Document:

Exhibit 10.26

 

EXECUTION VERSION

 

YANKEE CANDLE INVESTMENTS LLC

 

CLASS C EXECUTIVE UNIT EXCHANGE AGREEMENT

 

THIS CLASS C EXECUTIVE UNIT EXCHANGE AGREEMENT is made as of February 8, 2011, by and between Yankee Candle Investments LLC, a Delaware limited liability company (the “Company”), and «First_Name» «Last_Name» (“Executive”).  Capitalized terms used but not otherwise defined herein or in the LLC Agreement (as defined below) shall have the meanings assigned to such terms in Section 6 hereof.

 

WHEREAS, pursuant to that certain Class C Executive Unit Grant Agreement, dated as of «C_Original_Grant_Date», by and between YCC Holdings LLC (“Intermediate Holdings”) and Executive (the “Original Grant Agreement”), Executive is the holder of «C_Units» of Class  C Common Units of Intermediate Holdings (the “Existing Units”);

 

WHEREAS, the Company and Executive desire to exchange the Existing Units for the same number of Class C Common Units of the Company, which such Class C Common Units shall constitute “Executive Units” and which such exchange is intended to be governed by the provisions of Code § 351; and

 

WHEREAS, Executive has agreed to effect an exchange of the Existing Units for the Executive Units and, subject to the terms and conditions set forth herein, the Company has agreed to exchange the Existing Units for the Executive Units.

 

NOW THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the parties hereto agree as follows:

 

1.             Exchange For Executive Units.

 

(a)           The Company has authorized the issuance to Executive, in exchange for the Existing Units, the Executive Units, and upon surrender by Executive of the Existing Units free and clear of all liens and encumbrances, the Company will issue in the name of Executive certificates representing the Executive Units.  Executive authorizes Intermediate Holdings to deliver the certificate(s), if any, representing such Existing Units to the Company for cancellation.  Each Executive Unit shall have a Participation Threshold equal to $«Class_C_Participation_Threshold» per Class C Common Unit and shall be designated as a Series 1 Class C Common Unit (in accordance with Section 3.5(c) of the LLC Agreement).

 

(b)           Without in any way limiting the representations and warranties contained herein, each of the parties hereto intends that the exchange transaction contemplated by Section 1(a) qualify as part of an exchange of property by Executive for an interest in a corporation under Section 351 of the Internal Revenue Code of 1986, as amended.  Each of the parties hereto shall prepare and file all tax returns in a manner consistent with such treatment.  Notwithstanding anything to the contrary contained herein, Executive hereby agrees and acknowledges that neither the Company nor any of its Affiliates is making any representations with respect to any tax, economic or legal consequences of the exchange transaction contemplated by Section 1(a), and Executive agrees to accept the tax and legal consequences of the exchange transactions contemplated by Section 1(a).

 

 

(c)           Exchange Terms.  Executive hereby subscribes for the Executive Units and exchanges the Existing Units for the Executive Units on the terms and conditions set forth herein and in the Company’s Amended and Restated Limited Liability Company Agreement dated as of the date hereof (as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “LLC Agreement”), and in that certain Unitholders Agreement, dated as of the date hereof, by and among the Company and the other unitholders of the Company (as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Unitholders Agreement”).  Executive hereby agrees, as a condition to the effectiveness of the issuance of the Executive Units hereunder, to deliver counterpart signature pages to, and to be bound by the terms of, the LLC Agreement and the Unitholders Agreement, in each case contemporaneously with the issuance of the Executive Units hereunder.  By execution hereof, Executive acknowledges that the Company is relying upon the accuracy and completeness of the representations contained herein in complying with its obligations under applicable securities laws.

 

(d)           Tax Election.  Executive shall make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Annex A attached hereto and shall deliver the executed Section 83(b) election to the Company for filing with the Internal Revenue Service concurrently with the execution of this Agreement.

 

(e)           Possession of Certificates.  Until the earlier to occur of a Sale of the Company and an IPO, any certificates evidencing Executive Units shall be held by the Company for the benefit of Executive and the other holder(s) of Executive Units, if any.  All certificates evidencing Executive Units shall be delivered by Executive to the Company, and, if requested by the Company, together with appropriate irrevocable unit powers undated and duly executed in blank sufficient to transfer title thereto upon the occurrence of a Sale of the Company or otherwise upon a repurchase of such Executive Units hereunder.  Upon the occurrence of a Sale of the Company, the Company shall either (i) return to the record holders thereof any certificates representing Vested Units (as defined in Section 2(a) below), duly endorsed in blank or together with appropriate irrevocable unit powers undated and duly executed in blank, or (ii) deliver to the record holders of the Executive Units all proceeds received by the Company from the transfer of the Vested Units in connection with a Sale of the Company.  Upon the occurrence of an IPO or an incorporation of the Company pursuant to Article XIV of the LLC Agreement, the Company shall return to the record holders thereof any certificates representing Vested Units, duly endorsed in blank or together with appropriate irrevocable unit powers undated and duly executed in blank.

 

(f)            Executive Representations and Warranties.  In connection with the exchange of the Existing Units for the Executive Units hereunder, Executive hereby represents and warrants to the Company that:

 

(i)            Executive has good and unencumbered title to the Existing Units, free and clear of all pledges, security interests, liens, claims, encumbrances, agreements, rights of first refusal, and options of any kind whatsoever, except for any right or interest in the Existing Units granted pursuant to any agreement to which Intermediate Holdings is a party;

 

(ii)           The Executive Units to be acquired by Executive pursuant to this Agreement shall be acquired for Executive’s own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act, or any applicable state securities laws, and the Executive Units shall not be disposed of in contravention of the Securities Act or any applicable state securities laws;

 

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(iii)          This Agreement constitutes the legal, valid and binding obligation of Executive, enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement, the LLC Agreement and the Unitholders Agreement by Executive do not and shall not conflict with, violate or cause a breach of any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject;

 

(iv)          Executive is an officer or employee of Yankee Candle, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Executive Units; and

 

(v)           Executive is able to bear the economic risk of his investment in the Executive Units for an indefinite period of time because the Executive Units have not been registered under the 1933 Act and, therefore, cannot be sold unless subsequently registered under the 1933 Act or an exemption from such registration is available.

 

(g)           Additional Acknowledgements.  As an inducement to the Company to issue the Executive Units to Executive and as a condition thereto, Executive hereby acknowledges and agrees that:

 

(i)            Neither the issuance of the Executive Units to Executive nor any provision contained in this Agreement shall entitle Executive to remain in the employment of the Company and/or any of its Subsidiaries or affect the right of the Company and/or any of its Subsidiaries to terminate Executive’s employment at any time; and

 

(ii)           Except as expressly set forth in the LLC Agreement or as required by applicable law, the Company shall have no duty or obligation to disclose to Executive, and Executive shall have no right to be advised of, any material information regarding the Company and its Subsidiaries at any time prior to, upon or in connection with the repurchase of Executive Units upon the termination of Executive’s employment with the Company and/or any of its Subsidiaries or as otherwise provided hereunder.

