Document:

Third Amendment to Note Purchase Agreement

 Exhibit 10.1 
  
 THIRD AMENDMENT 
  
 TO 
  
 NOTE PURCHASE AGREEMENT 
  
  

Dated as of September 14, 2004 
  
 AMONG 
  
 QUICKSILVER RESOURCES, INC., 
  
 AS ISSUER, 
  
 THE GUARANTORS, 
  
 BNP
PARIBAS, 
  
 AS COLLATERAL
AGENT, 
  
 AND 

 
 THE PURCHASERS PARTY HERETO 

 THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT 
  
 THIS THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT (this
“Third Amendment”) dated as of September 14, 2004, is among QUICKSILVER RESOURCES, INC., a Delaware corporation (the “Company”); each of the undersigned Guarantors (collectively, the “Guarantors”);
BNP PARIBAS, as collateral agent (in such capacity, together with its successors in such capacity, the “Collateral Agent”) for the purchasers party to the Note Purchase Agreement referred to below (collectively, the
“Purchasers”); and each of the undersigned Purchasers. 
  
 R E C I T A L S 
  
 A. The Company, the
Collateral Agent and the Purchasers are parties to that certain Note Purchase Agreement dated as of June 27, 2003, as amended by that certain First Amendment to Note Purchase Agreement, dated as of January 30, 2004 and as further amended by that
certain Second Amendment to Note Purchase Agreement dated as of July 28, 2004 (as amended, the “Note Purchase Agreement”), pursuant to which the Purchasers have purchased $70 million of the Company’s Floating and Fixed Rate
Senior Subordinated Second Lien Mortgage Notes due December 31, 2006 (the “Notes”). 
  
 B. The Company has requested and the Purchasers have agreed to amend certain provisions of the Note Purchase Agreement and the other Transaction
Documents. 
  
 C. NOW, THEREFORE, in consideration of the premises
and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
  
 Section 1. Defined Terms. Each capitalized term used herein but not otherwise defined herein has the meaning given
such term in the Note Purchase Agreement, as amended by this Third Amendment. Unless otherwise indicated, all section references in this Third Amendment refer to sections of the Note Purchase Agreement. 
  
 Section 2. Amendments to Note Purchase Agreement. 
  
 2.1 Amendments to Section 9.1(a). Section 9.1(a) is hereby amended by
deleting the word “and” after clause (vi) thereof, deleting the period at the end of clause (vii) thereof and replacing it with “; and” and adding the following clause (viii) after clause (vii): 
  
 (viii) unsecured Debt of the Company and/or the Guarantors (which Debt may
be convertible into capital stock of the Company) in an original stated principal amount not to exceed $150,000,000, provided that such Debt is subordinated to the Notes and the other obligations of the Company and the Guarantors under this
Agreement and the other Transaction Documents on terms substantially similar to those contained in Article XVI or on terms otherwise reasonably satisfactory to the Holders. 

 2.2 Amendments to Schedule B. The definitions in Schedule B are hereby amended as follows:

  
 “Engineering Reports” means
the Initial Engineering Reports and each engineering report hereafter delivered by the Company pursuant to Section 8.1(c)(i) or Section 8.1(c)(ii), provided that each such report hereafter delivered must (a) separately report on Proved Developed
Producing Reserves, Proved Developed Nonproducing Reserves and Proved Undeveloped Reserves and separately calculate the NPV of each such category of Proved Reserves for the Company’s interest, (b) use a 9% discount rate and a price deck for
each calendar year evaluated equal to (i) for natural gas, the quotation for deliveries of natural gas for each such year from the New York Mercantile Exchange for Henry Hub, provided that (A) if such quotation is greater than $5.00 per mcf, the
price shall be capped at $5.00 per mcf and (B) with respect to quotations for calendar years after the fifth calendar year, the quotation for the fifth calendar year shall be applied and (ii) for crude oil, the quotation for deliveries of crude oil
for each such calendar year from the New York Mercantile Exchange for Cushing, Oklahoma, provided that (A) if such quotation is greater than $30.00 per barrel, the price shall be capped at $30.00 per barrel and (B) with respect to quotations for
calendar years after the fifth calendar year, the quotation for the fifth calendar year shall be applied, (c) further adjust the cash-flows derived from the pricing assumptions set forth in clause (b) above to account for the historical basis
differentials for each month during the preceding 12-month period calculated by comparing realized crude oil and natural gas prices to Cushing, Oklahoma and Henry Hub NYMEX prices for each month during such period, (d) take into account the
Company’s actual experiences with leasehold operating expenses and other costs in determining projected leasehold operating expenses and other costs, (e) identify and take into account any “over-produced” or “under-produced”
status under gas balancing arrangements, (f) contain information and analysis comparable in scope to that contained in the Initial Engineering Report, and (g) otherwise be in form and substance reasonably satisfactory to the Super-majority
Purchasers. 
  
