Document:

exv10w1

 

Exhibit 10.1

Big Stone II Power Plant

Amendment No. 2 to 

Participation Agreement

By and Among

CENTRAL MINNESOTA MUNICIPAL POWER AGENCY,

GREAT RIVER ENERGY,

HEARTLAND CONSUMERS POWER DISTRICT,

MONTANA-DAKOTA UTILITIES CO., A DIVISION OF MDU

RESOURCES GROUP, INC.,

OTTER TAIL CORPORATION dba OTTER TAIL POWER COMPANY,

SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY, AND

WESTERN MINNESOTA MUNICIPAL POWER AGENCY

As

Owners

August 18, 2006

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

Amendment No. 2 to Participation Agreement

     THIS AMENDMENT NO. 2 TO PARTICIPATION AGREEMENT (this “Amendment”) is made as of August
18, 2006, by and among Central Minnesota Municipal Power Agency, an agency incorporated under the
laws of the State of Minnesota (“CMMPA”), Great River Energy, a cooperative corporation
incorporated under the laws of the State of Minnesota (“GRE”), Heartland Consumers Power District,
a consumers power district formed and organized under the South Dakota Consumers Power District Law
(Chapter 49-35 of the South Dakota Codified Laws) (“Heartland”), Montana-Dakota Utilities Co., a
Division of MDU Resources Group, Inc., a corporation incorporated under the laws of the State of
Delaware (“Montana-Dakota”), Otter Tail Corporation, a corporation incorporated under the laws of
the State of Minnesota, doing business as Otter Tail Power Company (“Otter Tail”), Southern
Minnesota Municipal Power Agency, a municipal corporation and political subdivision of the State of
Minnesota (“SMMPA”), and Western Minnesota Municipal Power Agency, a municipal corporation and
political subdivision of the State of Minnesota (“WMMPA”) (each individually a “Party” and,
collectively, the “Parties”).

RECITALS

     WHEREAS, the Parties have entered into a Participation Agreement, dated June 30, 2005 (the
“Agreement”), and an Amendment No. 1 to the Participation Agreement dated effective as of June 1,
2006 (the “Amendment No. 1”) (collectively with the Agreement, the “Amended Agreement”), to provide
for their ownership as tenants in common of BSP II and set forth certain responsibilities and
mechanisms for the design, construction, ownership, operation, maintenance and repair of BSP II;
and

     WHEREAS, the Parties desire to amend the Agreement and the Amendment No. 1 as and to the
extent provided in this Amendment.

     NOW, THEREFORE, in consideration of the agreements and covenants set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound by this Amendment, the Parties covenant and agree as follows:

AGREEMENTS

     1.01 Defined Terms. Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.

     1.02 Amendments. The Amended Agreement is hereby amended as follows:

     (a) In Section 3.05(b) of the Amended Agreement, the date “August 31, 2006” is hereby replaced
with “November 30, 2006”.

     (b) In Section 3.05(b)(i)(B) of the Amended Agreement, the date “September 30, 2006” is hereby
replaced with the date “December 31, 2006”.

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

     (c) A new Section 3.05(c) is hereby inserted into the Amended Agreement:

“At any time prior to 2 p.m. Central Time on September 15, 2006 (“Early Withdrawal
Period’), any Owner may withdraw from the Project pursuant to Section 3.05(b) as a
result of (*) by providing written notice of its
withdrawal, transmitted electronically (facsimile or electronic mail) to the other
Owners prior to the end of the Early Withdrawal Period. Any Owner withdrawing during
such Early Withdrawal Period as a result of (*) shall deposit into the Trust Account on or before thirty (30) days after such notice
of withdrawal, a payment equal to (*) per kilowatt multiplied by that Owner’s
Ownership Share (“Early Withdrawal Deposit”).

In the event one or more Owners elects to withdraw during the Early Withdrawal
Period, then for purposes of the vote by the Coordination Committee contemplated in
Section 3.05(b) (the “Project Vote”) such Owner(s)
shall be deemed to have (*). Furthermore, for purposes of the Project Vote, all Owners’
Ownership Share (both for Owners who withdrew during the Early Withdrawal Period and
for those who did not) shall be as calculated without reallocation.

Following an Owner’s withdrawal pursuant to this Section 3.05(c), the withdrawing
Owner shall pay its obligations under Section 3.08 as they are invoiced by Operator.
The Early Withdrawal Deposit shall not be used for the purpose of paying such
obligations.