 

(h)           Compensatory Arrangements.  The Company and Executive hereby acknowledge and agree that this Agreement has been executed and delivered, and the Executive Units have been issued hereunder, in connection with and as a part of the compensation and incentive arrangements between the Company and Executive, and pursuant and subject to the provisions of the Company’s 2011 Incentive Equity Plan.

 

2.             Vesting of Units.

 

(a)           Each of the Executive Units issued hereunder shall be subject to vesting as set forth in this Section 2.  Executive Units which have become vested pursuant to this Section 2 are referred to herein as “Vested Units,” and Executive Units which have not become Vested Units are referred to herein as “Unvested Units.”

 

(b)           «Vested_C_Units» of the Executive Units issued hereunder shall be Vested Units as of the date hereof.  Thereafter, through the fifth anniversary of «C_Vesting_Comm_Date», provided that Executive is continuously employed by the Company or any of its Subsidiaries from the date of this Agreement through the date of determination, the Executive Units shall vest on a daily pro rata basis such that, on the date of determination, the number of Executive Units which shall have vested and become exercisable as of that date shall be equal to (rounded to the nearest whole unit) (x) the aggregate number of Executive Units multiplied by (y) a fraction, the numerator of which shall be the number of calendar 

 

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days from and including «C_Vesting_Comm_Date» through and including the date of determination, and the denominator of which shall be 1,826.

 

(c)           Upon Executive’s death or Disability, an additional amount of Executive Units equal to the lesser of (i) twenty percent (20%) of the aggregate number of Executive Units and (ii) the remainder of Executive’s Unvested Units, shall automatically become Vested Units.

 

(d)           Upon the occurrence of a Sale of the Company, on or prior to the fifth anniversary of «C_Vesting_Comm_Date», all Executive Units which have not yet become Vested Units shall become Vested Units if Executive is, and has been continuously, employed by the Company or any of its Subsidiaries from the date hereof through the date on which such Sale of the Company occurs.

 

3.             Repurchase Option.

 

(a)           In the event Executive ceases to be employed by the Company or any of its Subsidiaries for any reason (a “Termination”), (i) all Vested Units shall be subject to repurchase from Executive (or other holders thereof) by the Company and MDCP pursuant to the terms and conditions set forth in this Section 3 (the “Repurchase Option”) and (ii) all Unvested Units shall be automatically cancelled on the date of Termination without any consideration paid therefor and without further action on the part of the Company or any holder of any of the Unvested Units.

 

(b)           In the event of a Termination, the purchase price for each Vested Unit shall be the Fair Market Value of such Vested Unit as of the date of repurchase; provided, however, if Executive’s employment is terminated with Cause, all Vested Units shall be automatically cancelled on the date of Termination without any consideration paid therefor and without further action on the part of the Company or any holder of any of the Vested Units.

 

(c)           The Company may elect to purchase all or any portion of the Executive Units subject to repurchase under this Section 3 by delivering written notice (the “Repurchase Notice”) to the holder or holders of the Executive Units (i) within 210 days following the date of Executive’s Termination (the “Termination Date”) for any Executive Unit that has been a Vested Unit for 181 or more days prior to the Termination Date and (ii) for any Executive Unit that has been a Vested Unit for 180 or fewer days prior to the Termination Date, no earlier than 181 days and no later than 210 days after the Termination Date.  The Repurchase Notice shall set forth the number of Executive Units to be acquired from each holder of Executive Units, the aggregate consideration to be paid for such Executive Units and the time and place for the closing of the transaction.  The number of Executive Units to be repurchased by the Company shall first be satisfied to the extent possible from Executive Units held by Executive at the time of delivery of the Repurchase Notice.  If, due to permitted transfers by Executive, the number of Executive Units then held by Executive is less than the total number of Executive Units the Company has elected to purchase, the Company shall purchase the remaining Executive Units elected to be purchased from the transferee(s) of Executive Units under this Agreement, pro rata according to the number of Executive Units held by such transferee(s) at the time of delivery of such Repurchase Notice.

 

(d)           If for any reason the Company does not elect to purchase all of the Executive Units pursuant to the Repurchase Option, then MDCP shall be entitled to exercise the Company’s Repurchase Option in the manner set forth in Section 3(a) for all or any portion of the number of Executive Units the Company has not elected to purchase (the “Available Units”).  As soon as practicable after the Company has determined that there shall be Available Units, but in any event within 210 days after the Termination Date, the Company shall deliver written notice (the “Option Notice”) to MDCP setting forth the number of Available Units and the price for each Available Unit.  MDCP may elect to purchase any number of Available Units by delivering written notice to the Company within 30 days after 

 

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receipt of the Option Notice from the Company.  As soon as practicable, and in any event within 30 days after the expiration of such 30-day period, the Company shall notify Executive and any other holder(s) of Executive Units as to the number of Executive Units being purchased from Executive by MDCP (the “Supplemental Repurchase Notice”).  At the time the Company delivers the Supplemental Repurchase Notice to Executive and such other holder(s) of Executive Units, MDCP shall also receive written notice from the Company setting forth the number of Units it is entitled to purchase, the aggregate purchase price and the time and place of the closing of the transaction.

 

(e)           The closing of the purchase of the Executive Units pursuant to the Company’s exercise of the Repurchase Option shall take place on the date designated in the Repurchase Notice or Supplemental Repurchase Notice, as applicable, which date shall not be more than 280 days after the Termination Date.  The Company shall pay for any Executive Units to be purchased by it pursuant to the Repurchase Option by (i) delivery of a check or wire transfer of funds, (ii) a subordinate note or notes payable in up to two equal annual installments beginning on the first anniversary of the closing of such purchase and bearing interest (payable quarterly) at a rate per annum equal to the prime rate published in the “Money Rates” column of The Wall Street Journal, (iii) delivery of a number of shares of common stock of Yankee Holding having a fair market value (as determined by the Company) equal to the aggregate repurchase price for such Executive Units (the “Repurchase Shares”) or (iv) any combination of the foregoing in the aggregate amount of the purchase price for such Executive Units; provided that, in the event any Repurchase Shares are issued, promptly following the closing of the repurchase transaction, Yankee Holding shall redeem, and the holder of such Repurchase Shares shall sell to Yankee Holding, all of the Repurchase Shares for an aggregate amount in cash equal to the aggregate repurchase price for the Executive Units (or the portion thereof previously assigned to the Repurchase Shares).  MDCP shall pay for any Executive Units to be purchased by it pursuant to the Repurchase Option by delivery of a check or wire transfer of funds in the aggregate amount of the purchase price for such Executive Units.  Any notes issued by the Company pursuant to this paragraph (e) shall be subject to any restrictive covenants to which the Company is subject at the time of such purchase.  In addition, the Company and MDCP may pay the purchase price for such Executive Units by offsetting amounts outstanding under any indebtedness or obligations owed by Executive to the Company or any of its Subsidiaries or MDCP.  The purchasers of Executive Units hereunder shall be entitled to receive customary representations and warranties from the sellers regarding such sale of Executive Units (including representations and warranties regarding good title to such Executive Units, free and clear of any liens or encumbrances).

