Quicksilver Resources
Inc.
2009 Executive Bonus
Plan
Section 1.
Eligibility : This 2009 Executive Bonus Plan (the
“Plan”) provides for awards of incentive bonuses to
executive and other officers of Quicksilver Resources Inc. (the
“Company”). Only executive officers of the
Company designated by the Compensation Committee (“Executive
Officers”) or other officers of the Company designated by the
Chief Executive Officer (“Non-Executive Officers” and,
together with the Executive Officers, “Participants”)
are eligible to participate in the Plan.
The criteria for determining bonuses under the
Plan, including performance measures and target incentive amounts,
will be established by the Compensation Committee for Participants
who are Executive Officers and by the Chief Executive Officer for
Participants who are Non-Executive Officers. A
Participant may be granted a Cash Bonus Award, an Equity Bonus
Award, or a combination thereof.
The portion of an incentive bonus awarded
pursuant to the Plan to an Executive Officer who is designated as a
“Covered Employee” by the Compensation Committee that
exceeds 50% of the Executive Officer’s Target Incentive (
i.e. , the portion awarded for Quantitative Performance
Levels meeting or exceeding 80% of Budget) is intended to qualify
as “performance-based compensation” within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”), and is granted pursuant to the
Company’s Amended and Restated 2006 Equity Plan (the
“Equity Plan”), and is subject to the terms and
conditions thereof. The portion of any bonus awarded to
a Covered Employee that does not exceed 50% of the Covered
Employee’s Target Incentive ( i.e. , the portion that
would be awarded if Quantitative Performance Levels did not meet
80% of Budget) and all bonuses awarded to other Participants under
the Plan are not intended to qualify as performance-based
compensation and are not made pursuant to Section 11 of the
Equity Plan.
Except as provided below, in order to receive a
bonus under the Plan, a Participant must be an active, full-time
employee on the date bonuses are paid hereunder. The
incentive bonus of a newly hired or promoted Participant will be
pro-rated based on the number of calendar days in the Plan Year
that he or she participates in the Plan.
If an eligible Participant dies or becomes
disabled and unable to work during the Plan Year, a pro-rated award
based on the number of calendar days in the Plan Year that he or
she participated in the Plan before his or her death or disability
will be paid to the Participant or his or her beneficiary at the
same time and in the same manner as awards for the Plan Year are
paid to other Participants; provided, however, that notwithstanding
any provision of the Plan to the contrary, an Equity Bonus Award
will be paid in the form of a lump sum cash payment rather than in
the form of Restricted Shares. The Participant’s
beneficiary under the Plan will be the beneficiary designated under
the Company’s group life insurance plan. If no
such beneficiary has been designated, the award will be paid to the
Participant’s estate.
Board : The Board of Directors of the
Company.
Budget : The performance levels for
Quantitative Performance Measures, as set forth in Table 1,
against which the Quantitative Performance Levels achieved for the
Plan Year are measured.
Cash Bonus Awards : An incentive bonus award granted to
an eligible Participant pursuant to the Plan that is paid in a lump
sum cash payment.
Cash Flow from Operations
: The Company’s
cash flow from operations for the Plan Year, as determined in
accordance with generally accepted accounting
principles.
Change in Control : The occurrence of any of the
following events:
(i)
any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) is or
becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of the combined
voting power of the then-outstanding Voting Stock of the Company;
provided, however, that the following acquisitions will not
constitute a Change in Control: (A) any acquisition of
Voting Stock of the Company directly from the Company that is
approved by a majority of the Incumbent Directors; (B) any
acquisition of Voting Stock of the Company by the Company or any
subsidiary of the Company; (C) any acquisition of Voting Stock of
the Company by the trustee or other fiduciary holding securities
under any employee benefit plan (or related trust) sponsored or
maintained by the Company or any subsidiary of the Company; and (D)
any acquisition of Voting Stock of the Company by Mercury
Exploration Company, Quicksilver Energy, L.P., The Discovery Fund,
Pennsylvania Avenue Limited Partnership, Pennsylvania Management
Company, the estate of Frank Darden, Lucy Darden, Anne Darden Self,
Glenn Darden or Thomas Darden, or their respective successors,
assigns, designees, heirs, beneficiaries, trusts, estates or
controlled affiliates;
(ii)
a majority of the Board ceases to be comprised of Incumbent
Directors; or
(iii)
the consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the
consolidated assets of the Company (each, a “Business
Combination Transaction”) immediately after which the Voting
Stock of the Company outstanding immediately prior to such Business
Combination Transaction does not continue to represent (either by
remaining outstanding or by being converted into Voting Stock of
the entity surviving, resulting from, or succeeding to all or
substantially all of the Company’s consolidated assets as a
result of such Business Combination Transaction or any parent of
such entity) at least 50% of the combined voting power of the then
outstanding shares of Voting Stock of (A) the entity surviving,
resulting from, or succeeding to all or substantially all of the
Company’s consolidated assets as a result of, such Business
Combination Transaction or (B) any parent of any such entity
(including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
subsidiaries).
Chief Executive Officer : The Chief Executive Officer of the
Company.
Compensation Committee : The Compensation Committee of the
Board of Directors of the Company.
Earnings Per Share or EPS
: The Company’s
fully diluted Earnings Per Share as set forth in the
Company’s Consolidated Statement of Earnings for the Plan
Year, as determined in accordance with generally accepted
accounting principles.
Equity Bonus Awards : An incentive bonus award granted to
an eligible Participant pursuant to the Plan that is denominated in
a dollar amount but that is paid by a grant of Restricted Shares,
vesting in installments of 33 1/3% on each of the first three
anniversaries of the date of grant of such Restricted
Shares. The number of Restricted Shares granted will be
equal to the dollar amount of the award earned under the Plan
divided by the product of (i) the Market Value per Share (within
the meaning of the Equity Plan) on the date of grant and (ii) a
risk-of-forfeiture discount factor of 0.9313.
Exchange Act : The Securities Exchange Act of
1934, as amended.
F&D Cost : The Company’s finding and
development cost for the Plan Year, determined by dividing (i)
drilling capital related to reserve additions for the Plan Year, as
reflected in the Company’s general ledger for the Plan Year,
by (ii) reserve additions, for which capital was incurred, for the
Plan Year, as reflected in the Company’s reserve engineering
database for the Plan Year.
Incumbent Directors : The individuals who, as of the date
the Plan is adopted, are directors of the Company and any
individual becoming a director subsequent to the date hereof whose
election, nomination for election by the Company’s
stockholders, or appointment, was approved by a vote of a majority
of the then-Incumbent Directors (either by a specific vote or by
approval of the proxy statement of the Company in which such person
is named as a nominee for director, without objection to such
nomination).
Participant : An Executive Officer designated by
the Compensation Committee or a Non-Executive Officer designated by
the Chief Executive Officer as eligible to participate in the
Plan.
Plan Year : January 1, 2009 through
December 31, 2009.
Production : The Company’s net production
for the Plan Year as set forth in the Company’s audited
financial statements.
Qualitative Performance Measures
: Those objective and
subjective factors that the Compensation Committee or the Chief
Executive Officer may, in their discretion, consider in determining
each eligible