 “NPV” means,
with respect to any Proved Reserves expected to be produced from any Oil and Gas Properties, the net present value, discounted at 9% per annum, of the future net revenues expected to accrue to the Company’s and its Subsidiaries’ collective
interests in such reserves during the remaining expected economic lives of such reserves. NPV means, with respect to the Company’s and its Subsidiaries’ separate interests in such Proved Reserves, the net present value, discounted at 9%
per annum, of the future net revenues expected to accrue to such separate interests in such reserves during the remaining expected economic lives of such reserves. Each calculation of such expected future net revenues shall be made in accordance
with the then existing standards of the Society of Petroleum Engineers, provided that in any event (a) appropriate deductions shall be made for severance and ad valorem taxes, and for operating, gathering, transportation and marketing costs required
for the production and sale of such reserves, (b) appropriate adjustments shall be made for hedging operations, provided that Hedging Contracts with non-investment grade counterparties shall not be taken into account to the extent that such Hedging
Contracts improve the position of or otherwise benefit the Company or any of its Subsidiaries, (c) the pricing assumptions used in determining NPV for any particular reserves shall be based upon the following price decks: (i) for natural gas, the
quotation for deliveries of natural gas for each such year from the New York Mercantile Exchange for Henry Hub, provided that (A) if such quotation is greater than 
  

 2 

 $5.00 per mcf, the price shall be capped at $5.00 per mcf and (B) with respect to quotations for calendar
years after the fifth calendar year, the quotation for the fifth calendar year shall be applied and (ii) for crude oil, the quotation for deliveries of crude oil for each such calendar year from the New York Mercantile Exchange for Cushing,
Oklahoma, provided that (A) if such quotation is greater than $30.00 per barrel, the price shall be capped at $30.00 per barrel and (B) with respect to quotations for calendar years after the fifth calendar year, the quotation for the fifth calendar
year shall be applied and (d) the cash-flows derived from the pricing assumptions set forth in clause (b) above shall be further adjusted to account for the historical basis differentials for each month during the preceding 12-month period
calculated by comparing realized crude oil and natural gas prices to Cushing, Oklahoma and Henry Hub NYMEX prices for each month during such period. 
  
 Section 3. Conditions Precedent. This Third Amendment shall not become effective until the date on which each of the following conditions is
satisfied (the “Effective Date”): 
  
 3.1 On or
prior to the Effective Date, the Collateral Agent and the Purchasers shall have received all fees and other amounts due and payable in connection with this Third Amendment in accordance with Section 14.1 of the Note Purchase Agreement. 

 
 3.2 The Collateral Agent shall have received from the Majority Purchasers,
the Company and the Guarantors counterparts (in such number as may be requested by the Collateral Agent) of this Third Amendment signed on behalf of such Persons. 
  
 3.3 No Default shall have occurred and be continuing, after giving effect to the terms of this Third Amendment. 

 
 3.4 The Collateral Agent shall have received such other documents as the
Collateral Agent or special counsel to the Collateral Agent may reasonably request. 
  
 The Collateral Agent shall notify the Company and the Purchasers in writing of the Effective Date. 
  