 

(f)            Notwithstanding anything to the contrary contained in this Agreement, all repurchases of Executive Units by the Company shall be subject to applicable restrictions contained in the Delaware Limited Liability Company Act and in the Company’s and its Subsidiaries’ debt and equity financing agreements.  If any such restrictions prohibit the repurchase of Executive Units hereunder which the Company is otherwise entitled or required to make, the time periods provided in this Section 3 shall be suspended, and the Company may make such repurchases at the applicable purchase price therefor, plus interest thereon calculated from the last day such Units were eligible for repurchase pursuant to Section 3(e) until the date of repurchase at a rate per annum equal to the  then applicable federal rate as published by the Internal Revenue Service pursuant to Section 1274(d) of Internal Revenue Code, as soon as it is permitted to do so under such restrictions.  In addition, and without limiting the generality of the foregoing, in the event Executive invokes Executive’s consent rights regarding a determination of Fair Market Value as set forth in this Agreement, the notice and repurchase time periods set forth in this Section 3 shall be tolled until such appraisal has been completed.

 

(g)   The Repurchase Option set forth in this Section 3 shall terminate with respect to Vested Units upon and following the consummation of an IPO.

 

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4.             Restriction on Pledges.  Executive may not pledge or otherwise grant a security interest in any Executive Units to obtain financing for the purchase of such Executive Units or otherwise without the prior written consent of the Board of Managers of the Company (the “Board”).

 

5.             Holdback.  In connection with any underwritten public offering of the Company’s, any successor corporation of the Company’s, Intermediate Holdings’ or Yankee Holding’s equity securities, Executive agrees to enter into any holdback, lockup or similar agreement requested by the underwriters managing such registered public offering, provided that MDCP and, if applicable, its Affiliates shall enter into a holdback, lockup or similar agreements on terms no less restrictive than those imposed on Executive.

 

6.             Restrictions on Transfer. The Executive Units (and any securities issued with respect to the Executive Units by way of a split, dividend, recapitalization, merger, consolidation, liquidation or other reorganization) shall be subject to the restrictions on transfer set forth in the LLC Agreement and the Unitholders Agreement.  In addition, Executive may not sell, transfer or dispose of any Executive Units (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company an opinion of counsel reasonably acceptable in form and substance to the Company that registration under the Securities Act or any applicable state securities law is not required in connection with such transfer.  Executive Units transferred by the Executive shall continue to be Executive Units in the hands of any transferee holder (except for the Company and MDCP and except for transferees in a Public Sale), and except as otherwise provided herein, each such other holder of Executive Units shall succeed to all rights and obligations attributable to Executive as a holder of Executive Units hereunder, under the Unitholders Agreement and the LLC Agreement.

 

7.             Definitions.

 

“Affiliate” has the meaning given such term in the LLC Agreement.

 

“Cause” shall mean one or more of the following: (i) the commission, indictment or conviction of a felony or the commission of an act involving dishonesty or fraud with respect to the Company or any of its Affiliates or any of their respective customers or suppliers, (ii) reporting to work under the influence of alcohol or illegal drugs, the use of illegal drugs (whether or not at the workplace) or other repeated conduct causing the Company or any of its Affiliates substantial public disgrace or substantial economic harm, (iii) substantial and repeated failure to perform duties as reasonably directed by the Board, after providing such holder with 30 days written notice and a reasonable opportunity to remedy such failure, (iv) an affirmative act aiding a competitor of the Company or its Affiliates which causes a material detriment to the Company or its Affiliates, or (v) theft or misappropriation of property of the Company or its Affiliates; provided that, in each case, if Executive is party to an Executive Severance Agreement with Yankee Candle, the definition of “Cause” set forth therein shall control.

 

“Class C Common Units” has the meaning given such term in the LLC Agreement.

 

“Executive Units” shall mean the Class C Common Units issued to Executive hereunder and units of the Company’s equity or other capital interests issued with respect to such Class C Common Units by way of a split, combination, distribution or other recapitalization.

 

“Existing Units” has the meaning set forth in the recitals hereto.

 

“Fair Market Value” of any Executive Unit will be determined in good faith by the Board in its sole discretion after taking into account all factors determinative of value including, but not limited to, the lack of a readily available market to sell such units, but without regard to minority or lack of 

 

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liquidity discounts (other than with respect to any illiquidity attributable to the Company’s status as private corporation that affects the total common equity value of the Company); provided that if Executive received more than 2,000 Existing Units under the Original Grant Agreement and reasonably disagrees with the determination of Fair Market Value, Executive shall have the right to provide written notice to the Company, to be made within twenty (20) days after receipt of the Repurchase Notice (a “Contest Notice”), and such Contest Notice shall set forth Executive’s determination of Fair Market Value.  Upon receipt of a Contest Notice, the Company and Executive shall negotiate in good faith to agree on a mutually determined Fair Market Value.  If the Company and Executive cannot agree on a mutually determined Fair Market Value within thirty (30) days of the date of delivery of the Repurchase Notice, then the contested determination of Fair Market Value shall be referred to an independent, nationally recognized, mutually agreed third party valuator (the “Appraiser”) with experience in valuing similar securities and businesses to those in question, who shall be appointed to determine the Fair Market Value of the subject securities within thirty (30) days of referral thereto.  The decision of the Appraiser shall be final and binding on the parties and non-appealable.  The costs of the Appraiser shall be borne by the Company if the Fair Market Value as determined by the Appraiser is ten (10%) percent or more than the Board’s calculation of Fair Market Value, and by Executive if the difference between the Fair Market Value as determined by the Appraiser is less than ten (10%) percent more than the Board’s calculation of Fair Market Value.

 

“Intermediate Holdings” has the meaning set forth in the recitals hereto.

 

“IPO” has the meaning assigned to that term in the LLC Agreement.

 

“1933 Act” means the Securities Act of 1933, as amended from time to time.

 

“MDCP” means, collectively, Madison Dearborn Capital Partners V-A, L.P., a Delaware limited partnership, Madison Dearborn Capital Partners V-C, L.P., a Delaware limited partnership and Madison Dearborn Capital Partners V Executive-A, L.P., a Delaware limited partnership.

 

“Original Grant Agreement” has the meaning set forth in the recitals hereto.

 

“Person” means any individual, partnership, corporation, association, joint stock company, trust, joint venture, limited liability company, unincorporated organization, governmental entity or department, agency or political subdivision thereof.

 

“Public Sale” means any sale pursuant to a registered public offering under the 1933 Act or any sale to the public pursuant to Rule 144 (other than Rule 144(k) prior to an IPO) promulgated under the 1933 Act effected through a broker, dealer or market maker.

 

“Sale of the Company” has the meaning assigned to that term in the LLC Agreement.