If a Double Majority votes in favor of the Project continuing when the Project Vote
is taken then an Owner who properly withdraws under this Section 3.05(c) shall have
no other obligations except those required under Sections 3.08 and 16.06, and it
shall not be entitled to any refund of its Early Withdrawal Deposit.

If a Double Majority does not vote in favor of the Project continuing when the
Project Vote is taken, or if both Otter Tail and Montana-Dakota
withdraw from the Project, then an Owner who withdraws during the
Early Withdrawal Period shall be reimbursed its Early Withdrawal
Deposit less its portion of Project Costs described in Section 3.08
and those Project Costs incurred for winding up the Project as
described in Section 14.02. To the extent such Project Costs are not yet known,
they shall be reasonably estimated by the Operator, and thereafter, if such
estimates are not adequate to cover all such costs, then the withdrawing Owner shall
pay such additional Project Costs as they are invoiced by the Operator.”

     (d) The first sentence of Section 3.09(b) of the Amended Agreement is amended to provide as
follows: “If an Owner withdraws from the Project pursuant to Section 3.05(b) or 3.05(c), and
either Montana-Dakota or Otter Tail (or both) have not withdrawn, then:”

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

     (e) Section 14.02(c) is hereby replaced with the following: “the deposit of any proceeds from
the disposition in the Trust Account (provided, however, that an Owner that withdraws from the
Project pursuant to Section 3.05(b)(i) or 3.05(c) of this
Agreement shall not be entitled to receive any payment paid by such Owner in connection with such withdrawal
pursuant to Section 3.05(b)(i) or Section 3.05(c) of this Agreement or otherwise); and”

     1.03 Continuing Effect; Ratification. Except as expressly amended herein, all other terms,
covenants and conditions contained in the Amended Agreement shall continue to remain unchanged and
in full force and effect and are hereby ratified and confirmed.

     1.04 Governing Law. This Amendment shall be interpreted and enforced in accordance
with the Laws of the State of South Dakota, notwithstanding any conflict of law provision to the
contrary.

     1.05 Captions. All titles, subject headings, section titles and similar items are provided
for the purpose of reference and convenience and are not intended to affect the meaning of the
content or scope of this Amendment.

     1.06 Counterparts. This Amendment may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall constitute but one and the
same agreement. Counterpart signatures may be delivered by facsimile or electronic transmission,
each of which shall have the same force and effect as an original signed copy.

     1.07 Authority. Each signatory to this Amendment represents that he/she has the authority to
execute and deliver this Amendment on behalf of the party set forth above his/her signature.

[Signature pages follow.

The remainder of this page is intentionally blank.]

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

     IN WITNESS WHEREOF, the Parties have caused their names to be hereunto subscribed by their
officers thereunto duly authorized, intending thereby that this Amendment shall be effective as of
the date set forth above.

	 	 	 	 	 
	OWNERS: 

CENTRAL MINNESOTA MUNICIPAL POWER AGENCY

 	 
	 	By   /s/ Bob Elston
 	 
	 	Bob Elston 	 
	 	Its President 	 
	 

[Signatures continued on next page.]

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

     IN WITNESS WHEREOF, the Parties have caused their names to be hereunto subscribed by their
officers thereunto duly authorized, intending thereby that this Amendment shall be effective as of
the date set forth above.

	 	 	 	 	 
	OWNERS:

HEARTLAND CONSUMERS POWER

DISTRICT

 	 
	 	By   /s/ Michael McDowell
 	 
	 	Michael McDowell 	 
	 	Its General Manager 	 
	 

[Signatures continued on next page.]

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

     IN WITNESS WHEREOF, the Parties have caused their names to be hereunto subscribed by their
officers thereunto duly authorized, intending thereby that this Amendment shall be effective as of
the date set forth above.

	 	 	 	 	 
	OWNERS:

SOUTHERN MINNESOTA MUNICIPAL

POWER AGENCY

 	 
	 	By    /s/ Raymond M. Hayward
 	 
	 	Raymond A. Hayward 	 
	 	Its Executive Director and CEO 	 
	 

[Signatures continued on next page.]

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

     IN WITNESS WHEREOF, the Parties have caused their names to be hereunto subscribed by their
officers thereunto duly authorized, intending thereby that this Amendment shall be effective as of
the date set forth above.

