Exhibit 10.1
 
Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
 
This Option, Right of First Refusal, and Waiver in Amendment to Omnibus
Agreement and Gas Gathering and Processing Agreement (this “Agreement”) is
executed as of this 9th day of June 2009 (the “Effective Date”) by and among
Quicksilver Resources Inc. (“Quicksilver”), Quicksilver Gas Services LP (the
“MLP”), Quicksilver Gas Services GP LLC (“General Partner”), Cowtown Pipeline
Partners L.P. (“CPP”), and Cowtown Gas Processing Partners L.P. (“CGPP”), who
each individually may be referred to as a “Party” and together are referred to
as the “Parties”.
 
Recitals

 
 
I.
Quicksilver, the MLP, and General Partner are parties to that certain Omnibus
Agreement, effective as of August 10, 2007 (the “Omnibus Agreement”).

 
 
II.
Quicksilver, CPP, and CGPP are parties to that certain Sixth Amended and
Restated Gas Gathering and Processing Agreement, dated to be effective as of
September 1, 2008 (the “Gas Gathering and Processing Agreement”).

 
 
III.
On August 8, 2008 (the “Alliance Closing Date”), Quicksilver acquired certain
oil and gas assets, including midstream assets, in the Alliance Airport area of
Tarrant and Denton counties in the State of Texas, a portion of which constitute
Subject Assets.

 
 
IV.
On March 25, 2009, consistent with the provisions of Subsection 2.3(b)(i) of the
Omnibus Agreement, Quicksilver transmitted a notice and Offer to General Partner
to sell those Subject Assets and other related assets (together, the “Alliance
Midstream Assets”) to the MLP.

 
 
V.
The notice and Offer also contained a request by Quicksilver that, should the
MLP elect not to pursue the purchase of the Alliance Midstream Assets, the MLP,
CPP, and CGPP waive certain rights granted them under the Omnibus Agreement and
the Gas Gathering and Processing Agreement.

 
 
VI.
The MLP, General Partner, CPP, and CGPP have agreed to waive certain rights as
requested by Quicksilver, but only in accordance with the provisions of this
Agreement.

 
 
 
 

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Now therefore, for and in consideration of the premises, covenants, conditions,
and agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged,
Quicksilver (for itself and for the other Quicksilver Entities), the MLP (for
itself and for the other Partnership Entities except the General Partner, CPP,
and CGPP, who are executing this Agreement independently), the General Partner,
CPP, and CGPP agree as follows:

 
1.
Definitions.  Capitalized words, terms, and phrases not otherwise defined in
this Agreement shall have the meanings given them in the Omnibus Agreement.

 
2.
Omnibus Agreement waiver.  Effective from and after the Alliance Closing Date,
the lands described and depicted on Exhibit “A” to this Agreement (the “Alliance
Waiver Area”) shall be excluded from the definition of Quicksilver
Counties.  Except as provided in this Agreement, the Partnership Entities waive
any and all rights arising under the Omnibus Agreement and pertaining to the
Alliance Waiver Area.

 
3.
Gas Gathering and Processing Agreement waiver. Effective from and after the
Alliance Closing Date, the Alliance Waiver Area shall be excluded from the
definition of “Contract Area”, as that term is used in the Gas Gathering and
Processing Agreement.

 
4.
Grant of Option. Unless earlier terminated as provided in this Agreement,
beginning on the Effective Date and ending on August 10, 2017 (the “Option
Term”), the MLP shall have an option (the “Option”) to acquire not less than all
of the Option Assets.  For purposes of this Agreement, the “Option Assets”
shall, subject to any conveyances permitted under Sections 6 and 7, consist of:

 
 
a.
the Alliance Midstream Assets, and any additions, extensions, expansions,
upgrades, modifications, and changes to them located in the Alliance Waiver
Area;

 
 
b.
any other assets located, constructed, or maintained by any of the Quicksilver
Entities and located in the Alliance Waiver Area that, but for Sections 2 and 3
of this Agreement, would be considered either Subject Assets or part of the
Gathering System (as that term is defined in the Gas Gathering and Processing
Agreement) or both; and

 
 
c.
all contracts, agreements, instruments, and other rights then applicable to the
items described in Subsections 4.a and 4.b above.