 

“Subsidiary” means any corporation or limited liability company of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors or managers directly or through one or more subsidiaries.

 

“Termination Date” has the meaning set forth in Section 3(c).

 

“Yankee Candle” means The Yankee Candle Company, Inc., a Massachusetts corporation and indirect, wholly-owned Subsidiary of the Company.

 

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“Yankee Holding” means Yankee Holding Corp., a Delaware corporation and direct, wholly-owned Subsidiary of the Company.

 

8.             Notices.  Any notice provided for in this Agreement must be in writing and must be personally delivered, sent by telecopy with original to follow by overnight courier service, by first class mail (postage prepaid and return receipt requested) or reputable overnight courier service (charges prepaid) to the recipient at the addresses indicated below:

 

Notices to the Company:

 

Yankee Candle Investments LLC
 c/o The Yankee Candle Company, Inc.
 16 Yankee Candle Way
 South Deerfield, MA 01373
 Facsimile: (413) 665-9147

Attention: General Counsel

 

with copies to (which shall not constitute notice):

 

Madison Dearborn Capital Partners
 Three First National Plaza
 Suite 4600
 Chicago, IL 60602

Facsimile:    (312) 895-1056

Attention:     Robin P. Selati 

George Peinado

 

Kirkland & Ellis LLP 
 300 North LaSalle 
 Chicago, IL 60654

Facsimile:    (312) 862-2200

Attention:     Michael D. Paley, P.C.

Tana M. Ryan

 

Notices to MDCP:

 

Madison Dearborn Capital Partners 
 Three First National Plaza
 Suite 4600
 Chicago, IL 60602

Facsimile:   (312) 895-1056

Attention:   Robin P. Selati 

George Peinado

 

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with copies to (which shall not constitute notice):

 

Kirkland & Ellis LLP
 300 North LaSalle 
 Chicago, IL 60601

Facsimile:    (312) 862-2200

Attention:     Michael D. Paley, P.C.

Tana M. Ryan

 

Notices to Executive:

 

«First_Name» «Last_Name»
 «Address»
 «City», «State»  «Zip_Code»

 

or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.  Any notice under this Agreement shall be deemed to have been given when so delivered or, if sent by telecopy the day of receipt, or if mailed, three days after deposit in the U.S. mail (return receipt requested) and one day after deposit with a reputable overnight courier service.

 

9.             General Provisions.

 

(a)           Transfers in Violation of Agreement.  Any transfer or attempted transfer of any Executive Units in violation of any provision of this Agreement, the LLC Agreement or the Unitholders Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Executive Units as the owner of such Executive Units for any purpose.

 

(b)           Legend.  If the Executive Units are certificated, each certificate evidencing Executive Units shall be stamped or otherwise imprinted with the legend set forth in Section 12.8 of the LLC Agreement.

 

(c)           Irrevocability: Binding Effect on Successors and Assigns. Executive hereby acknowledges and agrees that, except as provided under applicable federal and state securities laws, the acquisition of the Executive Units hereunder is irrevocable, that Executive is not entitled to cancel, terminate or revoke this Agreement or any agreements of Executive hereunder, and that this Agreement and such other agreements shall survive the death or disability of Executive and shall be binding upon and inure to the benefit of the parties and their respective heirs, executors, administrators, successors, legal representatives and assigns (including subsequent holders of Executive Units).

 

(d)           Survival of Covenants, Representations and Warranties.  All covenants, representations and warranties contained herein or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

 

(e)           Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

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(f)            Complete Agreement.  This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

(g)           Counterparts.  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

(h)           Descriptive Headings; Interpretation.  The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.  The use of the word “including” in this Agreement shall be by way of example rather than by limitation.

 

(i)            No Strict Construction.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their collective mutual intent, and no rule of strict construction shall be applied against any person.  The term “including” as used herein shall be by way of example, and shall not be deemed to constitute a limitation of any term or provision contained herein.  Each defined term used in this Agreement has a comparable meaning when used in its plural or singular form.

 

(j)            Governing Law.  The limited liability company law of the State of Delaware shall govern all questions concerning the relative rights of the Company and its interestholders.  All other questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits hereto shall be governed by the internal law, and not the law of conflicts, of the State of Delaware.

 

(K)          WAIVER OF JURY TRIAL.  AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

(l)            Remedies.  Each of the parties to this Agreement shall be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorney’s fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor.  The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

 

(m)          Amendment and Waiver.  The provisions of this Agreement may be amended and waived only with the prior written consent of the Company, Executive and MDCP.

 

(n)           Business Days.  If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

 

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(o)           Third-Party Beneficiary.  The Company and Executive acknowledge that MDCP is an express third-party beneficiary under this Agreement and as such will inure to the benefit of MDCP and be enforceable by MDCP and its respective successors and assigns.

 

(p)           Deemed Transfer of Executive Units. If the Company and/or MDCP, as applicable, shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Executive Units to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such Executive Units are to be repurchased shall no longer have any rights as a holder of such Executive Units (other than the right to receive payment of such consideration in accordance with this Agreement), and such Executive Units shall be deemed purchased in accordance with the applicable provisions hereof and the Company and/or MDCP, as applicable, shall be deemed the owner and holder of such Executive Units whether or not the certificates therefor have been delivered as required by this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Executive Unit Exchange Agreement on the date first written above.

 

	
 
    	
YANKEE   CANDLE INVESTMENTS LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Its:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
«First_Name» «Last_Name»
    

 

Signature Page to Class C Executive Unit Exchange Agreement

 

 

ANNEX A

 

ELECTION TO INCLUDE MEMBERSHIP INTEREST IN GROSS
 INCOME PURSUANT TO SECTION 83(b) OF THE
 INTERNAL REVENUE CODE

 

See Attached

 

A-1ex10_1.htm

PROJECT AND EXPENDITURE AUTHORIZATION ("PEA")

made as of this 6th day of April, 2011

TO:           NOVA Gas Transmission Ltd. (the "Company")

 

	
1.  

	
The Work

 

Quicksilver Resources Canada Inc. ("Customer") hereby authorizes Company to perform, or cause to be performed, all services and work (the "Work") which Company or its agent acting reasonably may deem necessary or appropriate for the preliminary study, engineering, design, procurement, regulatory approval, construction, and installation of:

 

	
(a)  

	
Horn River Mainline (Komie North Section) from a-66-A/94-O-15 and extending to d-64-J/94-P-4 (the "Pipeline"); and

 

	
(b)  

	
Fortune Creek meter station located at a-66-A/94-O-15 (the "Meter Station");

 

each of which are more fully described and set out in Schedule "A" (collectively the "Facilities").

 

The parties agree that in performance of the Work, Company is acting in its own right and not as the agent or representative of Customer.

 

	
2.  

