companies or any of their Affiliates pursuant to any of the
Services for any month; and adjustment between the estimated payment amounts and
the actual payment amounts shall be made on the next month’s billing. Such
advances shall be reflected in an invoice from Quicksilver to BreitBurn and
shall be due and payable on or before the later of (i) three (3) Business Days
before the first day of the calendar month in which it is anticipated such
estimated payments will be incurred or (ii) five (5) Business Days after such
invoice is received by BreitBurn.

 

(c)                                  In addition to the fees provided for in
Section 2, BreitBurn shall reimburse Quicksilver for all out-of-pocket costs
reasonably incurred by Quicksilver in providing the Services (including all
costs Quicksilver incurs in connection with using the Property Tax Management
System licensed from Tax Compliance Inc. to perform the Services hereunder and
any fees due the service provider who provides payroll administration services),
excluding salaries, overtime and other employee costs and overhead and
administrative costs.

 

(D)                                 QUICKSILVER SHALL SEND BREITBURN A MONTHLY
INVOICE SETTING FORTH THE AMOUNTS OF (I) FEES DUE UNDER SECTION 2 FOR THAT MONTH
(PROVIDED, HOWEVER, IN THE CASE OF THE FEE PAYABLE TO QUICKSILVER FOR MARKETING
SERVICES, SUCH FEE SHALL BE CALCULATED BASED UPON THE ASSUMPTION THAT THE VOLUME
OF MCFE SOLD DURING THE MONTH IN QUESTION IS EQUAL TO THE VOLUME OF MCFE
NOMINATED FOR SUCH MONTH), (II) ANY ADVANCES MADE BY QUICKSILVER ON BEHALF OF
BREITBURN, THE ACQUIRED COMPANIES OR ANY OF THEIR AFFILIATES PURSUANT TO
SECTION 4(B) FOR WHICH BREITBURN HAS NOT MADE AN ADVANCE PAYMENT PURSUANT TO
SECTION 4(B), AND (III) ANY REIMBURSABLE OUT-OF-POCKET COSTS UNDER SECTION 4(C);
PROVIDED, HOWEVER, THAT QUICKSILVER’S FAILURE TO INCLUDE ANY

 

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fees, advances or reimbursable costs for any month in any monthly invoice shall
not waive or release BreitBurn’s obligation therefor under this Agreement.
Notwithstanding the foregoing, if it is determined that the actual volume of
mcfe sold in a given month during the term of this Agreement is different than
the volume that was used to calculate the fee paid by BreitBurn to Quicksilver
for Marketing Services for such month, the marketing fee shall be recalculated
for such month and any amount owed by Quicksilver to BreitBurn or BreitBurn to
Quicksilver, as the case may be, shall be reflected in the next monthly invoice
sent by Quicksilver to BreitBurn pursuant to this Section 4(d). BreitBurn shall
pay Quicksilver the total amount shown to be due on any such invoice within
fifteen (15) days of receipt of such invoice. The amount properly included in
any invoice not paid within fifteen (15) days after BreitBurn’s receipt of the
invoice shall accrue interest as provided in Section 4(e).

 

(E)                                  ALL AMOUNTS DUE AND PAYABLE BY EITHER PARTY
UNDER THIS AGREEMENT SHALL ACCRUE SIMPLE INTEREST AT THE INTEREST RATE FROM THE
FIRST DATE ON WHICH SUCH AMOUNTS ARE PAYABLE HEREUNDER UNTIL THE DATE PAYMENT IS
RECEIVED.

 

(F)                                    ALL AMOUNTS OWING BY EITHER PARTY TO THE
OTHER PARTY UNDER THIS AGREEMENT SHALL BE PAID BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS IN U.S. DOLLARS SENT TO THE BANK AND ACCOUNT DESIGNATED BY THE
RECEIVING PARTY.

 

5.                                      COOPERATION.

 