 Section 4. Miscellaneous. 
  
 4.1 Confirmation. The provisions of the Note Purchase Agreement, as amended by this Third Amendment, shall remain in full force and effect
following the effectiveness of this Third Amendment. 
  
 4.2
Ratification and Affirmation; Representations and Warranties. The Company and each Guarantor hereby (i) acknowledges the terms of this Third Amendment; (ii) ratifies and affirms its obligations under, and acknowledges, renews and extends its
continued liability under, each Transaction Document to which it is a party and agrees that each Transaction Document to which it is a party remains in full force and effect, except as expressly amended hereby; and (iii) represents and warrants to
the Purchasers that as of the date hereof, after giving effect to the terms of this Third Amendment: (A) all of the representations and warranties contained in each Transaction Document to which it is a party are true and correct, except to the

  

 3 

 extent any such representations and warranties are expressly limited to an earlier date, in which case, such
representations and warranties shall continue to be true and correct, as of such specified earlier date, (B) no Default has occurred and is continuing and (C) since December 31, 2002, there has been no event, development or circumstance that has had
or could reasonably be expected to have a Material Adverse Effect. 
  
 4.3 Transaction Document. This Third Amendment is a “Transaction Document” as defined and described in the Note Purchase Agreement and all of the terms and provisions of the Note Purchase Agreement relating to Transaction
Documents shall apply hereto. 
  
 4.4 Purchasers’
Satisfaction. For purposes of determining compliance with the conditions specified in Section 3 hereof, each of the undersigned Purchasers shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other
matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Purchaser upon its execution and delivery of a counterpart of this Third Amendment. 
  
 4.5 Counterparts. This Third Amendment may be executed by one or more of the parties hereto in any number of separate
counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this Third Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

  
 4.6 No Oral Agreement. THIS
THIRD AMENDMENT, THE NOTE PURCHASE AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS
EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR UNWRITTEN AGREEMENTS OF THE PARTIES. THERE ARE NO SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES. 
  
 4.7 GOVERNING LAW. THIS THIRD AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 
  
 [SIGNATURES BEGIN NEXT PAGE] 
  

 4 

 IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed as of the
date first written above. 
  

					
	COMPANY:	 	QUICKSILVER RESOURCES INC.
			
	 	 	By:	 	 /s/ MarLu S. Hiller

	 	 	Name:	 	MarLu S. Hiller
	 	 	Title:	 	Treasurer and Assistant Secretary
		
	GUARANTORS:	 	BEAVER CREEK PIPELINE, L.L.C.
			
	 	 	By:	 	 /s/ Bill Lamkin

	 	 	Name:	 	Bill Lamkin
	 	 	Title:	 	Vice President and Treasurer
		
	 	 	TERRA ENERGY LTD.
			
	 	 	By:	 	 /s/ MarLu S. Hiller

	 	 	Name:	 	MarLu S. Hiller
	 	 	Title:	 	Treasurer and Assistant Secretary
		
	 	 	MERCURY MICHIGAN, INC.
			
	 	 	By:	 	 /s/ MarLu S. Hiller

	 	 	Name:	 	MarLu S. Hiller
	 	 	Title:	 	Treasurer and Assistant Secretary
		
	 	 	GTG PIPELINE CORPORATION
			
	 	 	By:	 	 /s/ MarLu S. Hiller

	 	 	Name:	 	MarLu S. Hiller
	 	 	Title:	 	Treasurer and Assistant Secretary

  

 [Signature Page to Third Amendment] 
 Page 1 

			
	TERRA PIPELINE COMPANY
		
	By:	 	 /s/ MarLu S. Hiller

	Name:	 	MarLu S. Hiller
	Title:	 	Treasurer and Assistant Secretary

  

 [Signature Page to Third Amendment] 
 Page 2 

					
	COLLATERAL AGENT:	 	BNP PARIBAS, as a Purchaser and as Collateral Agent
			
	 	 	By:	 	 /s/ Gabe Ellisor

	 	 	Name:	 	Gabe Ellisor
	 	 	Title:	 	Vice President
			
	 	 	By:	 	 /s/ Polly Schott

	 	 	Name:	 	Polly Schott
	 	 	Title:	 	Vice President
		
	PURCHASERS:	 	FORTIS CAPITAL CORP.
			