	
The Service Documents

 

Company proposes that the Facilities will be an extension of the Company’s Alberta System (“Alberta System”).  Company intends to apply to the National Energy Board to extend the Alberta System from a location near the proposed Cabin meter station to receipt points in the Horn River area in northeast British Columbia, and the connection of the Facilities to the proposed Horn River mainline at or near d-64-J/94-P-4 (collectively the “Pipeline Project”). Customer shall, within 10 Banking Days of receipt  of this PEA from Company, execute and deliver to Company the service documents attached as Schedule B and such other documents reasonably required by Company, (the “Service Documents”), for the receipt of 8498.4 103m3/d of natural gas at the Meter Station (the “Service”). The Service shall be provided in accordance with the Alberta System Gas Transportation Tariff as amended from time to time (the “Alberta System Tariff”). If Customer fails to execute and deliver the Service Documents on or before the date requested by Company, Company may suspend the Work or terminate this PEA by giving written notice to Customer.

 

	
3.  

	
The Customer Authorized Amount

 

Customer hereby authorizes Company to incur such costs and expenses for the account of Customer, as Company may deem necessary or appropriate, up to a maximum amount of $265,000,000 plus applicable taxes (the "Customer Authorized Amount") in order to complete the Work for the Facilities.  Customer acknowledges and agrees that the Customer Authorized Amount is not a firm estimate, quotation or price, but is only a preliminary estimate of Customer’s proportionate share as determined by Company of the total costs and expenses for the Facilities.  The total estimated cost of the Work for the Facilities is $265,000,000 plus applicable taxes.

 

	
4.  

	
Changes to Customer Authorized Amount, the Scope of Work or the Facilities

 

If Company determines in the performance of the Work that Company will incur costs and expenses which will exceed the aggregate of the Customer’s Authorized Amount and the authorized amount for all other customers who have executed a PEA for the Facilities or there is a change in scope of Work or Facilities, Company shall not be obligated to continue the performance of the Work.  In such event Company shall forward to Customer amendments to this PEA and any other documents reasonably required by Company, which when executed shall be good and sufficient authorization for Company to incur such additional costs and expenses or change the scope of Work and/or Facilities for the account of Customer.  Customer shall within ten (10) Banking Days, or such other date agreed to by Company, of receipt of any such amendment, execute and deliver such amendments to Company, unaltered and without any revisions whatsoever, failing which, Company may in its sole discretion give written notice to Customer terminating this PEA.

 

In the event that one or more additional customers executes a PEA and any other documents required by Company for the Facilities after April 6th , 2011, Company shall promptly notify Customer of the reduction in the total estimated cost of the Work for the Facilities attributable to the account of Customer. Company shall forward to Customer amendments to this PEA, the financial assurance documents described in paragraph 9, and any other documents reasonably required by Company, reflecting such reduction. Customer shall within ten (10) Banking Days, or such other date agreed to by Company, of receipt of any such amendment, execute and deliver such amendments to Company, unaltered and without any revisions whatsoever, failing which, Company may in its sole discretion give written notice to Customer terminating this PEA.

 

	
5.  

	
Customer Approvals

 

Customer will proceed with due diligence to obtain all necessary permits, certificates, licences and authorizations from all governmental or regulatory authorities having jurisdiction over the construction of any facilities required by Customer for the Service ("Customer Approvals").  Customer shall on or before the commencement of the construction of the Facilities or such later date agreed to by Company (the “Customer Approval Date”) provide evidence satisfactory to Company that Customer has obtained or will obtain all Customer Approvals.  If Customer fails to obtain any Customer Approvals on terms and conditions satisfactory to Customer on or before the Customer Approval Date or if Company determines in its sole discretion that Customer is not proceeding with due diligence to obtain any Customer Approvals, Customer or Company as the case may be, may give written notice to the other, terminating this PEA.

 

Company shall use all reasonable efforts to assist Customer in obtaining any Customer Approvals and Company shall provide Customer with any information or documentation Customer determines necessary to obtain any Customer Approvals.

 

 

	
6.  

	
Company Approvals

 

Company shall proceed with due diligence to obtain all necessary approvals, permits, certificates, licenses, and authorizations from all corporate (including Board of Director approvals), and governmental or regulatory authorities having jurisdiction over Company, the Pipeline Project and the Facilities (including National Energy Board (“NEB”) approvals) in order that Company may complete the Pipeline Project, perform the Work and provide the Service as set out in the Service Documents (the "Company Approvals"). If Company fails to obtain any of the Company Approvals on terms and conditions satisfactory to Company, Company may in its sole discretion give Customer written notice, terminating this PEA.

 

Customer shall use all reasonable efforts to assist Company in obtaining any Company Approvals and Customer shall provide Company with any information or documentation Company determines necessary to obtain any Company Approvals.

 

	
7.  

	
Customer Termination

 

Customer shall be entitled subject to any rights and obligations in this PEA, including obligations to pay under paragraph 10, to terminate this PEA on or before March 1st, 2012 for any reason upon giving written notice to Company.

 

	
8.  

	
Company Termination

 

In the event another customer who has executed a PEA for the Facilities terminates or has its PEA terminated (the “Terminating Customer”) Company shall give notice to all other customers who have executed PEAs for the Facilities (the “Remaining Customers”) that a customer’s PEA has been terminated and that Company may suspend the Work on the Facilities.  Company will use reasonable efforts to facilitate the reallocation of the Terminating Customer’s Authorized Amount among the Remaining Customers.  If Company determines it is unable to reallocate the Terminating Customer’s Authorized Amount or if Company has not received executed new or amended PEAs for any reallocated amount within the time specified by Company, Company may, in addition to Company’s other rights to terminate as provided for in this PEA, terminate this PEA.

 

If this PEA is terminated for any reason, Customer consents to Company releasing the following information to the Remaining Customers:

 

	
(a)  

	
Customer’s Authorized Amount; and

 

	
(b)  

	
The Meter Station and the location.

 

If the Work is subsequently terminated, any payment received by Company from the Terminating Customer pursuant to paragraph 10 shall be credited against each Remaining Customer’s Authorized Amount for each Remaining Customer in proportion to the amount of the Terminating Customer’s Authorized Amount assumed by such Remaining Customer, if such Remaining Customer has provided Company with an executed new or amended PEA for the increase to such Remaining Customer’s Authorized Amount.

 

	
9.  

	
Financial Assurances

 

Company may at any time during the term of this PEA require Customer to provide financial assurances to Company, and such financial assurances shall be provided by Customer in a type and form acceptable to Company. For the purposes of this PEA, Company and Customer agree that acceptable financial assurances shall include one or more irrevocable standby letters of credit in a form acceptable to Company, issued or confirmed  by a Schedule 1 Canadian bank or a major U.S. commercial bank that is acceptable to Company with, in any case, a long-term senior unsecured, unsubordinated debt rating (not supported by third party credit enhancement) of at least "A" by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or its successor and "A2" by Moody’s Investors Service, Inc., or its successor. Based on Company’s current forecasted spend profile, Company estimates that the financial assurances that will be requested from Customer will be equivalent to the following percentage of the Customer Authorized Amount as of the dates set forth below:

 

	
Date

	  	
Percent of the Customer Authorized Amount

 

	
April 6th, 2011

 

	  	
5%

	
June 1, 2011

 

	  	
11%

	
March 1, 2012

 

	  	
23%

	
October 1, 2012

 

	  	
37%

	
July 1, 2013

 

	  	
50%

	
October 1, 2013

 

	  	
100%

 

If Customer fails to provide such financial assurances within ten (10) Banking Days from request by Company, Company may in its sole discretion suspend its performance of the Work and/or give written notice to Customer terminating this PEA with such termination being effective as of the date that such financial assurance was requested by Company.

