Document:

exv4w7

Exhibit 4.7

QUICKSILVER RESOURCES INC.,

THE SUBSIDIARY GUARANTORS PARTIES HERETO

AND

THE BANK OF NEW YORK TRUST COMPANY, N.A.

as TRUSTEE

 

FOURTH SUPPLEMENTAL INDENTURE

Dated as of October 31, 2007

 

 

               This FOURTH SUPPLEMENTAL INDENTURE, dated as of October 31, 2007 (this “Supplemental
Indenture”), among GTG Pipeline LLC, a Virginia limited liability company formerly known as QRI GTG
Pipeline LLC (the “First Guaranteeing Subsidiary”), Mercury Michigan Company, LLC, a Michigan
limited liability company (the “Second Guaranteeing Subsidiary”), Terra Energy Company LLC, a
Michigan limited liability company (the “Third Guaranteeing Subsidiary”), and Terra Pipeline
Company LLC, a Michigan limited liability company (the “Fourth Guaranteeing Subsidiary” and,
together with the First Guaranteeing Subsidiary, the Second Guaranteeing Subsidiary and the Third
Guaranteeing Subsidiary, the “Guaranteeing Subsidiaries”), each a subsidiary of Quicksilver
Resources Inc., a Delaware corporation (the “Company”), the Company, the other Subsidiary
Guarantors (as defined in the Indenture referred to herein) and The Bank of New York Trust Company,
N.A. (as successor in interest to JPMorgan Chase Bank, National Association (the “Initial
Trustee”)), as trustee (the “Trustee”).

W I T N E S S E T H

               WHEREAS, the Company and the Trustee (as successor in interest to the Initial Trustee) entered
into an Indenture (the “Original Indenture”), dated as of December 22, 2005, as supplemented by the
First Supplemental Indenture (the “First Supplemental Indenture”), dated as of March 16, 2006,
among the Company, the Subsidiary Guarantors parties thereto and the Trustee (as successor in
interest to the Initial Trustee), the Second Supplemental Indenture (the “Second Supplemental
Indenture”), dated as of July 31, 2006, among the Company, the Subsidiary Guarantors parties
thereto, the Guaranteeing Subsidiaries parties thereto and the Trustee (as successor in interest to
the Initial Trustee), and the Third Supplemental Indenture (the “Third Supplemental Indenture” and,
together with the Original Indenture, the First Supplemental Indenture and the Second Supplemental
Indenture, the “Indenture”), dated as of September 26, 2006, among the Company, the Subsidiary
Guarantors parties thereto and the Trustee (as successor in interest to the Initial Trustee),
pursuant to which the Company has issued $350,000,000 of aggregate principal amount of 71/8% Senior
Subordinated Notes due 2016 (the “Notes”);

               WHEREAS, Section 6.01(b) of the First Supplemental Indenture provides that the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement the Indenture in order to add
Subsidiary Guarantees with respect to the Notes, without the consent of the Holders of the Notes;

               WHEREAS, Section 3.11 of the Indenture provides that the Company may not permit any Subsidiary
Guarantor to consolidate with or merge with or into any Person (other than another Subsidiary
Guarantor) unless, among other things, the Person formed by the consolidation or into which the
Subsidiary Guarantor merged is a corporation, partnership, limited liability company, business
trust, trust or other legal entity organized and validly existing under the laws of the United
States, any state thereof, or the District of Columbia and such Person will expressly assume, by
supplemental indenture, all the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee;

               WHEREAS, GTG Pipeline Corporation, a Virginia corporation and a Subsidiary Guarantor (the
“First Merged Subsidiary”), has merged into the First Guaranteeing Subsidiary;

               WHEREAS, Mercury Michigan, Inc., a Michigan corporation and a Subsidiary Guarantor (the
“Second Merged Subsidiary”), has merged into the Second Guaranteeing Subsidiary;

               WHEREAS, Terra Energy Ltd., a Michigan corporation and a Subsidiary Guarantor (the “Third
Merged Subsidiary”), has merged into the Third Guaranteeing Subsidiary;

               WHEREAS, Terra Pipeline Company, a Michigan corporation and a Subsidiary Guarantor (the
“Fourth Merged Subsidiary”), has merged into the Fourth Guaranteeing Subsidiary; and

               WHEREAS, all acts and things prescribed by the Indenture, by law and by the Certificate of
Incorporation and the Bylaws (or comparable constituent documents) of the Company, the Subsidiary
Guarantors, the Guaranteeing Subsidiaries and the Trustee necessary to make this Supplemental
Indenture a valid instrument legally binding on the Company, the Subsidiary Guarantors, the
Guaranteeing Subsidiaries and the Trustee, in accordance with its terms, have been duly done and
performed;

 

 

               NOW THEREFORE, to comply with the provisions of the Indenture, and in consideration of the
foregoing, the Guaranteeing Subsidiaries, the Company, the Subsidiary Guarantors and the Trustee
mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as
follows:

ARTICLE 1

               Section 1.01. This Supplemental Indenture is supplemental to the Indenture and does and shall
be deemed to form a part of, and shall be construed in connection with and as part of, the
Indenture for any and all purposes.

               Section 1.02. This Supplemental Indenture shall become effective immediately upon its
execution and delivery by the Guaranteeing Subsidiaries, the Company, the Subsidiary Guarantors and
the Trustee.