	 	 	 	 	 
	OWNERS:

WESTERN MINNESOTA MUNICIPAL

POWER AGENCY

 	 
	 	By   /s/ Donald E. Habicht
 	 
	 	Donald E. Habicht 	 
	 	Its President 	 
	 

[Signatures continued on next page.]

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

     IN WITNESS WHEREOF, the Parties have caused their names to be hereunto subscribed by their
officers thereunto duly authorized, intending thereby that this Amendment shall be effective as of
the date set forth above.

	 	 	 	 	 
	OWNERS:

GREAT RIVER ENERGY

 	 
	 	By    /s/ David Saggau
 	 
	 	David Saggau 	 
	 	Its President and Chief Executive Officer 	 
	 

[Signatures continued on next page.]

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

     IN WITNESS WHEREOF, the Parties have caused their names to be hereunto subscribed by their
officers thereunto duly authorized, intending thereby that this Amendment shall be effective as of
the date set forth above.

	 	 	 	 	 
	OWNERS:

MONTANA-DAKOTA UTILITIES CO.,

a Division of MDU Resources Group, Inc.

 	 
	 	By     /s/ Bruce T. Imsdahl
 	 
	 	Bruce T. Imsdahl 	 
	 	Its President and Chief Executive Officer 	 
	 

[Signatures continued on next page.]

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006

 

 

     IN WITNESS WHEREOF, the Parties have caused their names to be hereunto subscribed by their
officers thereunto duly authorized, intending thereby that this Amendment shall be effective as of
the date set forth above.

	 	 	 	 	 
	OWNERS:

OTTER TAIL CORPORATION

dba Otter Tail Power Company

 	 
	 	By   /s/ Charles S. MacFarlane
 	 
	 	Charles S. MacFarlane 	 
	 	Its President 	 
	 

	 	 	(*) Confidential information has been omitted and filed separately with the Commission pursuant
to Rule 24b-2.

			
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	 	Amendment No. 2 to Participation Agreement

August 18, 2006exv10w1

 

Exhibit 10.1

QUICKSILVER RESOURCES INC.

AMENDED AND RESTATED

KEY EMPLOYEE

CHANGE IN CONTROL RETENTION INCENTIVE PLAN

     WHEREAS, Quicksilver Resources Inc., a Delaware corporation (the “Company”), considers it to
be in the best interests of its stockholders to encourage the continued employment of certain Key
Employees (as defined herein) notwithstanding the possibility, threat or occurrence of a Change in
Control (as defined herein);

     WHEREAS, the Company believes that the possibility of the occurrence of a Change in
Control may result in the termination by the Key Employee of the Key Employee’s employment by the
Company or in the distraction of the Key Employee from the performance of his or her duties to the
Company, in either case to the detriment of the Company and its stockholders;

     WHEREAS, the Company recognizes that the Key Employee could suffer adverse financial
and professional consequences if a Change in Control were to occur; and

     WHEREAS, the Company has determined that it is advisable to establish a severance
benefit program to protect the Key Employee if a Change in Control occurs, thereby encouraging the
Key Employee to remain in the employ of the Company and not to be distracted from the performance
of his or her duties to the Company by the possibility of a Change in Control.

     NOW, THEREFORE, the Company adopts the Quicksilver Resources Inc. Amended and Restated Key
Employee Change in Control Retention Incentive Plan, the terms of which are as follows:

ARTICLE 1

DEFINITIONS

     1.1 “Base Salary” means the Participant’s annual gross salary before any deductions,
exclusions or any deferrals or contributions under any Company plan or program, but excluding
bonuses, incentive compensation, deferred compensation, employee benefits, expense reimbursements
or any other non-salary form of compensation being received by a Participant (determined without
regard to any reduction in such Base Salary that occurs after a Change in Control).

     1.2 “Benchmark Bonus” means the greater of (a) the average of the three annual bonuses earned
by the Participant during the three Fiscal Years preceding the Change in Control event or (b) the
annual bonus that would be payable to the Participant if the target level of performance was
achieved for that year under the terms of the Company’s annual incentive plan applicable to such
Participant. In the event that a Participant received a bonus in a year in which he was not
employed for the entire 12 months of that year, such bonus will be annualized for purposes of
determining the average as set forth in this Article 1.2(a).

 

 

     1.3 “Benefits” means the severance benefits a Participant is entitled to receive pursuant to
Article 3 hereof, and any retention bonus a Participant is entitled to receive pursuant to Article
5 hereof.

