Option, Right of First Refusal, and Waiver in Amendment to Omnibus Agreement and Gas Gathering and Processing Agreement
Exhibit
10.1
Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
This Option, Right of First Refusal, and Waiver in
Amendment to Omnibus Agreement and Gas Gathering and Processing Agreement (this
“Agreement”)
is executed as of this 9th day of
June 2009 (the “Effective
Date”) by and among Quicksilver Resources Inc. (“Quicksilver”),
Quicksilver Gas Services LP (the “MLP”),
Quicksilver Gas Services GP LLC (“General
Partner”), Cowtown Pipeline Partners L.P. (“CPP”),
and Cowtown Gas Processing Partners L.P. (“CGPP”),
who each individually may be referred to as a “Party”
and together are referred to as the “Parties”.
Recitals
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I.
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Quicksilver,
the MLP, and General Partner are parties to that certain Omnibus
Agreement, effective as of August 10, 2007 (the “Omnibus
Agreement”).
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II.
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Quicksilver,
CPP, and CGPP are parties to that certain Sixth Amended and Restated Gas
Gathering and Processing Agreement, dated to be effective as of September
1, 2008 (the “Gas Gathering and
Processing Agreement”).
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III.
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On
August 8, 2008 (the “Alliance Closing
Date”), Quicksilver acquired certain oil and gas assets, including
midstream assets, in the Alliance Airport area of Tarrant and ▇▇▇▇▇▇
counties in the State of Texas, a portion of which constitute Subject
Assets.
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IV.
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On
March 25, 2009, consistent with the provisions of Subsection 2.3(b)(i) of
the Omnibus Agreement, Quicksilver transmitted a notice and Offer to
General Partner to sell those Subject Assets and other related assets
(together, the “Alliance Midstream
Assets”) to the MLP.
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V.
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The
notice and Offer also contained a request by Quicksilver that, should the
MLP elect not to pursue the purchase of the Alliance Midstream Assets, the
MLP, CPP, and CGPP waive certain rights granted them under the Omnibus
Agreement and the Gas Gathering and Processing
Agreement.
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VI.
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The
MLP, General Partner, CPP, and CGPP have agreed to waive certain rights as
requested by Quicksilver, but only in accordance with the provisions of
this Agreement.
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Now therefore, for and in consideration
of the premises, covenants, conditions, and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Quicksilver (for itself and for the other
Quicksilver Entities), the MLP (for itself and for the other Partnership
Entities except the General Partner, CPP, and CGPP, who are executing this
Agreement independently), the General Partner, CPP, and CGPP agree as
follows:
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1.
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Definitions. Capitalized
words, terms, and phrases not otherwise defined in this Agreement shall
have the meanings given them in the Omnibus
Agreement.
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2.
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Omnibus
Agreement waiver. Effective from and after the Alliance
Closing Date, the lands described and depicted on Exhibit “A” to this
Agreement (the “Alliance Waiver
Area”) shall be excluded from the definition of Quicksilver
Counties. Except as provided in this Agreement, the Partnership
Entities waive any and all rights arising under the Omnibus Agreement and
pertaining to the Alliance Waiver
Area.
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3.
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Gas
Gathering and Processing Agreement waiver. Effective from and after
the Alliance Closing Date, the Alliance Waiver Area shall be excluded from
the definition of “Contract Area”, as that term is used in the Gas
Gathering and Processing Agreement.
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4.
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Grant
of Option. Unless earlier terminated as provided in this Agreement,
beginning on the Effective Date and ending on August 10, 2017 (the “Option Term”),
the MLP shall have an option (the “Option”) to
acquire not less than all of the Option Assets. For purposes of
this Agreement, the “Option Assets”
shall, subject to any conveyances permitted under Sections 6 and 7,
consist of:
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a.
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the
Alliance Midstream Assets, and any additions, extensions, expansions,
upgrades, modifications, and changes to them located in the Alliance
Waiver Area;
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b.
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any
other assets located, constructed, or maintained by any of the Quicksilver
Entities and located in the Alliance Waiver Area that, but for Sections 2
and 3 of this Agreement, would be considered either Subject Assets or part
of the Gathering System (as that term is defined in the Gas Gathering and
Processing Agreement) or both; and
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c.