(A)                                  GENERAL COOPERATION. CONTEMPORANEOUSLY WITH
OR IMMEDIATELY FOLLOWING THE CLOSING DATE, QUICKSILVER AND BREITBURN SHALL EACH
DESIGNATE, BY WRITTEN NOTICE TO THE OTHER, A CONTACT PERSON OR PERSONS TO ACT ON
ITS (AND ITS AFFILIATES’) BEHALF FOR THE PURPOSE OF COORDINATING THE PROVISION
OF EACH OF THE SERVICES, INCLUDING IN SUCH NOTICE THE ADDRESS, TELEPHONE NUMBER,
FAX NUMBER AND E-MAIL ADDRESS OF SUCH CONTACT PERSON. QUICKSILVER OR BREITBURN
MAY CHANGE ITS CONTACT PERSON FOR ANY SERVICE BY WRITTEN NOTICE TO THE OTHER
PARTY. QUICKSILVER MAY CONCLUSIVELY RELY UPON AND SHALL BE FULLY PROTECTED IN
ACTING OR REFRAINING FROM ACTING UPON ANY REQUEST OR INSTRUCTION (ORAL OR
WRITTEN) WITH RESPECT TO ANY OF THE SERVICES RECEIVED FROM ANY CONTACT PERSON
DESIGNATED BY BREITBURN WITH RESPECT TO SUCH SERVICES PURSUANT TO THIS SECTION.
BREITBURN ACKNOWLEDGES AND AGREES THAT QUICKSILVER’S ABILITY TO PERFORM THE
SERVICES IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT IS CONTINGENT UPON THE
ASSISTANCE OF THE BUSINESS EMPLOYEES. AS SUCH, BREITBURN AGREES TO MAKE
AVAILABLE TO QUICKSILVER ANY DESIGNATED EMPLOYEE THAT ACCEPTS A JOB WITH
BREITBURN OR AN AFFILIATE OF BREITBURN OR ANY OTHER EMPLOYEE OF BREITBURN OR AN
AFFILIATE OF BREITBURN WHOSE EMPLOYMENT RELATES TO THE OIL AND GAS PROPERTIES
THAT QUICKSILVER REASONABLY REQUIRES TO PERFORM THE SERVICES HEREUNDER.

 

(B)                                 ACCOUNTING SERVICES COOPERATION. BREITBURN
SHALL SEND SUCH NOTICES TO OPERATORS, VENDORS AND OTHER PAYEES AS ARE REASONABLY
NECESSARY TO CAUSE SUCH PAYEES TO CONTINUE TO SEND BILLS AND STATEMENTS DURING
THE APPLICABLE TRANSITION PERIOD TO QUICKSILVER. SHOULD ANY OF THESE BILLS OR
STATEMENTS NEVERTHELESS BE SENT TO BREITBURN, BREITBURN SHALL PROMPTLY FORWARD
SUCH BILLS AND STATEMENTS TO QUICKSILVER IN SUFFICIENT TIME TO ALLOW QUICKSILVER
TO MAKE TIMELY PAYMENT. UPON REQUEST FROM BREITBURN, QUICKSILVER WILL ASSIST
BREITBURN BY SENDING A NOTICE TO AN OPERATOR, VENDOR, OR A PAYEE IN INSTANCES
WHERE THAT PERSON HAS REQUESTED A NOTICE FROM THE QUICKSILVER. BREITBURN SHALL
COOPERATE WITH QUICKSILVER BY DISCLOSING TO QUICKSILVER

 

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BREITBURN’S RECEIPT OF MONIES AND PAYMENT OF INVOICES DURING THE TRANSITION
PERIOD WITH RESPECT TO THE ACCOUNTING SERVICES.

 

6.                                      NO ADDITIONAL SERVICES. NOTHING HEREIN
SHALL REQUIRE QUICKSILVER TO PROVIDE RECORDS, FINANCIAL INFORMATION, OR OTHER
INFORMATION, WHICH IS NOT KEPT OR REPORTED BY QUICKSILVER IN THE ORDINARY COURSE
OF BUSINESS. FURTHER, NOTHING HEREIN SHALL REQUIRE QUICKSILVER TO INSTALL
EQUIPMENT OR EXPAND ANY SYSTEMS OR SERVICES AT ANY LOCATION BEYOND THE LEVEL
PROVIDED BY QUICKSILVER AS OF THE DATE HEREOF.

 

7.                                      SCOPE OF AUTHORITY. EXCEPT TO THE EXTENT
QUICKSILVER, AFTER RECEIVING CONSENT FROM BREITBURN IN WRITING OR VIA ELECTRONIC
MAIL, ELECTS TO ENTER INTO ANY CONTRACTS ON BEHALF OF BREITBURN, THE ACQUIRED
COMPANIES OF THEIR AFFILIATES IN CONNECTION WITH PROVIDING THE MARKETING
SERVICES, QUICKSILVER UNDERSTANDS AND AGREES THAT QUICKSILVER HAS NOT BEEN
GRANTED AUTHORITY TO ENTER INTO ANY CONTRACTS ON BEHALF OF BREITBURN, THE
ACQUIRED COMPANIES OR THEIR AFFILIATES.

 

8.                                      DISCLAIMER, INDEMNIFICATION AND
LIABILITY LIMITATIONS.

 

(A)                                  DISCLAIMER. NOTWITHSTANDING ANY OTHER
PROVISIONS OF THIS AGREEMENT, QUICKSILVER DOES NOT MAKE, AND EXPRESSLY
DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, STATUTORY,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PERFORMANCE OF THE SERVICES, INCLUDING,
WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED.