     1.4 “Board” means the Board of Directors of the Company or its direct or indirect parent.

     1.5 “Cause” means (i) the conviction of the Participant for any felony involving dishonesty,
fraud or breach of trust or (ii) the willful engagement by the Participant in gross misconduct in
the performance of his or her duties that materially injures the Company.

     1.6 “Change in Control” means the occurrence of any of the following after the Effective Date:

          (a) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (“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 shall not constitute a Change in Control: (i) any acquisition of Voting Stock of the
Company directly from the Company that is approved by a majority of the Incumbent Directors; (ii)
any acquisition of Voting Stock of the Company by the Company or any Subsidiary of the Company;
(iii) 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 (iv) 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;

          (b) a majority of the Board ceases to be comprised of Incumbent Directors; or

          (c) 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 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).

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     For purposes of this Plan, (i) “Incumbent Directors” means the individuals who, as of the date
hereof, 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 shareholders, 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) and (ii) “Voting Stock” means securities entitled
to vote generally in the election of Directors.

     1.7 “Code” means the Internal Revenue Code of 1986, as amended.

     1.8 “Company” means Quicksilver Resources Inc. The term “Company” shall also include any
Successor, whether the liability of such Successor under the Plan is established by contract or
occurs by operation of law.

     1.9 “Effective Date” means the date on which the Plan is adopted.

     1.10 “Employment Termination Date” means the date on which the employment relationship between
the Participant and the Company is terminated due to an Involuntary Termination.

     1.11 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     1.12 “Good Reason Event” means the occurrence of one or more of the following events or
conditions after the occurrence of a Change in Control:

          (a) the Company removes the Participant from, or fails to re-elect or appoint the Participant
to, any duties or position with the Company that were assigned or held by the Participant
immediately before the occurrence of the Change in Control, except that a nominal change in the
Participant’s title that is merely descriptive and does not affect rank or status shall not
constitute such an event;

          (b) the Company or a Subsidiary assigns to the Participant any duties inconsistent with the
Participant’s position (including offices, titles and reporting requirements), authority, duties or
responsibilities with the Company or a Subsidiary in effect immediately before the occurrence of
the Change in Control;

          (c) the Company takes any action that results in a material diminution of the Participant’s
position, authority, duties or responsibilities with the Company or a Subsidiary in effect
immediately before the occurrence of the Change in Control, or otherwise takes any action that
materially interferes therewith;

          (d) the Company reduces the Participant’s Base Salary or Benchmark Bonus;

          (e) the Company or a Subsidiary relocates the Participant’s principal workplace to an area
that is located outside of a radius of 50 miles from the location of the Participant’s principal
workplace immediately prior to the Change in Control, or requires the Participant to perform a
majority of his or her duties more than 50 miles from the Participant’s

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principal work location (determined as of the date of the Change in Control) for a period of
more than 21 consecutive days or for more than 90 days in any calendar year;

          (f) the Company or a Subsidiary fails to (i) continue in effect any bonus, incentive, profit
sharing, performance, savings, retirement or pension policy, plan, program or arrangement (such
policies, plans, programs and arrangements collectively being referred to herein as
“Basic Benefit Plans” ), including, but not limited to, any deferred
compensation, supplemental executive retirement or other retirement income, stock option, stock
purchase, stock appreciation, or similar policy, plan, program or arrangement of the Company or a
Subsidiary, in which the Participant was a participant immediately before the occurrence of the
Change in Control, unless an equitable and reasonably comparable arrangement (embodied in a
substitute or alternative benefit or plan) shall have been made with respect to such Basic Benefit
Plan promptly following the occurrence of the Change in Control, or (ii) continue the
Participant’s participation in any Basic Benefit Plan (or any substitute or alternative
plan) on substantially the same basis, both in terms of the amount of benefits provided to the
Participant (which are in any event always subject to the terms of any applicable Basic Benefit
Plan) and the level of the Participant’s participation relative to other participants, as
existed immediately before the occurrence of the Change in Control;

          (g) the Company or a Subsidiary fails to continue to provide the Participant with benefits
substantially similar to those enjoyed by the Participant under any of the Company’s or a
Subsidiary’s other benefit plans, policies, programs and arrangements, including, but not limited
to, life insurance, medical, dental, health, hospital, accident or disability plans, in which the
Participant was a participant immediately before the occurrence of the Change in Control;