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all
contracts, agreements, instruments, and other rights then applicable to
the items described in Subsections 4.a and 4.b
above.
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Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page
2 of 12
5. Option
terms and conditions. Exercise of the Option shall be governed
by the following:
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a.
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If
the MLP desires to exercise the Option, it shall notify Quicksilver (the
“Option
Notice”) of such desire. The Option Notice shall
include:
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i.
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the
MLP’s proposed purchase price for the Option Assets, which
shall not be less than the MLP’s good faith estimate of the fair market
value of the Option Assets (the “Purchase
Price”); and
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ii.
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the
form of a definitive agreement, containing commercially reasonable terms,
to effectuate the purchase and sale of the Option Assets (the “PSA”).
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b.
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As
soon as practicable, but in any event within 30 days after receipt of the
Option Notice, Quicksilver shall notify the MLP (the “Option
Response”) whether Quicksilver agrees with the proposed Purchase
Price and PSA.
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c.
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If
Quicksilver agrees with the proposed Purchase Price and the PSA, the MLP
and all applicable Quicksilver Entities and Partnership Entities shall, as
soon as commercially reasonable, execute the PSA and proceed to close the
sale of the Option Assets.
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d.
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If
Quicksilver and the MLP are unable to agree on either the Purchase Price
or the terms and conditions of the PSA within 30 days after the MLP’s
receipt of the Option Response, Quicksilver and the MLP shall engage a
mutually acceptable independent banking firm or other independent Person
that is an expert in valuing midstream assets like the Option Assets (the
“Option Assets
Valuation Expert”). Quicksilver and the MLP shall each
bear ½ of the costs and expenses associated with the engagement and
employment of the Option Assets Valuation Expert. The Option
Assets Valuation Expert shall determine, to the extent that the Parties
are unable to agree: i. the fair market value of the Option Assets, which
shall be their Purchase Price; and ii. commercially reasonable terms and
conditions of the PSA. The Option Assets Valuation Expert shall
provide his final determination within 30 days of being engaged by
Quicksilver and the MLP. The Option Assets Valuation Expert’s
determination regarding the Purchase Price and PSA shall be final and
binding upon the Parties. As soon as practicable after such
determination, the MLP shall: i. execute the PSA along with the other
Parties and proceed
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Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page
3 of 12
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to
close the sale of the Option Assets; or ii. should the MLP fail to execute
the PSA within 10 days of the Option Assets Valuation Expert’s
determination, this Agreement, including the Option and the ROFR (defined
in Section 6), shall terminate and be of no further force or
effect.
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e.
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The
Option shall not be affected by any failure to close the sale of the
Option Assets pursuant to the PSA, so long as the failure is not due to
the fault of the MLP or any of the Partnership
Entities.
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f.
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Notwithstanding
the other provisions of this Agreement, any PSA executed by the Parties
pursuant to the MLP’s exercise of the Option shall require the MLP to
assume and be liable for all then-existing duties, obligations, and
liabilities pertaining to the Option
Assets.
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6.
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Right
of first refusal.
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a.
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If,
during the Option Term, one or more of the Quicksilver Entities accepts an
offer from a Person other than a Partnership Entity or a Quicksilver
Entity (each such person, a “Purchaser”) to
purchase all or any part of the Option Assets during the Option Term,
Quicksilver shall promptly notify the MLP of that acceptance (each, a
“Sale
Notice”). The Sale Notice shall state the Purchaser’s
name and address and contain the terms and conditions of the proposed
purchase of Option Assets by the Purchaser. The MLP shall have
a right (a “ROFR”) for 30
days following its receipt of each Sale Notice (each period being a “Sale Notice
Period”) to elect to purchase the Option Assets on the same terms
and conditions as contained in the Sale Notice. If the MLP: i.
does not elect to purchase the identified Option Assets in accordance with
their corresponding Sale Notice during the Sale Notice Period; or ii.
after properly electing to purchase such Option Assets, fails to close
their sale in accordance with the terms and conditions contained in the
Sale Notice, the Quicksilver Entities shall have the right to convey the
Option Assets identified in the Sale Notice free and clear of the Option
and ROFR (and upon such terms and conditions as the Quicksilver Entities
may determine) for a period of one year following the end of the Sale
Notice Period (each period being a “Free
Period”). If, however, the Quicksilver Entities fail to
convey the Option Assets identified in a Sale Notice during the
corresponding Free Period, such Option Assets shall be again subject to
the Option and ROFR (unless the Option Term should expire prior to the end
of the Free Period).