 

	
10.  

	
Obligation to Pay

 

If this PEA is terminated for any reason, other than as contemplated in paragraph 13, then Customer shall pay to Company, within fifteen (15) days of receipt of an invoice from Company, an amount equal to the amount described in Schedule "C", provided however if this PEA is terminated after July 1, 2011 Customer shall pay to Company an amount equal to the aggregate of amounts described in Schedules "C" and "D".

 

Notwithstanding the foregoing, if this PEA is terminated by Company after July 1, 2011 pursuant to paragraph 6 because:

 

	
(a)  

	
Company did not receive Board of Director approval;  or

 

	
(b)  

	
subsequent to Company’s receipt of the certificate of public convenience and necessity issued by the NEB (on terms and conditions satisfactory to Company), Company did not receive one or more other Company Approvals,

 

Customer shall pay to Company an amount equal to the amount described in Schedule “C”, but shall not be liable for the amount described in Schedule “D”. Termination by Company pursuant to paragraphs 2, 4, 5, 7, 8 or 9 shall in no circumstances be considered failure by Company to receive Company Approvals.

 

If Customer fails to pay any invoice in full within the time herein required, interest on the unpaid portion shall accrue from the date such payment is first overdue until payment is made at a rate of interest equal to the prime rate of interest per annum of the Royal Bank of Canada, Main Branch, Calgary, Alberta applicable to Canadian dollar commercial loans on the date such payment is first overdue, plus three percent (3%) in addition thereto, and such interest shall be immediately due and payable.

 

	
11.  

	
Limitation of Liability

 

Company shall not be liable to Customer or its directors, officers, consultants, agents, contractors or employees (collectively, "Customer Associates") for any suit, claim, demand, action, proceeding, loss, cost, expense (including solicitor and his own client fees), injury, death or damage whatsoever, howsoever caused and whether contractual or tortious (collectively, the "Losses"), asserted against or suffered or incurred by Customer or Customer Associates, except and to the extent that such Losses are caused by the gross negligence or wilful misconduct of Company.

 

Notwithstanding anything contained herein, neither Company nor Customer shall be liable for any indirect, consequential, punitive, exemplary or similar damages or any economic loss, business interruption loss, loss of profits or loss of anticipated profits sustained or incurred by either party as a result of this PEA. This paragraph 11 shall survive termination of this PEA.

 

	
12.  

	
Title to Facilities

 

Customer acknowledges and agrees that Customer shall not acquire any right, title or interest whatsoever in the Facilities or any portion of the Facilities, or in any data, information, drawing, plan, equipment, service or work relating to the Facilities, the Pipeline Project or the Work, notwithstanding any amount paid or to be paid under or by virtue of this PEA.

 

	
13.  

	
Completion of Work

 

Company shall perform the Work in a good and workmanlike manner in accordance with standard industry practices and shall proceed diligently with the Work with an estimated completion date prior to May 1, 2014.  Subject to the terms and conditions of this PEA, Company shall give Customer written notice upon completion of the Work.  Upon Customer's receipt of such completion notice, the Service Documents shall become effective and this PEA shall terminate; provided however, the rights and obligations under paragraphs 11 and 15 of this PEA shall survive termination of this PEA.

 

	
14.  

	
Notices

 

Every notice, request, demand, statement, bill, invoice or other document required or permitted to be given hereunder shall be in writing and each of them and every payment provided for herein shall be personally delivered, sent by prepaid registered mail or sent by fax, email or other telecommunication addressed as follows:

 

	  	  	  
	
Customer:

	  	
Quicksilver Resources Canada Inc.

	  	  	
One Palliser Square

	  	  	
2000, 125-9th Avenue SE

Calgary, Alberta

	  	  	
T2G 0P8

	  	  	
Attention:

	
Gas Marketing

	  	  	
Fax:

	
403-262-6115

	  	  	  	  
	
with a copy to:

	  	
Quicksilver Resources Inc.

	  	  	
801 Cherry Street, Suite 3700 –Unit 19

	  	  	
Fort Worth, TX 76102

	  	  	
USA

	  	  	
Attention:

	
General Counsel

	  	  	
Fax:

	
817-665-5021

	  	  	
Email:

	
ccirone@qrinc.com

	  	  	  	  
	  	  	  	  
	  	  	  	  
	
Company:

	  	
NOVA Gas Transmission Ltd.

	  	  	
450 – 1st Street SW

	  	  	
Calgary, Alberta T2P 5H1

	  	  	  	  
	  	  	
Attention:

	
Karl Johannson, Senior Vice President

	  	  	  	
Canadian and Eastern U.S. Pipelines

	  	  	
Fax:

	
403-920-2317

	  	  	
Email:

	
Karl_johannson@transcanada.com

Any notice may be given by personal delivery or by mailing the same, postage prepaid, in an envelope properly addressed to whom the notice is to be given and shall be deemed to be given four (4) Banking Days (excluding Saturdays, Sundays and statutory holidays) after the mailing thereof.  Any notice may also be given by fax, email or other telecommunication addressed to the person to whom such notice is to be given at such person's address for notice as set forth above, and any notice so given shall be deemed to have been given twenty-four (24) hours after transmission of same, Saturdays, Sundays and statutory holidays excepted.  Any notice may also be given by telephone followed immediately by letter, fax, email or other telecommunication and any notice shall be deemed to have been given as of the date and time of the telephone notice.  In the event of disruption of regular mail, every payment shall be personally delivered and every notice, request, demand, statement, bill, invoice or other document shall be given by one of the alternative means set out herein.

 

	
15.  

	
Audit

 

All of Company's books, accounts and records in respect of the Work may be audited once by Customer or Customer's authorized representative during normal business hours at any time within twelve (12) months following the date upon which this PEA terminates; provided, however, that Customer gives reasonable notice of such audit to Company and Customer has paid to Company all amounts invoiced by Company pursuant to this PEA.  The expenses for any such audit shall be borne by Customer and the audit shall be conducted so as to cause a minimum of inconvenience to Company.  Company shall review and respond in a timely manner with respect to any discrepancy or question raised by Customer as a result of any such audit.  Any amounts that are determined to be owing as a result of any such audit shall be payable to the party that is owed such amount within thirty (30) days of such determination having been made.

 

	
16.  

	
Currency

 

All dollar amounts indicated in this PEA are in Canadian currency.

 

	
17.  