 
Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
Page 2 of 12
 
 

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5.           Option terms and conditions.  Exercise of the Option shall be
governed by the following:

 
 
a.
If the MLP desires to exercise the Option, it shall notify Quicksilver (the
“Option Notice”) of such desire.  The Option Notice shall include:

 
 
i.
the MLP’s  proposed purchase price for the Option Assets, which shall not be
less than the MLP’s good faith estimate of the fair market value of the Option
Assets (the “Purchase Price”); and

 
 
ii.
the form of a definitive agreement, containing commercially reasonable terms, to
effectuate the purchase and sale of the Option Assets (the “PSA”).

 
 
b.
As soon as practicable, but in any event within 30 days after receipt of the
Option Notice, Quicksilver shall notify the MLP (the “Option Response”) whether
Quicksilver agrees with the proposed Purchase Price and PSA.

 
 
c.
If Quicksilver agrees with the proposed Purchase Price and the PSA, the MLP and
all applicable Quicksilver Entities and Partnership Entities shall, as soon as
commercially reasonable, execute the PSA and proceed to close the sale of the
Option Assets.

 
 
d.
If Quicksilver and the MLP are unable to agree on either the Purchase Price or
the terms and conditions of the PSA within 30 days after the MLP’s receipt of
the Option Response, Quicksilver and the MLP shall engage a mutually acceptable
independent banking firm or other independent Person that is an expert in
valuing midstream assets like the Option Assets (the “Option Assets Valuation
Expert”).  Quicksilver and the MLP shall each bear ½ of the costs and expenses
associated with the engagement and employment of the Option Assets Valuation
Expert.  The Option Assets Valuation Expert shall determine, to the extent that
the Parties are unable to agree: i. the fair market value of the Option Assets,
which shall be their Purchase Price; and ii. commercially reasonable terms and
conditions of the PSA.  The Option Assets Valuation Expert shall provide his
final determination within 30 days of being engaged by Quicksilver and the
MLP.  The Option Assets Valuation Expert’s determination regarding the Purchase
Price and PSA shall be final and binding upon the Parties.  As soon as
practicable after such determination, the MLP shall: i. execute the PSA along
with the other Parties and proceed

 
Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
Page 3 of 12
 
 

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to close the sale of the Option Assets; or ii. should the MLP fail to execute
the PSA within 10 days of the Option Assets Valuation Expert’s determination,
this Agreement, including the Option and the ROFR (defined in Section 6), shall
terminate and be of no further force or effect.

 
 
e.
The Option shall not be affected by any failure to close the sale of the Option
Assets pursuant to the PSA, so long as the failure is not due to the fault of
the MLP or any of the Partnership Entities.

 
 
f.
Notwithstanding the other provisions of this Agreement, any PSA executed by the
Parties pursuant to the MLP’s exercise of the Option shall require the MLP to
assume and be liable for all then-existing duties, obligations, and liabilities
pertaining to the Option Assets.

 
 
6.
Right of first refusal.

 
 
a.
If, during the Option Term, one or more of the Quicksilver Entities accepts an
offer from a Person other than a Partnership Entity or a Quicksilver Entity
(each such person, a “Purchaser”) to purchase all or any part of the Option
Assets during the Option Term, Quicksilver shall promptly notify the MLP of that
acceptance (each, a “Sale Notice”).  The Sale Notice shall state the Purchaser’s
name and address and contain the terms and conditions of the proposed purchase
of Option Assets by the Purchaser.  The MLP shall have a right (a “ROFR”) for 30
days following its receipt of each Sale Notice (each period being a “Sale Notice
Period”) to elect to purchase the Option Assets on the same terms and conditions
as contained in the Sale Notice.  If the MLP: i. does not elect to purchase the
identified Option Assets in accordance with their corresponding Sale Notice
during the Sale Notice Period; or ii. after properly electing to purchase such
Option Assets, fails to close their sale in accordance with the terms and
conditions contained in the Sale Notice, the Quicksilver Entities shall have the
right to convey the Option Assets identified in the Sale Notice free and clear
of the Option and ROFR (and upon such terms and conditions as the Quicksilver
Entities may determine) for a period of one year following the end of the Sale
Notice Period (each period being a “Free Period”).  If, however, the Quicksilver
Entities fail to convey the Option Assets identified in a Sale Notice during the
corresponding Free Period, such Option Assets shall be again subject to the
Option and ROFR (unless the Option Term should expire prior to the end of the
Free Period).

