QUICKSILVER RESOURCES
INC.
AMENDED AND RESTATED 1999 STOCK
OPTION AND RETENTION STOCK PLAN
This Amended
and Restated 1999 Stock Option and Retention Stock Plan of
Quicksilver Resources Inc. is to promote and closely align the
interests of officers and employees with those of the shareholders
of Quicksilver Resources Inc. by providing stock based
compensation. The Plan is intended to strengthen
Quicksilver Resources Inc.’s ability to reward performance
which enhances long term shareholder value; to increase employee
stock ownership through performance based compensation plans; and
to strengthen the company’s ability to attract and retain an
outstanding employee and executive team.
The following terms shall have the following
meanings:
“
Act ” means the Securities Exchange Act of 1934, as
amended.
“
Award ” means the grant of Options, Restricted Stock
Units or an award of Retention Shares pursuant to the
Plan.
“
Beneficiary ” means any person or persons designated
in writing by a Participant to the Committee on a form prescribed
by it for that purpose, which designation shall be revocable at any
time by the Participant prior to his or her death, provided that,
in the absence of such a designation or the failure of the person
or persons so designated to survive the Participant,
“Beneficiary” shall mean such Participant’s
estate; and further provided that no designation of Beneficiary
shall be effective unless it is received by the Company before the
Participant’s death.
“
Board ” means the Board of Directors of the
Company.
“
Code ” means the Internal Revenue Code of 1986, as
amended, or the corresponding provisions of any successor
statute.
“
Committee ” means the Committee designated by the
Board to administer the Plan pursuant to Section 3.
“
Common Stock ” means the Common Stock of the
Company.
“
Company ” means Quicksilver Resources Inc., a Delaware
corporation, or any successor corporation.
“
Deferral Period ” means the period of time during
which Restricted Stock Units are subject to deferral limitations,
as provided in Section 10.
“
Executive Officer ” means the Chairman of the Board,
President, Executive Vice President or Vice President of the
Company.
“
Grant ” means a grant of an Option pursuant to the
Plan.
“
Option ” means each non-qualified stock option,
incentive stock option and stock appreciation right granted under
the Plan.
“
Participant ” means any employee of the Company or a
Subsidiary (including directors who are also such employees) who is
granted an Award under the Plan.
“
Plan ” means this Amended and Restated 1999 Stock
Option and Retention Stock Plan of Quicksilver Resources Inc., as
amended from time to time.
“
Restricted Stock Units ” means a grant pursuant to
Section 10 of the Plan of the right to receive shares of
Common Stock at the end of a specified period.
“
Retention Shares ” means shares of Common Stock
awarded pursuant to Section 9 of the Plan.
“
Restriction Period ” means the period defined in
Section 9(a).
“
Subsidiary ” means any corporation, partnership, or
limited liability company of which the Company owns directly or
indirectly at least a majority of the outstanding shares of voting
stock or other voting interest.
“
Vesting Condition ” means any condition to the vesting
of Retention Shares or Restricted Stock Units established by the
Committee pursuant to Section 9 or Section 10.
The Plan shall
be administered by the Committee which shall comprise not less than
three persons, who shall be members of the Board, none of whom
shall be employees of the Company or any Subsidiary. All
of the members of the Committee are intended to (i) meet all
applicable independence requirements of the New York Stock Exchange
or the principal national securities exchange or principal market
on which the Common Stock is traded, and (ii) to qualify as
“non-employee directors” as defined in Rule 16b-3
promulgated under the Act and as “outside directors” as
defined in regulations adopted under Section 162(m) of the Code, as
such terms may be amended from time to time; provided, however,
that the failure of a member of the Committee to so qualify will
not invalidate any Award granted under the Plan. The
Committee shall grant Awards to Participants and determine the
terms and conditions of such Awards, all in accordance with the
provisions of the Plan. The Committee shall have full
authority to construe and interpret the Plan, to establish, amend
and rescind rules and regulations relating to the Plan, to
administer the Plan, and to take all such steps and make all such
determinations in connection with the Plan and Awards granted
thereunder as it may deem necessary or advisable. The
Committee may delegate its authority under the Plan to one or more
Executive Officers or employees of the Company or a Subsidiary;
provided, however, that no delegation shall be made of authority to
take an action which is required by Rule 16b-3 promulgated under
the Act to be taken by “non-employee directors” in
order that the Plan and transactions thereunder meet the
requirements of such Rule. Each Award granted hereunder
shall be evidenced by an agreement to be executed by the Company
and the Participant, and contain provisions not inconsistent with
the Plan (including without limitation provisions relating to
acceleration of vesting or other adjustments in the event of a
change in control of or business combination involving the
Company). All determinations of the Committee shall be
by a majority of its members and shall be evidenced by resolution,
written consent or other appropriate action, and the
Committee’s determinations shall be final. Each
member of the Committee, while serving as such, shall be considered
to be acting in his or her capacity as a director of the
Company. No member of the Committee shall be liable for
any such action or determination made in good faith.
