Exhibit 10.1

 
Quicksilver Resources Inc.
2007 Executive Bonus Plan
 
Section 1.  Eligibility: This 2007 Executive Bonus Plan (the “Plan”) provides
for awards of incentive bonuses to executives of the Company. Only executives
designated by the Compensation Committee of the Company’s Board of Directors
(the “Compensation Committee”) are eligible to participate in the Plan. The
Compensation Committee is authorized to establish the criteria for determining
bonuses under the Plan, including performance measures and target incentive
amounts. The Compensation Committee may grant a Cash Bonus Award, an Equity
Bonus Award, or a combination thereof, to an eligible executive.
 
Except as provided below, in order to receive a bonus under the Plan, an
executive must be an active, full-time employee on the last business day of the
Plan Year. The incentive bonus of a newly hired or promoted executive 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 executive dies or becomes disabled and unable to work during the
Plan Year, an award, pro-rated 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 executive or his or her beneficiary at the same
time and in the same manner as awards for the Plan Year are paid to other
executives; 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 executive’s
beneficiary under the Plan will be the beneficiary designated for the
executive’s group life insurance plan. If no such beneficiary has been
designated, the award will be paid to the executive’s estate.
 
Section 2.  Definitions:
 
Board: The Board of Directors of the Company.
 
Cash Bonus Awards: An incentive bonus award granted to an eligible executive
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

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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 (A)
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 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 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).
 
Code: The Internal Revenue Code of 1986, as amended.
 
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 executive
pursuant to the Plan that is denominated in a dollar amount but that is paid by
a grant of a number of Restricted Shares having an aggregate market value on the
date of grant equal to the dollar amount of the award earned under the Plan and
vesting in installments of 33 1/3% on each of the first three anniversaries of
the date of grant of such Restricted Shares.
 
Exchange Act: The Securities Exchange Act of 1934, as amended.
 
Incumbent Directors: The individuals who, as of the date first set forth above,
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).
 
Plan Year: January 1, 2007 through December 31, 2007.
 
Production: The Company’s net production at the end of the Plan Year as set
forth in the Company’s audited financial statements.
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Qualitative Performance Measures: Those objective and subjective factors which
the Compensation Committee may, in its discretion, consider in determining each
eligible executive’s award. Qualitative Performance Measures may include such
factors as the Chief Executive Officer’s recommendation with respect to an
executive’s potential award, and such other factors as the Compensation
Committee may elect to consider in its discretion.
 
Quantitative Performance Levels: Performance levels based on Quantitative
Performance Measures, as set forth in Table 1.
 
Quantitative Performance Measures: Cash Flow from Operations, Earnings Per
Share, Production and Reserve Growth.
 
Restricted Shares: A grant of “Restricted Shares” within the meaning of and
pursuant to the Quicksilver Resources Inc. 2006 Equity Plan.
 
Reserve Growth: The annual percentage increase in additions of proven reserves,
net of revision and production, for the Plan Year.
 
Target Incentive: The unadjusted bonus an executive would earn under an award if
each Quantitative Performance Measure is achieved at a Quantitative Performance
Level equal to 100% of Budget. A Target Incentive is calculated by multiplying
the executive’s base salary earned during the Plan Year by the executive’s
Target Percent of Base Pay with respect to such award.
 
Target Percent of Base Pay: A percentage of base salary assigned to each
eligible executive by the Compensation Committee with respect to each award
granted under the Plan.
 
Voting Stock: The securities entitled to vote generally in the election of
directors or persons who serve similar functions.
 
Weighting Factor: The weighting percentage assigned to each Quantitative
Performance Measure, as set forth in Table 1.
 
Section 3.  Calculation of Awards: With respect to each Quantitative Performance
Measure, an executive’s Target Incentive for each award is multiplied by the
“Percent Target Awarded” value corresponding to the Quantitative Performance
Level set forth in Table 1 for that Quantitative Performance Measure and further
multiplied by the Weighting Factor applicable to that Quantitative Performance
Measure. The resulting products for each Quantitative Performance Measure are
then summed to obtain an executive’s potential award or awards. The Compensation
Committee may, in its discretion, adjust an executive’s potential award or
awards based on consideration of Qualitative Performance Measures.
 