	
Compliance with Laws

 

Customer and Company shall comply with all laws, regulations, rules and orders applicable to the observance or performance of their respective obligations under this PEA.

 

	
18.  

	
Further Assurances

 

Customer and Company shall provide such data and information, execute and deliver such further documents and instruments, give further assurances and perform such acts as may be reasonably required by the other party in order to carry out the purposes, intentions and provisions of this PEA.

 

	
19.  

	
The Tariff

 

Customer has reviewed and is familiar with the terms, conditions and provisions of the Alberta System Tariff.  Company and Customer agree that any capitalized terms not defined herein shall have the meaning ascribed thereto in the Alberta System Tariff as amended from time to time or such other gas transportation tariff determined by Company to be applicable to the Pipeline Project.

 

	
20.  

	
Assignment

 

Customer or Company may assign its rights and obligations pursuant to this PEA with the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed; provided, however, Company may assign to an Affiliate all or a portion of its interest to this PEA without the consent of Customer.  “Affiliate” means, in relation to Company, any company, corporation, partnership or association which (i) directly or indirectly controls Company; (ii) is directly or indirectly controlled by Company; or (iii) is directly or indirectly controlled by a company or corporation which directly or indirectly controls Company; where “controls”, “controlled by” and “under common control with” mean the possession directly or indirectly through one or more intermediaries, of more than 50% of the outstanding voting stock of the company in question, or the power to direct or cause the direction of management policies of, any person, whether through ownership of stock, as a general partner or trustee, by contract or otherwise. In the event of an assignment by Customer of all or a portion of its rights and obligations under this PEA with the consent of Company, Company shall, on Customer’s reasonable request, work with Customer to adjust, replace, or reduce (as applicable) Customer’s financial assurance obligations under paragraph 9 of this PEA following such assignment,  subject to the creditworthiness of such assignee, including but not limited to the long-term senior unsecured, unenhanced debt rating of the assignee and/or its owner(s).

 

	
21.  

	
Entire Agreement and Amendments

 

This PEA sets forth the entire agreement between the Company and Customer with respect to the subject matter hereof, and supersedes and replaces all previous discussions, understandings and agreements (excluding any confidentiality agreements between the parties) respecting the subject matter hereof.  No amendment or variation of this PEA shall be of any force or effect whatsoever unless it is in writing and is signed both Company and Customer.

 

	
22.  

	
Enurement

 

This PEA shall be binding upon and enure to the benefit of Company and Customer and each of their respective successors and permitted assigns.

 

	
23.  

	
Severability

 

If the whole or any portion of any provision of this PEA or the application thereof to any circumstance shall be held invalid, unenforceable or superseded to any extent, the remainder of the provision in question, or its application to any circumstance other than that to which it has been held invalid or unenforceable, and the remainder of this PEA shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law.

 

	
24.  

	
Governing Law

 

This PEA shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein, and each of Company and Customer irrevocably submit to the jurisdiction of the courts of the Province of Alberta for the interpretation and enforcement hereof.

 

 

	
25.  

	
Counterpart Execution

 

This PEA and any document required to be signed by Company and Customer may be so executed in counterpart and a complete set of counterpart pages shall be provided to each party.  A facsimile signature shall be deemed to be an original signature.

 

 

IN WITNESS WHEREOF Company and Customer have executed this PEA as of the date first above written.

 

	  	  	
QUICKSILVER RESOURCES CANADA INC.

 

	  	  	  	
By:

	/s/ Philip Cook
	  	  	  	  	
Name: Philip Cook

	  	  	  	  	
Title: Vice President--Finance

	  	  	  	  	  
	  	  	  	
NOVA GAS TRANSMISSION LTD.

	  	  	  	  	  
	  	  	  	
By:

	/s/ Stephen M. V. Clark
	  	  	  	  	
Name: Stephen M. V. Clark

	  	  	  	  	
Title: Vice President, Commercial

	  	  	  	
 

	  
	  	  	  	By:	
/s/ Karl Johannson

	  	  	  	  	
Name: Karl Johannson

	  	  	  	  	Title: President
	  	  	  	  	  
	  	  	  	  	  

  

  

  

SCHEDULE "A"

Attached to and forming part of a PEA dated as of April 6th, 2011 between Company and Customer

 

Facilities

   

	  	
Facility

 

 

	
Description

	
Total Estimated  

Cost of the 

Work

	
Customer’s 

Proportionate 

Share of the 

Work

	
Customer’s 

Estimated 

Proportionate 

Cost of the 

Work

	
1

	
 Pipeline

 

 

	
Approximately 100 Kilometers of NPS 36 

pipeline from a-66-A/94-O-15 to d-64-J/94-P-4.  

(Note:  The diameter of the Pipeline has not been finalized); and

 

 

 

 

	
 

$260,000,000.00

	
 

100%

	
 

$260,000,000.00

	
2

	
 Meter Station

 

 

 

	
Type 2-16104U (2 NPS 10 ultrasonic meters 

and NPS 16 yard piping) with sour gas 

monitoring, containment and pull back facilities 

(Note: The meter station type has not been finalized)

 

 

 

	
 

$5,000,000.00

	
 

100%

	
 

$5,000,000.00

	  	  	
 

Total

 

	
 

$265,000,000.00

	
 

100%

	
 

$265,000,000.00

  

  

  

SCHEDULE "B"

Attached to and forming part of a PEA dated as of April 6th, 2011 between Company and Customer

 

Service Documents

(Attached)

Summary of attached Service Documents:

	
Contract Number

 

	
Contract Volume

	
Contract Term

	
Estimated Start Date

	
2011469022

	
2,832.8 E3M3/d       

	
10 years Primary Term + 0 

years Secondary Term

 

	
May 1, 2014

	
2011469023 

	
2,832.8 E3M3/d       

	
6 years Primary Term + 0 

years Secondary Term

 

	
May 1, 2018

	
2011469024  

	
2,832.8 E3M3/d       

	
4 year Primary Term + 0 

years Secondary Term     

	
May 1, 2020

[Remainder of page intentionally left blank]

 

  

  

  

 

FT-R

Schedule of Service

NOVA Gas Transmission Ltd.

SCHEDULE OF SERVICE

RATE SCHEDULE FT-R

Cust   Customer:                   Quicksilver Resources Canada Inc.

	
 

Schedule of 

Service

Number

	
 

Receipt Point

Number and Name

	
 

Legal

Description

	
Maximum

Receipt

Pressure

kPa

	
 

Secondary

Term Start

 Date

	
 

Service

Termination

Date

	
Receipt

Contract

Demand

103m3/d

	
 

Price

Point

	
 

Additional

Conditions

	
2011469022     

	
42305:Fortune Creek

	
a-66-A/94-O-15

	
9930

	
N/A

See Condition 1

	
See Condition 1

	
2832.8

	
A

	
See Condition 2

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  

THIS SCHEDULE FORMS PART OF SERVICE AGREEMENT DATED FEBRUARY 7, 2003 AND SHALL BE DEEMED TO BE ATTACHED THERETO.

