ex10_10.htm


    Exhibit
10.10

     

    
      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.

       

      Section
2.   Definitions:

       

      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 Participant’s
award.  Qualitative Performance Measures may include such factors as
the Chief Executive Officer’s recommendation with respect to an Executive
Officer’s potential award, the Board’s recommendation with respect to the Chief
Executive Officer’s potential award and such other factors as the Compensation
Committee or the Chief Executive Officer may elect to consider in their
discretion.

       

      Quantitative
Performance Levels:  The performance levels achieved for the
Plan Year with respect to Quantitative Performance Measures.

       

      Quantitative
Performance Measures:  Cash Flow from Operations, Earnings Per
Share, F&D Cost, Production and Reserves.

       

      Reserves:  The
Company’s proved reserves, net of revision and production, as of the end of the
Plan Year, as set forth in the official report prepared by the independent
petroleum engineers engaged by the Company for such purpose.

       

      Restricted
Shares: A grant
of “Restricted Shares” within the meaning of and pursuant to the Equity
Plan.

       

      Target
Incentive:  The unadjusted bonus a Participant 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 Participant’s base salary earned during the Plan
Year by the Participant’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 Participant by the Compensation Committee or the Chief Executive
Officer, as applicable, 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, a Participant’s Target Incentive for each award is multiplied by the
applicable “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 a Participant’s potential award or
awards.  The Compensation Committee (with respect to Executive
Officers) or the Chief Executive Officer (with respect to Non-Executive
Officers) may, in their discretion, adjust a Participant’s potential award or
awards based on consideration of Qualitative Performance Measures; provided,
however, that with respect to an award to a Covered Employee, the Compensation
Committee may exercise such discretion only to reduce or eliminate such
award.  In no event will the reduction of any Participant’s potential
award have the effect of increasing an award payable to a Covered Employee under
the Plan.  The Compensation Committee’s exercise of discretion to make
adjustments in awards and performance measures with respect to Covered Employees
is limited as specifically provided in the Equity Plan.

       

      If the
Compensation Committee (with respect to Executive Officers) or the Chief
Executive Officer (with respect to Non-Executive Officers) 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 Target Awarded values are no longer suitable,
the Compensation Committee or the Chief Executive Officer, as applicable, may in
their 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 they or he deem appropriate and
equitable.

       

      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 (with respect to Executive
Officers) and the Chief Executive Officer (with respect to Non-Executive
Officers) will certify in writing the extent to which the Quantitative
Performance Levels for the Plan Year were achieved and determine the award or
awards payable to each eligible Participant.  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 Participant 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 following the Change in
Control and 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
Participants or their beneficiaries.  The Plan does not confer upon
any eligible Participant 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.  The
Plan will be approved by the Compensation Committee and the Chief Executive
Officer and may be amended from time to time by the Compensation Committee
without notice; provided that the Chief Executive Officer may modify the
Weighting Factors, Quantitative Performance Measures, and Percent Target Awarded
criteria set forth in Table 1 with respect to Participants who are Non-Executive
Officers.  No eligible Participant 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 or, with respect to an
award to a Non-Executive Officer, the Chief Executive Officer, 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 or the Chief Executive Officer of any such provision and
any determination by the Compensation Committee or the Chief Executive Officer
pursuant to any provision of the Plan or of any such agreement, notification or
document will be final and conclusive.  Neither the Chief Executive
Officer nor any member of the Compensation Committee will be liable for any such
action or determination.

       

      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 Participant 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
Participant’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 Participant other than pursuant to the
Plan.

       

      
        
           

        

        
           

          
            
 

        

        
           

        

      

      Table
1

       

      QUICKSILVER
RESOURCES INC.

      2009
EXECUTIVE BONUS PLAN

       

      I.           Quantitative
Performance Measures and Weighting Factors

       

      
        	
                Performance
      Measure

              	 	
                Weighting
      Factor

              
	 
      	 	 
      
	
                Cash
      Flow from Operations

              	 	
                15%

              
	
                Earnings
      Per Share (EPS)

              	 	
                15%

              
	
                F&D
      Cost

              	 	
                10%

              
	
                Production

              	 	
                30%

              
	
                Reserves

              	 	
                30%

              


      

       

       

      II.           Performance
Levels Attained and Determination of Awards

       

      
        	
                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%2

              
	
                50%
      of Budget or below

              	 	
                25.00%3

              


      

       

      “Budget”
represents (i) with respect to Cash Flow from Operations, Earnings per
Share and Production, the applicable performance measure budgeted for the Plan
Year in the Company’s 2009 Budget approved by the Board on November 20,
2008, and (ii) with respect to F&D Cost and Reserves, the performance
goals established by the Compensation Committee for purposes of the Plan on
November 24, 2008.

       

      For the
avoidance of doubt, the Quantitative Performance Level for F&D Cost will be
determined by reference to the extent to which F&D Cost is less than the
established performance goal (as contrasted to the Quantitative Performance
Levels for other Quantitative Performance Measures, which are determined by
reference to the extent that performance exceeds established performance
goals).

       

      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; provided that, in the case of a Covered
Employee, no such adjustment will be made if the effect of such adjustment would
cause the related compensation to fail to qualify as “performance-based
compensation.”

      

        
 

        

        1 Actual
performance will be rounded to the closest whole percentage of Budget to
determine the Quantitative Performance Level attained.

      

        

        2 Bonuses
paid to Covered Employees in amounts up to 50% of Target Incentive are not
intended to qualify as performance-based compensation.  Only the
portion of a bonus in excess of 50% of a Covered Employee’s Target Incentive is
intended to qualify as performance-based compensation.

      

        

        3 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 with respect to Executive Officers and at the discretion of the Chief
Executive Officer with respect to Non-Executive
Officers.