SUBORDINATED PROMISSORY NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD
UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN ONLY IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH HEREIN.
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH HEREIN TO THE SENIOR DEBT (AS
HEREINAFTER DEFINED); AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE
HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE SUBORDINATION PROVISIONS HEREIN.
$50,000,000
August 10, 2007
FOR VALUE RECEIVED, QUICKSILVER GAS SERVICES LP, a Delaware limited
partnership ("Payor"), HEREBY AGREES TO PAY to the order of QUICKSILVER
RESOURCES INC., a Delaware corporation, or its successors and assigns (together
with its successors and assigns, the "Subordinated Creditor"), in lawful
currency of the United States of America, in immediately available funds, at
such location or bank account as the Subordinated Creditor shall from time to
time designate, the principal amount of Fifty Million and 00/100 Dollars
($50,000,000), together with interest, compounded quarterly, on the unpaid
principal balance outstanding from time to time from the date hereof until the
Maturity Date (as hereinafter defined) at a rate of interest per annum equal to
the lesser of (a) the Note Rate (as hereinafter defined) or (b) the Highest
Lawful Rate (as hereinafter defined); provided, however, that, notwithstanding
the foregoing, in the event the Payor fails to make any payment of any portion
of the principal of this Note when due and payable (including, without
limitation, due to a Blockage Event), at the request of the Subordinated
Creditor, interest on such overdue amount (including, without limitation,
interest with respect to such overdue amount to the extent permitted by
applicable law) shall accrue at a rate of interest per annum equal to the lesser
of (a) the Note Rate plus two percent (2.00%) and (b) the Highest Lawful Rate.
Capitalized terms used in this Subordinated Promissory Note (this "Note"), but
not defined herein shall have the meanings specified therefor in the Credit
Agreement, dated as of August 10, 2007 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among Payor, as
the borrower, the Lenders party thereto, Bank of America, N.A., as L/C Issuer
thereunder, Bank of America, N.A., as Administrative Agent (or any successor
administrative agent appointed pursuant to Article IX of the Credit Agreement,
the "Administrative Agent") for the Lenders thereunder, and the other Agents
party thereto.
1. Principal. Subject to the subordination provisions contained in Section
7 hereof, Payor promises to pay the principal on this Note in equal consecutive
quarterly installments of $275,000 on the last Business Day of each calendar
quarter, beginning on March 31, 2008, and to pay the entire remaining
outstanding principal balance on this Note on February 10, 2013 (the
1
"Maturity