	 	 	By:	 	 /s/ Christopher S. Parada

	 	 	Name:	 	Christopher S. Parada
	 	 	Title:	 	Vice President
			
	 	 	By:	 	 /s/ Darrell W. Holley

	 	 	Name:	 	Darrell W. Holley
	 	 	Title:	 	Managing Director
		
	 	 	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
			
	 	 	By:	 	 /s/ Randall M. Kob

	 	 	Name:	 	Randall M. Kob
	 	 	Title:	 	Vice President
		
	 	 	THE ROYAL BANK OF SCOTLAND plc
			
	 	 	By:	 	 /s/ Chris H. Clarke

	 	 	Name:	 	Chris H. Clarke
	 	 	Title:	 	Senior Vice President

  

 [Signature Page to Third Amendment] 
 Page 3Letter of Understanding among the Price Group

 Exhibit 10.1 
  
 September 15, 2004 
  
 The Price Group, LLC 
 7979 Ivanhoe Avenue, Suite 520 
 La Jolla, CA 92037 
  
 PriceSmart Inc. 
 9740 Scranton Road 
 San Diego, CA 92121 
  
 PSMT Caribe, Inc. 
 c/o PriceSmart Inc. 
 9740 Scranton Road 
 San Diego, CA 92121 
  
 PSMT Trinidad/Tobago Limited 
 c/o PriceSmart Inc. 
 9740 Scranton Road 
 San Diego, CA 92121 
  
 PSMT Philippines, Inc. 
 c/o PriceSmart Inc.

 9740 Scranton Road 
 San Diego, CA 92121 
  
 Dear Sirs, 
  

	 	Re:	IFC investments in PriceSmart, Inc. and its subsidiaries 

  
 We refer to the Loan Agreement dated January 26, 2001 (the “A Loan Agreement”), by and among PriceSmart, Inc., a company organized and existing under the laws
of the State of Delaware, U.S.A. (“PriceSmart”), PSMT Caribe Inc., a company organized and existing under the laws of the Territory of the British Virgin Islands (“Caribe”), PSMT Trinidad/Tobago Limited, a company organized and
existing under the laws of the Republic of Trinidad and Tobago (“PSMT Trinidad”) and International Finance Corporation, an international organization established by Articles of Agreement among its member countries (“IFC”); the C
Loan Agreement dated January 26, 2001 (the “C Loan Agreement”), by and among PriceSmart, Caribe, PSMT Trinidad and IFC; and the Omnibus Agreement dated June 27, 2002 (the “Omnibus Loan Agreement” and together with the A Loan
Agreement and the C Loan Agreement, the “Loan Agreements”), by and 

 among PSMT Philippines, Inc., a company organized and existing under the laws of the Republic of Philippines
(“PSPH” and together with PriceSmart, Caribe and PSMT Trinidad, the “Co-Borrowers”), PriceSmart and IFC. We also refer to your letters, dated June 2, 2004, and July 26, 2004, respectively, pursuant to which you requested IFC to
consider restructuring its investment in, and grant certain waivers and concessions to, the Co-Borrowers. 
  
 Capitalized terms not otherwise defined herein have the meanings assigned to them in the Loan Agreements. 
  