          (h) the Company takes any action that would directly or indirectly materially reduce any other
non-contractual benefits that were provided to the Participant by the Company immediately before
the occurrence of the Change in Control or deprive the Participant of any material fringe benefit
enjoyed by him or her immediately before the occurrence of the Change in Control;

          (i) the Company fails to provide the Participant with the number of paid vacation days to
which he or she was entitled in accordance with the Company’s vacation policy in effect immediately
before the occurrence of the Change in Control;

          (j) the Company fails to continue to provide the Participant with office space, related
facilities and support personnel (including, but not limited to, administrative and secretarial
assistance) (i) that are both commensurate with Participant’s responsibilities to and position with
the Company immediately before the occurrence of the Change in Control and not materially
dissimilar to the office space, related facilities and support personnel provided to employees of
the Company having comparable responsibility to the Participant, or (ii) that are physically
located at the Company’s principal executive offices;

          (k) the Company fails to honor any provision of this Plan; or

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          (l) the Company gives effective notice of an election to terminate at the end of the term or
extended the term of any employment agreement that the Participant has or may in the future have
with the Company or the Successor in accordance with the terms of any such agreement.

     1.13 “Involuntary Termination” means the termination of a Participant’s employment
relationship with the Company and each Subsidiary (i) by the Company or a Subsidiary for any reason
other than Cause, or (ii) by the Participant on account of a Good Reason Event. For purposes of
the Plan, a Participant’s termination will not be considered to be on account of a Good Reason
Event unless the Participant terminates employment no more than 60 days following such Good Reason
Event. A Participant shall not be deemed to have incurred an Involuntary Termination by reason of
the transfer of the Participant’s employment between the Company and any of its Subsidiaries, or
among Subsidiaries. The Plan Administrator shall determine, in its sole discretion, whether a
Participant’s termination of employment from the Company or any Subsidiary constitutes an
Involuntary Termination.

     1.14 “Key Employee” means an employee of the Company or any Subsidiary whose name appears on
Exhibit B which is attached hereto and made a part hereof for all purposes, as the same may be
amended from time to time by the Board or the Chief Executive Officer of the Company.

     1.15 “Participant” means an individual who (i) is a Key Employee on the date a Change in
Control occurs and (ii) is not eligible to participate in the Quicksilver Resources Inc. Executive
Change in Control Retention Incentive Plan. An individual who is classified by the Company as a
temporary employee or an independent contractor on the date a Change in Control occurs is not
eligible to participate in the Plan (even if he or she is subsequently reclassified by the Internal
Revenue Service or a court as a common law employee of the Company and the Company acquiesces to
such reclassification). Notwithstanding the foregoing, in the event that a Key Employee has
entered into an employment agreement with the Company or a Subsidiary, such Key Employee will not
be deemed a Participant under this Plan unless such employment agreement specifically adopts and
incorporates this Plan by reference.

     1.16 “Person” means any individual, entity or group that is a “person” within the meaning of
Section 3(a)(9), 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended.

     1.17 “Plan” means the Quicksilver Resources Inc. Amended and Restated Key Employee Change in
Control Retention Incentive Plan, as set forth herein and as amended from time to time.

     1.18 “Plan Administrator” means the Company; however, the Company may designate any Person or
a committee to administer the Plan in accordance with the provisions of Article 7.

     1.19 “Release” means the Release Agreement in substantially the form attached hereto as
Exhibit A and made a part hereof for all purposes.

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     1.20 “Subsidiary” means a corporation, partnership, limited liability company or other entity
in which the Company owns directly or indirectly more than 50% of the outstanding shares of voting
stock or other voting interest.

     1.21 “Successor” means a person with or into which the Company shall have been merged or
consolidated or to which the Company shall have transferred all or substantially all of its assets.

ARTICLE 2

ELIGIBILITY

          (a) Except as specified herein, a Participant who incurs an Involuntary Termination within two
years after the occurrence of a Change in Control (including such a termination on the date of the
Change in Control) shall be entitled to the severance benefits described in Article 3 hereof,
provided the Participant executes and delivers to the Company a Release and does not exercise any
right specified in the Release to revoke such Release.

          (b) The Plan does not provide benefits with respect to any termination of employment prior to
the occurrence of a Change in Control, whether such termination is for Cause or otherwise. A
Participant will forfeit all Benefits under the Plan if he or she is discharged by the Company for
Cause

ARTICLE 3

CHANGE IN CONTROL BENEFITS

     The Company shall pay or provide a Participant who has satisfied the requirements of Article 2
hereof the following Benefits:

          (a) A single sum cash payment equal to two times the sum of (i) the Participant’s Base Salary,
plus (ii) the Participant’s Benchmark Bonus.