 

(B)                                 EXCULPATION AND INDEMNIFICATION. BREITBURN
HEREBY AGREES TO DEFEND, RELEASE, INDEMNIFY AND HOLD HARMLESS QUICKSILVER AND
EACH OF THE OTHER QUICKSILVER INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL
DAMAGES ARISING OUT OF, RESULTING FROM OR RELATING TO ANY ACT OR OMISSION
PERFORMED OR OMITTED IN CONNECTION WITH THE SERVICES OR UNDER OR ON ACCOUNT OF
THIS AGREEMENT (A) IN A MANNER REASONABLY BELIEVED BY QUICKSILVER TO BE WITHIN
THE SCOPE OF THE AUTHORITY GRANTED TO QUICKSILVER IN THIS AGREEMENT AND (B) IN A
MANNER NOT CONSTITUTING WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, EVEN IF SUCH
DAMAGES ARISE OUT OF OR RESULT FROM, SOLELY OR IN PART, THE SOLE, ACTIVE,
PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT
OR VIOLATION OF LAW OF OR BY QUICKSILVER OR ANY OTHER QUICKSILVER INDEMNIFIED
PARTIES.

 

(C)                                  LIABILITY LIMITATIONS. IN NO EVENT SHALL
ANY PARTY AND/OR ITS AFFILIATES BE LIABLE FOR ANY CONSEQUENTIAL, SPECIAL,
INDIRECT OR PUNITIVE DAMAGES CLAIMED BY A PARTY HERETO OR ANY BREITBURN
INDEMNIFIED PARTIES OR QUICKSILVER INDEMNIFIED PARTIES ARISING FROM OR RELATING
TO (A) ANY ACTIONS FOR INDEMNIFICATION UNDER SECTION 8(B) OR (B) ANY BREACH OR
ALLEGED BREACH OF THIS AGREEMENT (INCLUDING ANY FAILURE OR ALLEGED FAILURE TO
COMPLY WITH THIS AGREEMENT); PROVIDED, HOWEVER, THAT THE FOREGOING

 

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SHALL NOT BAR RECOVERY BY A QUICKSILVER INDEMNIFIED PARTY FOR INDEMNIFIED
DAMAGES UNDER SECTION 8(B) TO THE EXTENT SUCH DAMAGES ARE OWED BY THE
QUICKSILVER INDEMNIFIED PARTY TO AN UNAFFILIATED THIRD PARTY (WHICH SHALL NOT
INCLUDE ANY QUICKSILVER INDEMNIFIED PARTIES AND ANY OF THEIR RESPECTIVE
AFFILIATES).

 

9.                                      NOTICES.    SUBJECT TO QUICKSILVER’S
RIGHT TO RELY ON COMMUNICATIONS FROM BREITBURN’S CONTACT PERSONS PURSUANT TO
SECTION 5, ALL WRITTEN NOTICES AND COMMUNICATIONS REQUIRED OR PERMITTED UNDER
THIS AGREEMENT SHALL BE DELIVERED AS PROVIDED IN SECTION 11.1 OF THE
CONTRIBUTION AGREEMENT.

 

10.                               AMENDMENTS. THIS AGREEMENT MAY NOT BE AMENDED
EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY QUICKSILVER AND BREITBURN. ANY
RIGHTS HEREUNDER SHALL NOT BE WAIVED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED
BY QUICKSILVER AND BREITBURN.

 

11.                               ASSIGNMENT. NEITHER PARTY MAY ASSIGN ALL OR
ANY PORTION OF ITS RIGHTS, OR DELEGATE ALL OR ANY PORTION OF ITS DUTIES
HEREUNDER, UNLESS IT CONTINUES TO REMAIN LIABLE FOR THE PERFORMANCE OF ITS
OBLIGATIONS HEREUNDER AND OBTAINS THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY.
NOTHING CONTAINED IN THIS AGREEMENT, EXPRESS OR IMPLIED, SHALL CONFER ON ANY
PERSON OTHER THAN THE PARTIES OR THEIR RESPECTIVE SUCCESSORS AND PERMITTED
ASSIGNS, ANY RIGHTS OR REMEDIES UNDER OR BY REASON OF THIS AGREEMENT.