 In order to give effect to the proposed restructuring of IFC’s investment in the Co-Borrowers at the request of The Price Group, LLC (the “Sponsor”) and
the Co-Borrowers, the parties agree as follows: 
  
 1. IFC hereby: 
  

	 	(a)	waives compliance by the Co-Borrowers with the provisions of Section 6.02(c) of the Loan Agreements solely in respect of, and in order to permit PriceSmart to incur, a bridge loan
of up to twenty five million Dollars ($25,000,000) (the “Bridge Loan”) from the Sponsor, so long as such loan complies with Section 2(b) below; 

  

	 	(b)	agrees to execute and deliver to the Co-Borrowers proper instruments acknowledging the release to PriceSmart of the Escrow Account (with proceeds of approximately five million two
hundred thousand Dollars ($5,200,000)); 

  

	 	(c)	agrees to amend the interest rate, repayment and prepayment provisions of the C Loan Agreement to reflect (i) a new interest rate equal to LIBOR plus four per cent (4.0%) per annum,
(ii) loan repayment in twelve (12) equal semi-annual installments commencing on March 15, 2005 and (iii) the right of the Co-Borrowers identified therein to prepay the C Loan without any restriction whatsoever or prepayment penalty; and

  

	 	(d)	agrees to amend the prepayment provisions of the A Loan Agreement to allow prepayment of the A Loan without any restriction whatsoever or prepayment premium.

  
 2. The waivers, concessions and amendments set forth in Section
1 above are granted and agreed and shall remain in effect subject to Section 3 below: 
  

	 	(a)	Within seven (7) days after the signing of this Agreement, PriceSmart shall purchase the IFC Loan (as defined in the Omnibus Loan Agreement) plus all accrued interest thereon and,
subject to such purchase, IFC will assign the IFC Security with respect to such IFC Loan to PriceSmart pursuant to an assignment and assumption agreement in form and substance satisfactory to the parties. 

  

 2 

	 	(b)	The Sponsor shall convert the Bridge Loan, subject to shareholder approval, into the common stock of PriceSmart at a conversion price of eight Dollars ($8.00) per share by November
30, 2004. Until conversion, the Bridge Loan shall earn interest at eight per cent (8%) per annum and shall be subordinated to the IFC Loans. 

  

	 	(c)	The Sponsor shall convert its existing loans and advances to PriceSmart, in the aggregate principal amount of twenty million Dollars ($20,000,000), into the common stock of
PriceSmart, subject to shareholder approval, at a conversion price of eight Dollars ($8.00) per share by November 30, 2004. 

  

	 	(d)	The Sponsor and its Affiliates shall, subject to shareholder approval, deliver to IFC by November 30, 2004, proper instruments (i) evidencing the conversion of the Preferred
“B” Shares beneficially owned by them in the capital stock of PriceSmart, in the aggregate principal amount of twenty-two million Dollars ($22,000,000), into common stock of PriceSmart at a conversion price of ten Dollars ($10.00) per
share and (ii) waiving all accrued and unpaid dividends on such preferred shares. 

  

	 	(e)	As soon as practicable after the signing of this Agreement, subject to shareholder approval, PriceSmart shall implement a rights offering to its existing shareholders at a rate of
1.5 rights (i.e., the right to acquire 1.5 shares of common stock) for each common share. The rights offering shall have a one year exercise period and shall offer PriceSmart’s shareholders of record the option to subscribe during the first one
month period at a price of seven Dollars ($7.00) per share, or subscribe at any time after such first one month period at a price of eight Dollars ($8.00) per share. Prior to the end of the offering period, the Sponsor shall purchase common stock in
an amount of up to twenty-five million Dollars ($25,000,000), in immediately available funds, to the extent that the shareholders of record do not subscribe for common stock in the aggregate amount of twenty five million Dollars ($25,000,000) in the
offering. 

  

	 	(f)	The Sponsor shall grant IFC a put option by entering into a put option agreement in form and substance satisfactory to the parties pursuant to which, in consideration of the
agreements contained in this letter agreement, IFC shall have the right, exercisable between November 30, 2005 and November 30, 2006, to sell the IFC Shares (as defined below) to the Sponsor at a put price of twelve Dollars ($12.00) per share. The
put option agreement shall, inter alia, contain an undertaking by the Sponsor to (i) ensure that the IFC put option agreement and the implementation thereof comply with any applicable United States securities laws and regulations; and (ii)
indemnify, defend and hold harmless IFC, its 

  