          (b) To the extent permitted by law, the Company shall take all actions necessary to cause the
Participant’s account balances under the Company’s 401(k) Plan to become fully vested and
nonforfeitable.

          (c) All outstanding stock options and restricted stock awards held by the Participant shall
immediately become fully vested.

          (d) The Company (at its sole expense) shall take the following actions:

               (i) Throughout the two years following the Employment Termination Date, the Company
shall maintain in effect, and not materially reduce the benefits provided by the group
health insurance and group life insurance plans in which the Participant participated
immediately prior to the Employment Termination Date; and

               (ii) the Company shall arrange for the Participant’s uninterrupted participation
throughout the two-year period commencing on the Participant’s Employment Termination Date
in such group health insurance and group life insurance

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plans, provided that if the Participant’s participation after his or her Employment
Termination Date in any such plan is not permitted by the terms of that plan, then
throughout such two year period, the Company (at its sole expense) shall provide the
Participant with substantially the same benefits that were provided to the Participant under
such plan immediately before the Employment Termination Date.

          (e) Benefits under the Plan shall not be taken into account as compensation for purposes of
determining contributions or benefits under any other employee benefit plan of the Company or a
Subsidiary. In addition, Benefits under the Plan shall be reduced by any severance, termination or
similar payments payable to a Participant pursuant to any employment, change in control, severance
or similar agreement with the Company or a Subsidiary.

ARTICLE 4

TIME OF SEVERANCE PAYMENT

     The Company shall pay the Participant the cash severance benefits described in paragraph (a)
of Article 3 within the later of 30 days after the Participant’s Employment Termination Date or
five days after the Participant’s Release described in Article 2 becomes irrevocable.

ARTICLE 5

RETENTION BONUS

     If a Participant remains employed by the Company or a Subsidiary throughout the six-month
period following a Change in Control, then six months after the date of the Change in Control the
Company shall pay to the Participant, in a single cash payment, a retention bonus equal to one-half
(1/2) of the Participant’s Base Salary (without regard to whether the Participant is or ever will
become entitled to severance benefits under Article 3 hereof).

ARTICLE 6

LIMITATION ON PAYMENT OF BENEFITS

     Notwithstanding any provision of this Plan to the contrary, if any amount or benefit to be
paid or provided under this 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 and benefits
to be paid or provided under this 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 or benefit, 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 and benefits 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 the Participant or the Company, the determination of whether any reduction in
such payments or benefits to be provided under this 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 or benefits may be reduced by reason of the limitations

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contained in this Article will not of itself limit or otherwise affect any other rights of the
Participant other than pursuant to this Plan. In the event that any payment or benefit intended to
be provided under this Plan or otherwise is required to be reduced pursuant to this Article, the
Participant will be entitled to designate the payments and/or benefits to be so reduced in order to
give effect to this Article. The Company will provide the Participant with all information
reasonably requested by the Participant to permit the Participant to make such designation. In the
event that the Participant fails to make such designation within 10 business days of the Employment
Termination Date, the Company may effect such reduction in any manner it deems appropriate.

ARTICLE 7

UNFUNDED ARRANGEMENT

     The plan is unfunded, and all cash Benefits will be paid, as needed, from the general assets
of the Company. The Plan is only a general corporate commitment and each Participant must rely
upon the general credit of the Company for the fulfillment of its obligations hereunder. Under all
circumstances the rights of Participants to any asset held by the Company will be no greater than
the rights expressed in this Plan. Nothing contained in this Plan shall constitute a guarantee by
the Company that the assets of the Company will be sufficient to pay any Benefits under this Plan
or would place the Participant in a secured position ahead of general creditors of the Company; the
Participants are only unsecured creditors of the Company with respect to their Plan benefits, and
the Plan constitutes a mere promise by the Company to make Benefit payments in the future. No
specific assets of the Company have been or shall be set aside, or shall in any way be transferred
to a trust or shall be pledged in any way for the performance of the Company’s obligations under
the Plan which would remove such assets from being subject to the general creditors of the Company.

ARTICLE 8

ADMINISTRATION OF THE PLAN

     The Plan Administrator shall have the full power and authority to administer the Plan, carry
out its terms and conditions and effectuate its purposes. The Plan Administrator shall be the
“named fiduciary,” as such term is defined in ERISA, of the Plan, with responsibility for
administration of the Plan.