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Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page 4
of 12
b. If
Quicksilver transmits a Sale Notice to the MLP within 30 days of the end of the
Option Term, the ROFR shall be extended for a period sufficient to accommodate
the time periods for notice and exercise of the ROFR under Subsection
6.a.
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7.
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Agreement
subject to certain senior rights. Notwithstanding
anything in this Agreement to the contrary, the Quicksilver Entities may
convey all or any part of the Option Assets among themselves at any time
during the Option Term and the ROFR shall not apply to any such
conveyances. However, all such interests in the Option Assets
shall be owned and held by the Quicksilver Entities subject to the Option
and the ROFR.
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8.
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Right
to review records. During the Option Term, and upon
reasonable notice to Quicksilver, the MLP shall have the right to access
and review all documents, books, and records owned, held, or controlled by
Quicksilver and reasonably required by the MLP to make a fair market
evaluation of the Option Assets.
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9.
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Choice
of law. This Agreement shall be subject to and governed
by the laws of the State of Texas. The Parties hereby submit to the
exclusive venue of a state or federal court having jurisdiction and
located in Ft. Worth, Tarrant County,
Texas.
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10.
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Notices. All
notices, requests, or consents provided for or permitted to be given
pursuant to this Agreement must be in writing and must be given by
depositing them in the United States mail, addressed to the person or
entity to be notified, postpaid, and registered or certified with return
receipt requested or by delivering such notice in person or by fax. Notice
given by personal delivery or mail shall be effective upon actual receipt.
Notice given by fax shall be effective upon actual receipt if received
during the recipient’s normal business hours, or at the beginning of the
recipient’s next business day after receipt if not received during the
recipient’s normal business hours. All notices to be sent to any of the
Parties pursuant to this Agreement shall be sent to or made at its address
set forth below or at such other address as such Party may stipulate to
the other Parties in the manner provided in this
Section 10:
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a.
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For
notices to any of the Quicksilver
Entities:
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Quicksilver
Resources Inc.
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Law Department
Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page 5
of 12
b. For
notices to any of the Partnership Entities:
Quicksilver
Gas Services L.P.
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Law Department
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11.
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Entire
agreement. This Agreement constitutes the entire agreement of the
Parties relating to the matters contained within it, superseding all prior
contracts or agreements, whether oral or written, relating to the matters
contained in this Agreement.
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12.
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Termination. This
Agreement, including the Option and ROFR, shall terminate upon a Change of
Control of General Partner or the MLP, other than any Change of Control of
General Partner or the MLP that may be deemed to have occurred pursuant to
clause (iv) of the definition of Change of Control in the Omnibus
Agreement solely as a result of a Change of Control of
Quicksilver. Notwithstanding any other provision of this
Agreement, if General Partner is removed as general partner of the MLP
under circumstances where Cause does not exist and Common Units held by
the General Partner and its Affiliates are not voted in favor of such
removal, this Agreement may immediately thereupon be terminated by
Quicksilver.
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13.
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Effect
of waiver or consent. No waiver or consent, express or implied, by
any Party to or of any breach or default by any Party in the performance
of its obligations under this Agreement shall be deemed or construed to be
a consent or waiver to or of any other breach or default in the
performance by that Party of the same or any other obligations of that
Person hereunder. Failure on the part of a Party to complain of any act of
any other Party or to declare any Person in default, irrespective of how
long such failure continues, shall not constitute a waiver by such Party
of its rights hereunder until the applicable statute of limitations period
has run.
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14.
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Amendment
or modification. This Agreement may be amended or modified from
time to time only by the written agreement of all the Parties; provided,
however, that the MLP may not, without the prior approval of the Conflicts
Committee, agree to any amendment or modification of this Agreement that,
in the reasonable discretion of General Partner, will have an adverse
effect on the holders of Common Units. Each such instrument shall be
reduced to writing and shall be designated on its face an “Amendment” or
an “Addendum” to this Agreement.
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Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page
6 of 12
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15.