 3 

 employees, officers and directors against and in respect of any losses, claims, damages or liabilities
(including legal or other fees and expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage or liability) to which IFC or any such persons may become subject under the Securities Act of
1933, as amended, as a result of the granting or exercise of the put option. For purposes of this clause, the term “IFC Shares” means (i) all of the three hundred thousand (300,000) shares of common stock of PriceSmart owned by IFC as of
the date hereto, (ii) all shares of PriceSmart received by IFC as a result of stock splits on the shares identified in clause (i) above, and (iii) all shares (of any company) received by IFC in exchange, replacement or substitution of the shares
identified in clauses (i) and (ii) above. 
  

	 	(g)	By October 15, 2004, PriceSmart and IFC shall enter into a warrant agreement, in form and substance satisfactory to IFC pursuant to which, in consideration of the agreements
contained in this letter agreement, PriceSmart shall grant to IFC four hundred thousand (400,000) warrants convertible into the common stock of PriceSmart at a price of seven Dollars ($7.00) per share. Fifty per cent (50%) of the warrants shall be
exercised by IFC upon receipt by IFC of proper agreements and instruments, duly executed and in full force and effect, evidencing the (i) conversion of the Bridge Loan as contemplated in Section 2(b) above, (ii) conversion of the Sponsor’s
other loans as contemplated in Section 2(c) above, (iii) conversion of the preferred shares as contemplated in Section 2(d) above, and (iv) commencement of the exercise period of the rights offering as contemplated in Section 2(e) above. The balance
of the warrants shall, at the option of IFC, be exercised by November 30, 2005. The exercise price shall be paid by a reduction of the IFC Loan then outstanding to the extent of the aggregate exercise price. 

  

	 	(h)	PriceSmart shall cause to deliver to IFC a legal opinion, in form and substance acceptable to IFC, from the law firm of Latham & Watkins with respect to the transactions
contemplated hereby. 

  

	 	(i)	The Co-Borrowers agree to pay the fees and expenses of IFC’s counsel retained for the purposes of the transactions contemplated hereby. 

  
 3. For the avoidance of doubt, and notwithstanding anything to the contrary in this letter
agreement, failure by the Co-Borrowers and the Sponsor to comply with any of the provisions of this letter agreement shall constitute an Event of Default under the Loan Agreements and shall relieve IFC of any further obligation in respect of any
remaining unexecuted instruments, agreements and amendments hereunder. 
  
 4. The
parties hereto agree to shall take any and all necessary steps (including the exercise of their voting rights, if any, and the execution and delivery of instruments, agreements and amendments) to achieve prompt and effective implementation of all of
the provisions of this Agreement. 
  

 4 

 5. This waiver does not operate as a waiver of any provision of the Loan Agreements other than those specified above. It
does not in any way waive or impair IFC’s rights under the Loan Agreements or any agreement to which IFC is a party. 
  
 6. This letter Agreement shall be governed by, and shall be construed in accordance with, the laws of the State of New York, United States of America. 
  
 If the foregoing is acceptable to you, please sign below and return a copy to us. 

 
 Sincerely, 
  
 INTERNATIONAL FINANCE CORPORATION 
  

			
	By:	 	 /s/ Stanley Greig

  

			
	
	Accepted and Agreed:
	
	THE PRICE GROUP, LLC
	
	 /s/ James Cahill

	Name: James Cahill
	Title: Manager
	
	PRICESMART, INC.
	
	 /s/ John Heffner

	Name: John Heffner
	Title: Executive V.P./CFO
	
	PSMT CARIBE INC.
	
	 /s/ Atul Patel

	Name: Atul Patel
	Title: Director/Treasurer

  

 5 

	
	 PSMT TRINIDAD/TOBAGO LIMITED

	
	 /s/ Ernesto Grijalva

	 Name: Ernesto Grijalva

	 Title: Director/Secretary

	
	 PSMT PHILIPPINES, INC.

	
	 /s/ John Heffner

	 Name: John Heffner

	 Title: Director

  

 6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]