     The Plan Administrator shall serve without compensation for its services as such. However,
all reasonable expenses of the Plan Administrator shall be paid or reimbursed by the Company upon
proper documentation. The Plan Administrator shall be indemnified by the Company against personal
liability for actions taken in good faith in the discharge of duties as the Plan Administrator.

     The Plan Administrator shall keep all individual and group records relating to participants
and former participants and all other records necessary for the proper operation of the Plan. Such
records shall be made available to the Company and to each Participant for examination during
business hours except that a Participant shall examine only such records as pertain exclusively to
the examining Participant and to the Plan. The Plan Administrator shall prepare and shall file as
required by law or regulation all reports, forms, documents and other items

8

 

required by ERISA, and every other relevant statute, each as amended, and all regulations
thereunder (except that the Company, as payor of the Benefits, shall prepare and distribute to the
proper recipients all forms relating to withholding of income or wage taxes, Social Security taxes,
and other amounts which may be similarly reportable).

ARTICLE 9

AMENDMENT OR TERMINATION

     The Board reserves the right to amend or terminate the Plan at any time and in any manner
without the consent of any affected individual, which right includes, without limitation, the right
to change the individuals who are eligible to participate in the Plan from time to time. In
addition, without the consent of any affected individual, the Chief Executive Officer may amend
Exhibit B hereto from time to time in order to add individuals to the list of Key Employees or to
remove individuals from the list of Key Employees. Notwithstanding the foregoing, (i) for a period
of two years following a Change of Control, the Plan may not be terminated or amended in any manner
adverse to any eligible Participant without the written consent of each affected Participant and
(ii) any amendment to or termination of the Plan will not adversely affect the Benefits payable to
a Participant whose Employment Termination Date occurred prior to the date of such amendment or
termination.

ARTICLE 10

CLAIMS PROCEDURES

     10.1 Claim for Benefits.

     When a Benefit is due, a Claimant may submit a claim for Benefits to the office designated by
the Plan Administrator to receive claims. For purposes of this Article, “Claimant” means a
Participant or an authorized representative of a Participant who makes a claim for Benefits under
the Plan.

     10.2 Deadline for Notifications of Claim Determinations.

     If a Claimant’s claim for Benefits under the Plan is denied in whole or in part, the Plan
Administrator will provide to the Claimant a written notice of the claim decision within 90 days of
receipt of the claim. This 90-day period may be extended one time by the Plan Administrator for up
to 90 days, provided that the Plan Administrator notifies the Claimant, prior to the expiration of
such 90-day period, of the circumstances requiring the extension of time and the date by which the
Plan Administrator expects to render a decision. Claims not acted upon within the time prescribed
herein shall be deemed denied for purposes of proceeding to the review stage.

     10.3 Contents of Notices of Claims Denials.

     When a claim is denied (an adverse determination) in full or in part, the Plan Administrator
will provide the Claimant a written or electronic notification of the denial within the time frame
specified in Section 9.1. This notice will:

          (a) explain the specific reasons for the adverse determination;

9

 

          (b) reference the specific Plan provisions on which the adverse determination is based;

          (c) provide a description of any additional material or information necessary for the Claimant
to complete the claim and an explanation of why such material or information is necessary; and

          (d) provide a description of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the Claimant’s right to bring a civil action under
Section 502(a) of ERISA following an adverse claims determination on review.

     10.4 Appeals of Denied Claims.

     The Claimant will have 60 days after receiving the notice that the Claimant’s claim is denied
to appeal the adverse determination in writing to the Plan Administrator. The Claimant may submit
written comments, documents, records, and other information relevant to the claim, and such
information will be taken into account during the review, without regard to whether it was
submitted or considered in the initial claim determination. In addition, the Claimant will be
provided, upon request and free of charge, reasonable access to and copies of all documents,
records, and other information relevant to the claim.

     If no appeal of the adverse determination is made in writing to the Plan Administrator within
60 days after the Claimant’s receipt of the notice of denial, the denial of the claim is final.

     10.5 Deadlines for Notifications of Appeals Determinations.

     The Administrator will notify the Claimant of its determination on review of an adverse claim
determination within a reasonable period of time, but not later than 60 days from receipt of a
request for review of the adverse determination. This 60-day period may be extended one time by
the Plan Administrator for up to 60 days, provided that the Plan Administrator notifies the
Claimant, prior to the expiration of such 60-day period, of the circumstances requiring the
extension of time and the date by which the Plan Administrator expects to render a decision.