ARTICLE 2

               Section 2.01. The First Guaranteeing Subsidiary hereby assumes all the obligations of the
First Merged Subsidiary under its Subsidiary Guarantee; the Second Guaranteeing Subsidiary hereby
assumes all the obligations of the Second Merged Subsidiary under its Subsidiary Guarantee; the
Third Guaranteeing Subsidiary hereby assumes all the obligations of the Third Merged Subsidiary
under its Subsidiary Guarantee; and the Fourth Guaranteeing Subsidiary hereby assumes all the
obligations of the Fourth Merged Subsidiary under its Subsidiary Guarantee. The obligations so
assumed by each of the Guaranteeing Subsidiaries shall be deemed for any and all purposes of the
Indenture to constitute a Subsidiary Guarantee of each Guaranteeing Subsidiary, and each of the
Guaranteeing Subsidiaries hereby agrees to be bound by the terms, conditions and other provisions
of the Indenture with all attendant rights, duties and obligations stated therein, on a joint and
several basis with the Subsidiary Guarantors parties hereto and thereto, with the same force and
effect as if originally named as a Subsidiary Guarantor therein and as if such party executed the
Indenture on the date thereof.

ARTICLE 3

               Section 3.01. Except as specifically modified herein, the Indenture and the Notes are in all
respects ratified and confirmed (mutatis mutandis) and shall remain in full force and effect in
accordance with their terms.

               Section 3.02. All capitalized terms used but not defined herein shall have the same respective
meanings ascribed to them in the Indenture.

               Section 3.03. Except as otherwise expressly provided herein, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this
Supplemental Indenture. This Supplemental Indenture is executed and accepted by the Trustee
subject to all of the terms and conditions set forth in the Indenture with the same force and
effect as if those terms and conditions were repeated at length herein and made applicable to the
Trustee with respect hereto.

               Section 3.04. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

               Section 3.05. The parties may sign any number of copies of this Supplemental Indenture. Each
signed copy shall be an original, but all of them together represent the same agreement.

               Section 3.06. The headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Supplemental Indenture.

               Section 3.07. The recitals hereto are statements only of the Company, the Subsidiary
Guarantors and the Guaranteeing Subsidiaries and shall not be considered statements of or
attributable to the Trustee.

[Signature Pages Follow]

2

 

               IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed and attested, all as of the date first above written.

	 	 	 	 	 
	 	GTG PIPELINE LLC,

as Subsidiary Guarantor

 	 
	 	By:  	
/s/ John C. Cirone
 	 
	 	 	Name:  	John C. Cirone 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	MERCURY MICHIGAN COMPANY, LLC,

as Subsidiary Guarantor

 	 
	 	By:  	
/s/ John C. Cirone
 	 
	 	 	Name:  	John C. Cirone 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	TERRA ENERGY COMPANY LLC,

as Subsidiary Guarantor

 	 
	 	By:  	
/s/ John C. Cirone
 	 
	 	 	Name:  	John C. Cirone 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	TERRA PIPELINE COMPANY LLC,

as Subsidiary Guarantor

 	 
	 	By:  	
/s/ John C. Cirone
 	 
	 	 	Name:  	John C. Cirone 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	QUICKSILVER RESOURCES INC.

 	 
	 	By:  	
/s/ John C. Cirone
 	 
	 	 	Name:  	John C. Cirone 	 
	 	 	Title:  	Senior Vice President 	 

 

 

	 	 	 	 	 
	 	COWTOWN PIPELINE FUNDING, INC.,

as Subsidiary Guarantor

 	 
	 	By:  	
/s/ John C. Cirone
 	 
	 	 	Name:  	John C. Cirone 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	COWTOWN PIPELINE MANAGEMENT, INC.,

as Subsidiary Guarantor

 	 
	 	By:  	
/s/ John C. Cirone
 	 
	 	 	Name:  	John C. Cirone 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	BEAVER CREEK PIPELINE, L.L.C.,

as Subsidiary Guarantor

 	 
	 	By:  	
/s/ John C. Cirone
 	 
	 	 	Name:  	John C. Cirone 	 
	 	 	Title:  	Senior Vice President 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	COWTOWN PIPELINE L.P.,	 
	 	 	as Subsidiary Guarantor
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	COWTOWN PIPELINE MANAGEMENT, INC,
	 	 	 	 	its general partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	
/s/ John C. Cirone  
	 

	 	 	 	 	 	Name:
	 	John C. Cirone
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:
	 	Senior Vice President
	 
	 	 	 	 	 	 	 	 
	 	 	COWTOWN GAS PROCESSING L.P.,
	 	 	as Subsidiary Guarantor
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	COWTOWN PIPELINE MANAGEMENT, INC,
	 	 	 	 	its general partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	
/s/ John C. Cirone
	 

	 	 	 	 	 	Name:
	 	John C. Cirone 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:
	 	Senior Vice President

 

 

	 	 	 	 	 
	 	THE BANK OF NEW YORK TRUST COMPANY,
 N.A.,

as Trustee

 	 
	 	By:  	/s/ Brian Echausse 

 	 
	 	 	Name:  	Brian Echausse 	 
	 	 	Title:  	Trust Officerexv10w22

Exhibit 10.22

Quicksilver Resources Inc.

Amended and Restated 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, as may be amended (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 or Restricted Stock Units. 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.

2

 

          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 or
Restricted Stock Units, vesting in installments of 33 1/3% on each of the first three anniversaries
of the date of grant of such Restricted Shares or Restricted Stock Units. The number of Restricted
Shares or Restricted Stock Units 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.

3

 

          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.

          Restricted Stock Units: A grant of “Restricted Stock Units” 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.

4

 

          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 or Restricted Stock Units 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 or Restricted Stock Units.

          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.

5

 

          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.

6

 

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	%

 

			

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

 

 

	 	 	 	 	 

	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.”

 

			

          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.

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