If the Compensation Committee determines that, as a result of a change in the
business, operations, corporate structure or capital structure of the Company,
or the manner in which the Company conducts its business, or any other events or
circumstances, the Quantitative Performance Measures or corresponding Percent
Targets Awarded are no longer suitable, the Compensation Committee may in its
discretion modify such Quantitative Performance Measures or percentages or the
related minimum acceptable level of achievement, in whole or in part, with
respect to the Plan Year as the Compensation Committee deems appropriate and
equitable.
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Section 4.  Approval and Payment of Awards: Upon completion of the annual audit
by the Company’s independent auditors of the results of the Company’s operations
for the Plan Year, the Compensation Committee will, in writing, certify the
extent to which the Quantitative Performance Levels for the Plan Year were met
and determine the award or awards payable to each eligible executive. Payment of
each Cash Bonus Award will be made in a lump sum payment in cash, and will be
made no later than March 15 following the end of the Plan Year. Restricted
Shares granted in payment of Equity Bonus Awards will be granted no later than
March 15 following the end of the Plan Year. The Company may deduct from any
award such amounts as may be required to be withheld under any federal, state or
local tax laws. It is the Company’s intention that any bonus awarded under the
Plan will not constitute a deferral of compensation within the meaning of
Section 409A of the Code.
 
Section 5.  Change in Control: If a Change in Control occurs during the Plan
Year, the award payable to each eligible executive for the Plan Year will be
determined at the highest level of achievement of the Quantitative Performance
Levels, without regard to actual performance and without proration for less than
a full Plan Year. The awards will be paid at such time following the Change in
Control as the Compensation Committee determines in its discretion, but in no
event later than 30 days after the date of an event which results in a Change in
Control. Notwithstanding any provision of the Plan to the contrary, if a Change
in Control occurs during the Plan Year, each Equity Bonus Award will be paid in
the form of a lump sum cash payment rather than in the form of Restricted
Shares.
 
Section 6.  No Contract: The Plan is not and will not be construed as an
employment contract or as a promise or contract to pay awards to eligible
executives or their beneficiaries. The Plan does not confer upon any eligible
executive any right with respect to continuance of employment or other service
with the Company or any subsidiary, nor will it interfere in any way with any
right the Company or any subsidiary would otherwise have to terminate such
person’s employment or other service at any time. A leave of absence of definite
length approved by the Compensation Committee will not be deemed a termination
of employment for purposes of the Plan; any other leave of absence will be
deemed a termination of employment for purposes of the Plan. The Plan will be
approved by the Compensation Committee and may be amended from time to time by
the Compensation Committee without notice. No eligible executive or beneficiary
may sell, assign, transfer, discount or pledge as collateral for a loan, or
otherwise anticipate any right to payment of an award under the Plan.
 
Section 7.  Administration of the Plan: The Compensation Committee has the full
authority and discretion to administer the Plan and to take any action that is
necessary or advisable in connection with the administration of the Plan,
including without limitation the authority and discretion to interpret and
construe any provision of the Plan or of any agreement, notification or document
evidencing an award of an incentive bonus. A majority of the Compensation
Committee will constitute a quorum, and the action of the members of the
Compensation Committee present at any meeting at which a quorum is present, or
acts unanimously approved in writing, will be the acts of the Compensation
Committee. The interpretation and construction by the Compensation Committee of
any such provision and any determination by the Compensation Committee pursuant
to any provision of the Plan or of any such agreement, notification or document
will be final and conclusive. No member of the Compensation Committee will be
liable for any such action or determination.
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Section 8.  Governing Law: The Plan, all awards and all actions taken under the
Plan will be governed in all respects in accordance with the laws of the State
of Texas, including without limitation, the Texas statute of limitations, but
without giving effect to the principles of conflicts of laws of such State.
 