 
Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
Page 4 of 12
 
 

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b.           If Quicksilver transmits a Sale Notice to the MLP within 30 days of
the end of the Option Term, the ROFR shall be extended for a period sufficient
to accommodate the time periods for notice and exercise of the ROFR under
Subsection 6.a.

 
 
7.
Agreement subject to certain senior rights.  Notwithstanding anything in this
Agreement to the contrary, the Quicksilver Entities may convey all or any part
of the Option Assets among themselves at any time during the Option Term and the
ROFR shall not apply to any such conveyances.  However, all such interests in
the Option Assets shall be owned and held by the Quicksilver Entities subject to
the Option and the ROFR.

 
 
8.
Right to review records.  During the Option Term, and upon reasonable notice to
Quicksilver, the MLP shall have the right to access and review all documents,
books, and records owned, held, or controlled by Quicksilver and reasonably
required by the MLP to make a fair market evaluation of the Option Assets.

 
 
9.
Choice of law.  This Agreement shall be subject to and governed by the laws of
the State of Texas. The Parties hereby submit to the exclusive venue of a state
or federal court having jurisdiction and located in Ft. Worth, Tarrant County,
Texas.

 
 
10.
Notices.  All notices, requests, or consents provided for or permitted to be
given pursuant to this Agreement must be in writing and must be given by
depositing them in the United States mail, addressed to the person or entity to
be notified, postpaid, and registered or certified with return receipt requested
or by delivering such notice in person or by fax. Notice given by personal
delivery or mail shall be effective upon actual receipt. Notice given by fax
shall be effective upon actual receipt if received during the recipient’s normal
business hours, or at the beginning of the recipient’s next business day after
receipt if not received during the recipient’s normal business hours. All
notices to be sent to any of the Parties pursuant to this Agreement shall be
sent to or made at its address set forth below or at such other address as such
Party may stipulate to the other Parties in the manner provided in this
Section 10:

 
 
a.
For notices to any of the Quicksilver Entities:

 
Quicksilver Resources Inc.
777 West Rosedale Street
Fort Worth, Texas 76104
Phone: (817) 665-5000
Fax: (817) 665-5004
Attention: Law Department

 
Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
Page 5 of 12
 
 

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b.           For notices to any of the Partnership Entities:

 
Quicksilver Gas Services L.P.
777 West Rosedale Street
Fort Worth, Texas 76104
Phone: (817) 665-5000
Fax: (817) 665-5004
Attention: Law Department

 
 
11.
Entire agreement. This Agreement constitutes the entire agreement of the Parties
relating to the matters contained within it, superseding all prior contracts or
agreements, whether oral or written, relating to the matters contained in this
Agreement.

 
 
12.
Termination.  This Agreement, including the Option and ROFR, shall terminate
upon a Change of Control of General Partner or the MLP, other than any Change of
Control of General Partner or the MLP that may be deemed to have occurred
pursuant to clause (iv) of the definition of Change of Control in the Omnibus
Agreement solely as a result of a Change of Control of
Quicksilver.  Notwithstanding any other provision of this Agreement, if General
Partner is removed as general partner of the MLP under circumstances where Cause
does not exist and Common Units held by the General Partner and its Affiliates
are not voted in favor of such removal, this Agreement may immediately thereupon
be terminated by Quicksilver.

 
 
13.
Effect of waiver or consent. No waiver or consent, express or implied, by any
Party to or of any breach or default by any Party in the performance of its
obligations under this Agreement shall be deemed or construed to be a consent or
waiver to or of any other breach or default in the performance by that Party of
the same or any other obligations of that Person hereunder. Failure on the part
of a Party to complain of any act of any other Party or to declare any Person in
default, irrespective of how long such failure continues, shall not constitute a
waiver by such Party of its rights hereunder until the applicable statute of
limitations period has run.

 
 
14.
Amendment or modification. This Agreement may be amended or modified from time
to time only by the written agreement of all the Parties; provided, however,
that the MLP may not, without the prior approval of the Conflicts Committee,
agree to any amendment or modification of this Agreement that, in the reasonable
discretion of General Partner, will have an adverse effect on the holders of
Common Units. Each such instrument shall be reduced to writing and shall be
designated on its face an “Amendment” or an “Addendum” to this Agreement.