	
QUICKSILVER RESOURCES CANADA INC.

 

	  	
NOVA GAS TRANSMISSION LTD.

	
Per:

	  /s/ Philip Cook	  	
Per :

	  /s/ Dave Murray

	
Per:

	
Philip Cook

Vice President--Finance

	  	
Per :

	
Dave Murray

Manager, Supply

Commercial West

 

Effective Date: November 1, 2010

 

 

 

FT-R

Schedule of Service

NOVA Gas Transmission Ltd.

Attachment 1

 Conditions:

 

 

1. Customer has requested and Company has agreed that the Primary Term of this Schedule of Service shall be 10 years and the Secondary Term shall be 0 years. This Schedule of Service shall terminate and be of no further force and effect on the day that is 10 years plus any partial month from the Billing Commencement Date for the Service described herein. This Schedule of Service will be subject to the applicable rates, tolls, charges, terms and conditions, and contract term that are in effect on the Billing Commencement Date and any amendments thereto from time to time.  Once Company determines the Billing Commencement Date, Company and Customer agree that the Service Termination Date for the Service described herein shall be as set out in Company’s letter to Customer declaring the Billing Commencement Date.

2. This Schedule of Service becomes a binding obligation on the Company only upon and not prior to the date Company:

	
i)  

	
receives all permits, certificates, licenses, jurisdictional approvals, project approvals and authorizations Company determines necessary on terms and conditions satisfactory to Company for the provision of  Service described herein;

 

	
ii)  

	
has completed the construction of facilities which are located downstream of the Fortune Creek meter station it determines necessary to provide the Service described herein; and

 

	
iii)  

	
delivers notice to Customer of the Billing Commencement Date for the Service described herein.

 

  

  

  

  

FT-R

Schedule of Service

NOVA Gas Transmission Ltd.

SCHEDULE OF SERVICE

RATE SCHEDULE FT-R

Cust     Customer:                     Quicksilver Resources Canada Inc.

	
 

Schedule of Service

Number

	
 

Receipt Point

Number and Name

	
 

Legal

Description

	
Maximum

Receipt

Pressure

kPa

	
 

Secondary

Term

Start

 Date

	
 

Service

Termination

Date

	
Receipt

Contract

Demand

103m3/d

	
 

Price

Point

	
 

Additional

Conditions

	
2011469023     

	
42305:Fortune Creek

	
a-66-A/94-O-15

	
9930

	
N/A

See Condition 1

	
See Condition 1

	
2832.8

	
A

	
See Condition 2

	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  

THIS SCHEDULE FORMS PART OF SERVICE AGREEMENT DATED FEBRUARY 7, 2003 AND SHALL BE DEEMED TO BE ATTACHED THERETO.

	
QUICKSILVER RESOURCES CANADA INC.

 

	  	
NOVA GAS TRANSMISSION LTD.

	
Per:

	  /s/ Philip Cook	  	
Per :

	  /s/ Dave Murray

	
Per:

	
Philip  Cook

Vice President--Finance

	  	
Per :

	
Dave Murray

Manager, Supply

Commercial West

 

Effective Date: November 1, 2010

 

 

 

FT-R

Schedule of Service

NOVA Gas Transmission Ltd.

Attachment 1

 Conditions:

1. Customer has requested and Company has agreed that the Primary Term of this Schedule of Service shall be 6 years and the Secondary Term shall be 0 years. This Schedule of Service shall terminate and be of no further force and effect on the day that is 6 years plus any partial month from the Billing Commencement Date for the Service described herein. This Schedule of Service will be subject to the applicable rates, tolls, charges, terms and conditions, and contract term that are in effect on the Billing Commencement Date and any amendments thereto from time to time.  Once Company determines the Billing Commencement Date, Company and Customer agree that the Service Termination Date for the Service described herein shall be as set out in Company’s letter to Customer declaring the Billing Commencement Date.

2. This Schedule of Service becomes a binding obligation on the Company only upon and not prior to the date Company:

	
i)  

	
receives all permits, certificates, licenses, jurisdictional approvals, project approvals and authorizations Company determines necessary on terms and conditions satisfactory to Company for the provision of  Service described herein;

 

	
ii)  

	
has completed the construction of facilities which are located downstream of the Fortune Creek meter station it determines necessary to provide the Service described herein; and

 

	
iii)  

	
delivers notice to Customer of the Billing Commencement Date for the Service described herein.

 

  

  

  

FT-R

Schedule of Service

NOVA Gas Transmission Ltd.

Attachment 1

 Conditions:

1. Customer has requested and Company has agreed that the Primary Term of this Schedule of Service shall be 4 years and the Secondary Term shall be 0 years. This Schedule of Service shall terminate and be of no further force and effect on the day that is 4 years plus any partial month from the Billing Commencement Date for the Service described herein. This Schedule of Service will be subject to the applicable rates, tolls, charges, terms and conditions, and contract term that are in effect on the Billing Commencement Date and any amendments thereto from time to time.  Once Company determines the Billing Commencement Date, Company and Customer agree that the Service Termination Date for the Service described herein shall be as set out in Company’s letter to Customer declaring the Billing Commencement Date.

2. This Schedule of Service becomes a binding obligation on the Company only upon and not prior to the date Company:

	
i)  

	
receives all permits, certificates, licenses, jurisdictional approvals, project approvals and authorizations Company determines necessary on terms and conditions satisfactory to Company for the provision of  Service described herein;

 

	
ii)  

	
has completed the construction of facilities which are located downstream of the Fortune Creek meter station it determines necessary to provide the Service described herein; and

 

	
iii)  

	
delivers notice to Customer of the Billing Commencement Date for the Service described herein.

 

  

  

  

SCHEDULE "C"

Attached to and forming part of a PEA dated as of April 6th, 2011 between Company and Customer

 

 

Customer shall pay to Company an amount equal to Customer’s Proportionate Share (as defined below) of  the aggregate of all costs and expenses, including any carrying costs and interest,  paid or incurred by Company, or for which Company is or may become liable up to the Customer’s Authorized Amount, in the performance of the Work up to and including two (2) Banking Days following the date that Company or Customer, as the case may be, receives notice terminating this PEA, including without limitation all cancellation and shut down costs paid or to be paid by Company, plus interest thereon at an annual rate of interest equal to one percent (1%) over and above the prime rate of interest announced from time to time by the Royal Bank of Canada, Main Branch, Calgary, Alberta, calculated from the later of the termination date or the date such costs and expenses were paid by Company until and including the date of payment by Customer. “Customer’s Proportionate Share” shall mean the percentage set out under the column “Customer’s Proportionate Share of the Work” in Schedule “A” as amended from time to time.

 

 

[Remainder of page left intentionally blank.]

 

 

 

  

  

  

SCHEDULE "D"

Attached to and forming part of a PEA dated as of April 6th, 2011 between Company and Customer

 

The cumulative present value of revenues for a period equal to the Secondary Term is $26,424,600.

[Remainder of page left intentionally blank.]

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