To be eligible
for selection by the Committee to participate in the Plan an
individual must be an employee of the Company or a
Subsidiary. Directors who are not full-time salaried
employees shall not be eligible. In granting Awards to
eligible persons, the Committee shall take into account their
duties, their present and potential contributions to the success of
the Company or a Subsidiary, and such other factors as the
Committee shall deem relevant in connection with accomplishing the
purpose of the Plan.
5. STOCK SUBJECT TO
THE PLAN
Subject to the
provisions of Section 12 hereof, the maximum number of shares as to
which Options or Retention Shares may at any time be granted, or
issued or transferred in payment of Restricted Stock Units under
the Plan, is equal to the sum of (i) 1.2 million and
(ii) the number of shares of Common Stock that remain
available for such grants as of the close of business on
May 17, 2004. No Participant may receive Awards
aggregating more than 20% of the shares of Common Stock available
under the Plan. Shares of Common Stock subject to Awards
under the Plan may be either authorized but unissued shares, issued
and held for use in employee compensation plans or shares
previously issued and reacquired by the Company. Upon
the expiration, termination or cancellation (in whole or in part)
of unexercised Options, shares of Common Stock subject thereto
shall again be available for option or grant as Retention Shares or
Restricted Stock Units under the Plan. Shares of Common
Stock covered by an Option, or portion thereof, which is
surrendered upon the exercise of a stock appreciation right, shall
thereafter be unavailable for option or grant as Retention Shares
or Restricted Stock Units under the Plan. Upon the
forfeiture (in whole or in part) of a grant of Retention Shares or
Restricted Stock Units, the shares of Common Stock subject to such
forfeiture shall again be available for option or grant as
Retention Shares or Restricted Stock Units under the
Plan.
6. TERMS AND
CONDITIONS OF NON-QUALIFIED OPTIONS
All
non-qualified options under the Plan shall be granted subject to
the following terms and conditions:
(a)
Option Price . The option price per share
with respect to each Option shall be determined by the Committee
but shall not be less than 100% of the fair market value of the
Common Stock on the date the Option is granted, such fair market
value to be determined in accordance with the procedures to be
established by the Committee.
(b)
Duration of Options . Options shall be
exercisable at such time or times and under such conditions as set
forth in the written agreement evidencing such Option but in no
event shall any Option be exercisable subsequent to the tenth
anniversary of the date on which the Option is granted.
(c)
Payment . Shares of Common Stock purchased
under Options shall, at the time of purchase, be paid for in
full. All, or any portion, of the option exercise price
may be paid by the surrender to the Company, at the time of
exercise, of shares of previously acquired Common Stock owned by
the Participant and held for a period of six months, to the extent
that such payment does not require the surrender of a fractional
share of such previously acquired Common Stock. Such
shares previously acquired or shares withheld to pay the option
exercise price shall be valued at fair market value on the date the
Option is exercised in accordance with the procedures to be
established by the Committee. A holder of an Option
shall have none of the rights of a stockholder until the shares of
Common Stock are issued to him or her.
(d)
Non-Transferability of Options . During a
Participant’s lifetime, the Option may be exercised only by
the Participant. Options shall not be transferable,
except for exercise by the Participant’s legal
representatives or heirs. An officer of the Company may,
with prior approval from the Committee (or its designee) as to
form, transfer an exercisable non-qualified option to (i) a
member or members of the officer’s immediate family (spouse,
children and grandchildren, including step and adopted children and
grandchildren), (ii) a trust, the beneficiaries of which
consist exclusively of members of the officer’s immediate
family, (iii) a partnership, the partners of which consist
exclusively of members of the officer’s immediate family, or
(iv) any similar entity created for the exclusive benefit of
members of the officer’s immediate family. The
Committee or its designee must approve the form of any transfer of
a Grant to or for the benefit of any immediate family member or
members before such transfer shall be recognized as valid
hereunder. For purposes of the preceding sentence, any
remote, contingent interest of persons other than a member of the
officer’s immediate family shall be
disregarded. For purposes of this Section 6(d), the term
“officer” shall have the same meaning as that term is
defined in Rule 16a-1(f) of the Act. A person’s status as an
officer shall be determined at the time of the intended
transfer.