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Assignment;
third party beneficiaries. Except as otherwise permitted by Section
7, no Party shall have the right to assign its rights or obligations under
this Agreement without the prior written consent of the other Parties.
Each of the Parties specifically intends that the Quicksilver Entities and
the Partnership Entities, as applicable (and whether or not a Party to
this Agreement), shall be entitled to assert rights and remedies hereunder
as third-party beneficiaries hereto with respect to those provisions of
this Agreement affording a right, benefit, or privilege to any such
entity.
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16.
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Counterparts.
This Agreement may be executed in any number of counterparts with the same
effect as if all signatory Parties had signed the same document. All
counterparts shall be construed together and shall constitute one and the
same instrument.
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17.
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Severability.
If any provision of this Agreement or the application thereof to any
Person or circumstance shall be held invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such
provision to any other Person or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by
law.
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18.
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Gender
and sections. Whenever the context requires, the gender of all
words used in this Agreement shall include the masculine, feminine, and
neuter, and the number of all words shall include the singular and plural.
All references to Section and Subsection numbers refer to sections of this
Agreement.
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19.
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Further
assurances. In connection with this Agreement and all transactions
contemplated by this Agreement, each Party agrees to execute and deliver
such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out, and
perform all of the terms, provisions, and conditions of this Agreement and
all such transactions.
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20.
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Laws
and regulations. Notwithstanding any provision of this Agreement to
the contrary, no Party shall be required to take any act, or fail to take
any act, under this Agreement if the effect thereof would be to cause such
Party to be in violation of any applicable law, statute, rule, or
regulation or the MLP Agreement.
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21.
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Negation
of rights of limited partners, assignees and third parties. Except
as set forth in Section 15, the provisions of this Agreement are
enforceable solely by the Parties, and no limited partner, member,
shareholder, or assignee of Quicksilver or the MLP or other Person shall
have the right, separate and apart from Quicksilver or the MLP, to enforce
any provision of this Agreement or to compel any Party to comply with the
terms of this Agreement.
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Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page
7 of 12
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22.
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No
recourse against officers or directors. For the avoidance of doubt,
the provisions of this Agreement shall not give rise to any right of
recourse against any officer or director of any of the Quicksilver
Entities or any of the Partnership
Entities.
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| Quicksilver: | |||
| Quicksilver Resources Inc. | |||
| a Delaware corporation | |||
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By:
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Printed Name: | ▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Title: | President and C.E.O. | ||
[signatures
continue on next page]
Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page 8
of 12
| MLP: | |||
| Quicksilver Gas Services LP | |||
| a Delaware limited partnership | |||
| By: | Quicksilver Gas Services GP LLC | ||
| a Delaware limited liability company | |||
| its general partner | |||
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By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Printed Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | President and C.E.O. | |||
[signatures
continue on next page]
Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page 9
of 12
| General Partner: | |||
| Quicksilver Gas Services GP LLC | |||
| a Delaware limited liability company | |||
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By:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| Printed Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Title: | President and C.E.O. | ||
[signatures
continue on next page]
Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page 10
of 12
| CPP: | |||
| Cowtown Pipeline Partners L.P. | |||
| a Texas limited partnership | |||
| By: | Quicksilver Gas Services Operating GP LLC | ||
| a Delaware limited liability company | |||
| its general partner | |||
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By: | /s/ ▇▇▇▇ ▇▇▇▇ | |
| Printed Name: | ▇▇▇▇ ▇▇▇▇ | |||
| Title: | Executive Vice President - C.O.O. | |||
[signatures
conclude on next page]
Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page
11 of 12
| CGPP: | |||
| Cowtown Gas Processing Partners L.P. | |||
| a Texas limited partnership | |||
| By: | Quicksilver Gas Services Operating GP LLC | ||
| a Delaware limited liability company | |||
| its general partner | |||
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By: | /s/ ▇▇▇▇ ▇▇▇▇ | |
| Printed Name: | ▇▇▇▇ ▇▇▇▇ | |||
| Title: | Executive Vice President - C.O.O. | |||
Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Page 12
of 12
Exhibit
“A”
Alliance Waiver
Area
(see
attached page)
Option,
Right of First Refusal, and Waiver in Amendment to
Omnibus
Agreement and Gas Gathering and Processing Agreement
Exhibit
“A”