Section 9.  Limitation on Payment of Benefits: Notwithstanding any provision of
the Plan to the contrary, if any amount to be paid or provided under the Plan
would be an “Excess Parachute Payment,” within the meaning of Section 280G of
the Code, but for the application of this sentence, then the payments to be paid
or provided under the Plan will be reduced to the minimum extent necessary (but
in no event to less than zero) so that no portion of any such payment, as so
reduced, constitutes an Excess Parachute Payment; provided, however, that the
foregoing reduction will be made only if and to the extent that such reduction
would result in an increase in the aggregate payment to be provided, determined
on an after-tax basis (taking into account the excise tax imposed pursuant to
Section 4999 of the Code, any tax imposed by any comparable provision of state
law, and any applicable federal, state and local income and employment taxes).
Whether requested by an eligible executive or the Company, the determination of
whether any reduction in such payments to be provided under the Plan or
otherwise is required pursuant to the preceding sentence will be made at the
expense of the Company by the Company’s independent accountants in effect prior
to the Change in Control. The fact that the executive’s right to payments may be
reduced by reason of the limitations contained in this Section 9 will not of
itself limit or otherwise affect any other rights of the executive other than
pursuant to the Plan. In the event that any payment intended to be provided
under the Plan or otherwise is required to be reduced pursuant to this Section
9, the executive will be entitled to designate the payments to be so reduced in
order to give effect to this Section 9. The Company will provide the executive
with all information reasonably requested by the executive to permit the
executive to make such designation. In the event that the executive fails to
make such designation within 10 business days of the Change in Control, the
Company may effect such reduction in any manner it deems appropriate.
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Table 1

QUICKSILVER RESOURCES INC.
2007 EXECUTIVE BONUS PLAN
 
I. Quantitative Performance Measures and Weighting Factors
 

Performance
Measure
 
Weighting Factor
Earnings Per Share (EPS)
20%
Cash Flow from Operations
20%
Production
35%
Reserve Growth
25%

 
 
 
 
II. Determination of Targets Attained

 
Quantitative Performance Levels1
Percent Target Awarded 
120% of Budget or greater
200.00%
119% of Budget
175.00%
118% of Budget
175.00%
117% of Budget
175.00%
116% of Budget
175.00%
115% of Budget
175.00%
114% of Budget
150.00%
113% of Budget
150.00%
112% of Budget
150.00%
111% of Budget
150.00%
110% of Budget
150.00%
109% of Budget
125.00%
108% of Budget
125.00%
107% of Budget
125.00%
106% of Budget
125.00%
105% of Budget
125.00%
104% of Budget
100.00%
103% of Budget
100.00%
102% of Budget
100.00%
101% of Budget
100.00%
100% of Budget
100.00%
99% of Budget
90.00%
98% of Budget
90.00%
97% of Budget
90.00%
96% of Budget
90.00%
95% of Budget
90.00%
94% of Budget
80.00%
93% of Budget
80.00%
92% of Budget
80.00%
91% of Budget
80.00%
90% of Budget
80.00%
89% of Budget
70.00%
88% of Budget
70.00%
87% of Budget
70.00%
86% of Budget
70.00%
85% of Budget
70.00%
84% of Budget
60.00%
83% of Budget
60.00%
82% of Budget
60.00%
81% of Budget
60.00%
80% of Budget
60.00%
Less than 80% but more than 50% of Budget
50.00%
50% of Budget or below
25.00%2 

“Budget” represents (i) with respect to Earnings Per Share, Cash Flow from
Operations and Production, the applicable performance measure budgeted for the
Plan Year in the Company’s 2007 Budget (the “2007 Budget”) approved by the Board
on January 11, 2007, and (ii) with respect to Reserve Growth, the performance
goal established by the Compensation Committee for purposes of the Plan on April
10, 2007.
 
The Quantitative Performance Levels for the Plan Year will be calculated so as
to exclude the effects of any extraordinary or nonrecurring events (including
any material restructuring charges, financial or otherwise), or any changes in
accounting principles, acquisitions or divestitures, and may be adjusted as
otherwise permitted by the Equity Plan.

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1 Actual performance will be rounded to the closest whole percentage of Budget
to determine the Quantitative Performance Level attained.
 
2 The Percent Target Awarded for a Quantitative Performance Level less than 50%
of Budget may be any percent from 0 to 25%, at the discretion of the
Compensation Committee.