(e)
Termination of Employment . Except as may
otherwise be provided in the award agreement entered into in
connection with any grant, upon the termination of a
Participant’s employment for any reason other than death, the
Option shall be exercisable only as to those shares of Common Stock
which were then subject to the exercise of such Option; provided,
however, that in the case of retirement, at or after age 55
and with at least five years of credited service, from the Company
or a Subsidiary, such Option shall immediately become exercisable
in full. Such Option shall expire according to the
following schedule:
(i)
Retirement . Option shall expire, unless
exercised, five years after the Participant’s retirement, at
or after age 55 with at least five years of credited service, from
the Company or a Subsidiary.
(ii) Disability
. Option shall expire, unless exercised, five years
after the date the Participant is terminated due to the
determination by the Company that the Participant is disabled as
defined in section 22(e)(3) of the Code.
(iii) Gross Misconduct
. Option shall expire upon receipt by the Participant of
the notice of termination if he or she is terminated for
deliberate, willful or gross misconduct as determined by the
Company.
(iv) All Other
Terminations . Option shall expire, unless
exercised, three months after the date of such
termination.
In no event,
however, shall any Option be exercisable pursuant to this Section
6(e) subsequent to the tenth anniversary of the date on which it is
granted.
(f)
Death of Participant . Upon the death of a
Participant during his or her period of employment (or, if so
provided in the award agreement, within three months thereafter),
the Option shall be exercisable only as to those shares of Common
Stock which were subject to the exercise of such Option at the time
of his or her death (or, if so provided in the award agreement, as
to all shares of Common Stock covered by such Option), provided
that the Committee may determine that particular limitations and
restrictions under the Plan shall not apply, and such Option shall
expire, unless exercised by the Participant’s legal
representatives or heirs, five years after the date of
death. In no event, however, shall any Option be
exercisable pursuant to this Section 6(f) subsequent to the tenth
anniversary of the date on which it is granted.
7. TERMS AND
CONDITIONS OF STOCK APPRECIATION RIGHTS
(a)
General . The Committee may also grant a
stock appreciation right in connection with a non-qualified option
at the time of grant. Such stock appreciation right
shall cover the same shares covered by such Option (or such lesser
number of shares of Common Stock as the Committee may determine)
and shall, except for the provisions of Section 6(c) hereof, be
subject to the same terms and conditions as the related
non-qualified option, including the requirement of
Section 6(a) that the option price per share shall not be less
than 100% of the fair market value of the Common Stock on the date
the stock appreciation right is granted.
(b)
Exercise and Payment . Each stock
appreciation right shall entitle the Participant to surrender to
the Company unexercised the related Option, or any portion thereof,
and to receive from the Company in exchange therefor an amount
equal to the excess of the fair market value of one share of Common
Stock over the option price per share times the number of shares
covered by the Option, or portion thereof, which is
surrendered. A grant may provide that payment shall be
made in shares of Common Stock valued at fair market value, or in
cash, or partly in shares and partly in cash, all as shall be
determined by the Committee. The fair market value shall
be the value determined in accordance with procedures established
by the Committee. Stock appreciation rights may be
exercised from time to time upon actual receipt by the Company of
written notice stating the number of shares of Common Stock with
respect to which the stock appreciation right is being exercised,
provided that if a stock appreciation right expires unexercised, it
shall be deemed exercised on the expiration date if any amount
would be payable with respect thereto.
(c)
Restrictions . The obligation of the
Company to satisfy any stock appreciation right exercised by a
Participant subject to Section 16 of the Act shall be conditioned
upon the prior receipt by the Company of an opinion of counsel to
the Company that any such satisfaction will not create an
obligation on the part of such Participant pursuant to Section
16(b) of the Act to reimburse the Company for any statutory profit
which might be held to result from such satisfaction.