 

12.                               GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (EXCLUDING ANY CONFLICT OF LAWS
RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR CONSTRUCTION OF THIS
AGREEMENT TO THE LAW OF ANOTHER JURISDICTION), OTHER THAN MATTERS DEALING WITH
THE OWNERSHIP OF REAL PROPERTY OR INTERESTS THEREIN, WHICH SHALL BE GOVERNED BY
THE LAWS OF THE STATE WHERE SUCH PROPERTY IS LOCATED. IT IS ACKNOWLEDGED AND
AGREED THAT THIS AGREEMENT IS CONTEMPLATED BY THE CONTRIBUTION AGREEMENT.
ACCORDINGLY, THE PROVISIONS OF SECTION 11.7 (CONSENT TO JURISDICTION) AND
SECTION 11.14 (WAIVER OF JURY TRIAL) OF THE CONTRIBUTION AGREEMENT APPLY TO THIS
AGREEMENT AND HEREBY EXPRESSLY INCORPORATED HEREIN AND MADE A PART HEREOF.

 

13.                               ENTIRE AGREEMENT. THIS AGREEMENT AND THE
CONTRIBUTION AGREEMENT CONSTITUTE THE ENTIRE UNDERSTANDING AMONG QUICKSILVER,
BREITBURN, THE ACQUIRED COMPANIES AND THEIR RESPECTIVE AFFILIATES WITH RESPECT
TO THE SUBJECT MATTER HEREOF, SUPERSEDING ALL NEGOTIATIONS, PRIOR DISCUSSIONS,
AND PRIOR AGREEMENTS AND UNDERSTANDINGS RELATING TO SUCH SUBJECT MATTER.

 

14.                               INDEPENDENT CONTRACTOR. IN ITS PERFORMANCE OF
SERVICES, QUICKSILVER SHALL BE CONSIDERED AN INDEPENDENT CONTRACTOR, AND IN NO
EVENT SHALL EITHER PARTY BE DEEMED A PARTNER, CO-VENTURER OR AGENT OF THE OTHER
PARTY.

 

15.                               AUDIT RIGHT. BREITBURN HAS A RIGHT FOR A
PERIOD OF NINETY (90) DAYS AFTER THE TRANSITION PERIOD FOR THE MARKETING
SERVICES, LAND ADMINISTRATION SERVICES OR ACCOUNTING SERVICES, AS APPLICABLE,
(THE “AUDIT PERIOD”) TO CONDUCT, AT ITS SOLE COST AND EXPENSE, DURING NORMAL
BUSINESS HOURS UPON AT LEAST THIRTY (30) DAYS PRIOR NOTICE, AN AUDIT OF
QUICKSILVER’S

 

7

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RECORDS TO THE EXTENT RELATING TO SUCH PARTICULAR SERVICES AND SHALL BE ENTITLED
TO AN ADJUSTMENT IF ANY ERROR IS DISCOVERED. IF BREITBURN DOES NOT EXERCISE ITS
AUDIT RIGHT WITHIN THE AUDIT PERIOD, BREITBURN SHALL BE DEEMED TO HAVE WAIVED
ITS AUDIT RIGHT. ALL STATEMENTS AND REPORTS RENDERED TO BREITBURN BY QUICKSILVER
PURSUANT TO THIS AGREEMENT SHALL CONCLUSIVELY BE PRESUMED TO BE TRUE AND CORRECT
AFTER THE AUDIT PERIOD, EXCEPT FOR AUDIT ISSUES RAISED BY WRITTEN NOTICE FROM
BREITBURN TO QUICKSILVER DURING THE AUDIT PERIOD. FURTHERMORE, ANY AUDIT ISSUES
NOT RAISED BY WRITTEN NOTICE FROM BREITBURN TO QUICKSILVER DURING THE AUDIT
PERIOD SHALL BE DEEMED TO HAVE BEEN WAIVED BY BREITBURN, THE ACQUIRED COMPANIES
AND THEIR AFFILIATES. QUICKSILVER SHALL RETAIN ALL ITS RECORDS RELATING TO THE
SERVICES PERFORMED HEREUNDER FOR NO LESS THAN SIX (6) MONTHS AFTER THE END OF
THE AUDIT PERIOD, AND IF AUDIT ISSUES ARE TIMELY RAISED SHALL RETAIN THEM UNTIL
ALL SUCH ISSUES ARE RESOLVED BY AGREEMENT OF BREITBURN AND QUICKSILVER, OR AS
OTHERWISE PROVIDED BY LAW.

 

16.                               CONTRIBUTION AGREEMENT. THIS AGREEMENT IS MADE
IN ACCORDANCE WITH AND IS SUBJECT TO THE TERMS AND CONDITIONS OF THE
CONTRIBUTION AGREEMENT. IF THERE IS A CONFLICT BETWEEN THE PROVISIONS OF THE
CONTRIBUTION AGREEMENT AND THIS AGREEMENT, THE PROVISIONS OF THE CONTRIBUTION
AGREEMENT CONTROL.