 
Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
Page 6 of 12
 
 

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15.
Assignment; third party beneficiaries. Except as otherwise permitted by Section
7, no Party shall have the right to assign its rights or obligations under this
Agreement without the prior written consent of the other Parties. Each of the
Parties specifically intends that the Quicksilver Entities and the Partnership
Entities, as applicable (and whether or not a Party to this Agreement), shall be
entitled to assert rights and remedies hereunder as third-party beneficiaries
hereto with respect to those provisions of this Agreement affording a right,
benefit, or privilege to any such entity.

 
 
16.
Counterparts. This Agreement may be executed in any number of counterparts with
the same effect as if all signatory Parties had signed the same document. All
counterparts shall be construed together and shall constitute one and the same
instrument.

 
 
17.
Severability. If any provision of this Agreement or the application thereof to
any Person or circumstance shall be held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such provision to any
other Person or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.

 
 
18.
Gender and sections. Whenever the context requires, the gender of all words used
in this Agreement shall include the masculine, feminine, and neuter, and the
number of all words shall include the singular and plural. All references to
Section and Subsection numbers refer to sections of this Agreement.

 
 
19.
Further assurances. In connection with this Agreement and all transactions
contemplated by this Agreement, each Party agrees to execute and deliver such
additional documents and instruments and to perform such additional acts as may
be necessary or appropriate to effectuate, carry out, and perform all of the
terms, provisions, and conditions of this Agreement and all such transactions.

 
 
20.
Laws and regulations. Notwithstanding any provision of this Agreement to the
contrary, no Party shall be required to take any act, or fail to take any act,
under this Agreement if the effect thereof would be to cause such Party to be in
violation of any applicable law, statute, rule, or regulation or the MLP
Agreement.

 
 
21.
Negation of rights of limited partners, assignees and third parties. Except as
set forth in Section 15, the provisions of this Agreement are enforceable solely
by the Parties, and no limited partner, member, shareholder, or assignee of
Quicksilver or the MLP or other Person shall have the right, separate and apart
from Quicksilver or the MLP, to enforce any provision of this Agreement or to
compel any Party to comply with the terms of this Agreement.

 
Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
Page 7 of 12
 
 

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22.
No recourse against officers or directors. For the avoidance of doubt, the
provisions of this Agreement shall not give rise to any right of recourse
against any officer or director of any of the Quicksilver Entities or any of the
Partnership Entities.

 
 

  Quicksilver:           Quicksilver Resources Inc.     a Delaware corporation  
       
 
By:
/s/ Glenn Darden     Printed Name: Glenn Darden     Title: President and C.E.O.
         

 
 

 
 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
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Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
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MLP:           Quicksilver Gas Services LP     a Delaware limited partnership  
           By: Quicksilver Gas Services GP LLC       a Delaware limited
liability company       its general partner          

 
 
 
By: /s/ Thomas F. Darden       Printed Name: Thomas F. Darden       Title:
President and C.E.O.    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
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Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
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General Partner:           Quicksilver Gas Services GP LLC     a Delaware
limited liability company          
 
By:
/s/ Thomas F. Darden     Printed Name: Thomas F. Darden     Title: President and
C.E.O.        

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
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Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
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CPP:           Cowtown Pipeline Partners L.P.     a Texas limited partnership  
           By: Quicksilver Gas Services Operating GP LLC       a Delaware
limited liability company       its general partner          

 
 
 
By: /s/ Jeff Cook       Printed Name: Jeff Cook       Title: Executive Vice
President - C.O.O.    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
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Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
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CGPP:           Cowtown Gas Processing Partners L.P.     a Texas limited
partnership              By: Quicksilver Gas Services Operating GP LLC       a
Delaware limited liability company       its general partner          

 
 
 
By: /s/ Jeff Cook       Printed Name: Jeff Cook       Title: Executive Vice
President - C.O.O.    

 
 
 
 
 
 
 
 

 
Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
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Exhibit “A”

 
Alliance Waiver Area

 
(see attached page)

 
Option, Right of First Refusal, and Waiver in Amendment to
Omnibus Agreement and Gas Gathering and Processing Agreement
Exhibit “A”
 
 

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