 

17.                               RELIEF OF OBLIGATIONS. QUICKSILVER SHALL BE
RELIEVED OF ITS OBLIGATIONS UNDER THIS AGREEMENT TO THE EXTENT IT IS RENDERED
UNABLE WHOLLY OR IN PART BY CAUSES OR CONDITIONS NOT REASONABLY WITHIN
QUICKSILVER’S CONTROL TO CARRY OUT IS OBLIGATIONS UNDER THIS AGREEMENT.

 

18.                               ACQUIRED COMPANIES AND AFFILIATES BOUND. THE
ACQUIRED COMPANIES JOIN IN THIS AGREEMENT TO EVIDENCE AND ACKNOWLEDGE THE
AGREEMENT AND ACCEPTANCE BY THE ACQUIRED COMPANIES AND THEIR AFFILIATES OF ALL
TERMS AND PROVISIONS OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE
RELEASE, EXCULPATION, INDEMNIFICATION, HOLD HARMLESS, AND OTHER PROVISIONS OF
SECTION 8. THE ACQUIRED COMPANIES FOR THEMSELVES AND ON BEHALF OF THEIR
AFFILIATES HEREBY APPROVE AND CONSENT TO, AND SHALL BE BOUND BY, ANY AMENDMENT,
MODIFICATION, WAIVER OR RELEASE, IN WHOLE OR IN PART, OF THIS AGREEMENT BY
BREITBURN WHETHER OR NOT THE ACQUIRED COMPANIES OR ANY OF THEIR AFFILIATES
APPROVE SUCH AMENDMENT, MODIFICATION, WAIVER OR RELEASE OR HAVE ANY NOTICE
THEREOF. ALL NOTICES GIVEN IN CONNECTION HEREWITH BY QUICKSILVER TO BREITBURN
SHALL BE DEEMED TO HAVE BEEN GIVEN ALSO TO THE ACQUIRED COMPANIES AND THEIR
AFFILIATES WHETHER OR NOT THE ACQUIRED COMPANIES OR ANY OF THEIR AFFILIATES
RECEIVE SUCH NOTICE.

 

EXECUTED as of the Closing Date

 

 

QUICKSILVER RESOURCES INC.,

 

a Delaware corporation

 

 

 

 

 

 

 

By:

 

 

 

Glenn M. Darden

 

 

President and Chief Executive Officer

 

8

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BREITBURN OPERATING L.P.,

 

a Delaware limited partnership

 

 

 

 

By:

BreitBurn Operating GP, LLC,

 

 

a Delaware limited liability company,

 

 

its General Partner

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

AGREED AND ACCEPTED:

 

 

TERRA ENERGY COMPANY LLC

GTG PIPELINE LLC

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

Glenn M. Darden

Glenn M. Darden

 

President and Chief Executive Officer

President and Chief Executive Officer

 

 

 

 

MERCURY MICHIGAN COMPANY, LLC

BEAVER CREEK PIPELINE, L.L.C.

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

Glenn M. Darden

Glenn M. Darden

 

President and Chief Executive Officer

President and Chief Executive Officer

 

9

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Exhibit A

 

Transition Services Agreement

(Accounting Services)

 

Monthly Settlement Statement

Cash Flow Due to BreitBurn from Quicksilver

 

Post-Effective Time Revenues (Net BreitBurn share)

 

 

 

 

 

$

 XXX

 

 

 

 

 

 

 

 

 

COPAS Overhead Recoveries

 

 

 

XXX

 

 

 

 

 

 

 

 

 

 

 

Other Receipts Attributable to Post-Effective Time

 

 

 

 

 

 

 

Operations

 

 

 

XXX

 

 

 

 

 

 

 

 

 

 

 

Total Receipts

 

 

 

XXX

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Post-Effective Time Expenditures (Net BreitBurn share)

 

 

 

XXX

 

 

 

 

 

 

 

 

 

 

 

Lease Operating Expenses

 

$

XXX

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

 

XXX

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental, Rights-of-way, Leasehold, Minimum or

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Payments

 

XXX

 

 

 

 

 

 

 

 

 

 

 

 

 

Services Fee

 

XXX

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Expenditures Attributable to Post-Effective Time Operations

 

 

 

XXX

 

 

 

 

 

 

 

 

 

 

 

Total Expenditures

 

 

 

XXX

 

 

 

 

 

 

 

 

 

 

 

Monthly Settlement

 

 

 

$

XXX

 

 

 

 

[Include accruals, as applicable]

 

10

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