     10.6 Contents of Notices of Final Claims Determinations.

     Notice of the Plan’s claims decision will be given in writing or electronically. If the
Claimant’s claim is denied in whole or in part the notification will include:

          (a) the specific reasons for the denial;

          (b) reference to the specific Plan provisions on which the decision was based;

          (c) a statement of the Claimant’s right to receive, upon request and free of charge,
reasonable access to and copies of all documents, records, and other information relevant to the
claim; and

          (d) a statement of the Claimant’s right to bring a civil action in court under section 502(a)
of ERISA.

10

 

ARTICLE 11

MISCELLANEOUS

     11.1 Tax Withholding. The Company will calculate the deductions from the amount of the
benefit paid under the Plan for any taxes required to be withheld by federal, state or local
government and shall cause them to be withheld.

     11.2 Plan Not an Employment Contract. The adoption and maintenance of the Plan is not a
contract between the Company and its employees, which gives any employee the right to be retained
in its employment. Likewise, it is not intended to interfere with the rights of the Company to
discharge any employee at any time or to interfere with the employee’s right to terminate his or
her employment at any time.

     11.3 Alienation Prohibited. No benefits hereunder shall be subject to anticipation or
assignment by a Participant, to attachment by, interference with, or control of any creditor of a
Participant, or to being taken or reached by any legal or equitable process in satisfaction of any
debt or liability of a Participant prior to its actual receipt by the Participant. Any attempted
conveyance, transfer, assignment, mortgage, pledge, or encumbrance of the benefits hereunder prior
to payment thereof shall be void.

     11.4 Gender and Number. If the context requires it, words of one gender when used in the Plan
shall include the other genders, and words used in the singular or plural shall include the other.

     11.5 Severability. If any provision of the Plan is determined to be invalid or unenforceable,
that determination shall not affect the validity or enforceability of any other provision.

     11.6 Successors. The Company shall not, directly or indirectly, consolidate with, merge into
or sell or otherwise transfer all or substantially all of its assets to, any person, or permit any
person to consolidate with or merge into the Company, unless immediately after such consolidation,
merger, sale or transfer, the Successor shall have assumed in writing the Company’s obligations
under the Plan.

     11.7 Assignment; Binding Effect. This Plan shall be binding upon any Successor. The Company
shall not assign any of its obligations under the Plan unless (a) such assignment is to a
Successor, and (b) the requirements of Section 11.6 are fulfilled.

     11.8 Governing Law. The provisions of the Plan shall be construed, administered, and governed
under the laws of the State of Texas and, to the extent applicable, by the laws of the United
States.

	 	 	 	 	 
	 	QUICKSILVER RESOURCES INC.

 	 
	 	By:  	/s/ Glenn Darden
 	 
	 	Title:  President and Chief Executive Officer 	 
	 	 	 	 

11

 

	 	 	 	 	 

Exhibit A

QUICKSILVER RESOURCES INC.

AMENDED AND RESTATED

KEY EMPLOYEE

CHANGE IN CONTROL RETENTION INCENTIVE PLAN

RELEASE AGREEMENT

     This RELEASE is executed by                                          (the “Employee”) in
consideration of the severance benefits provided under the Quicksilver Resources Inc. Amended and
Restated Key Employee Change in Control Retention Incentive Plan (the “Plan”), and as a condition
to the receipt of such benefits.

     NOW THEREFORE, the Employee provides the following release:

     1. Release by Employee. I,                     , on behalf of myself and my
heirs and assigns, in consideration of the Company’s payment of the severance benefits in the
amount of $                     (less any amounts that the Company is required to withhold under
applicable laws), and other good and valuable consideration to be furnished to me pursuant to the
Plan, the sufficiency of which is hereby acknowledged, and as a material inducement to the Company
to enter into this Release hereby release and forever discharge the Company, and its directors,
officers, shareholders, partners, representatives, agents, employees, predecessors, successors,
affiliates, divisions, subsidiaries and related entities and their respective directors, officers,
shareholders, agents, representatives and employees, from all claims of any nature whatsoever, from
the beginning of time to the date of the execution of this Release, known or unknown, suspected or
unsuspected, including but not limited to all claims arising out of, based upon, or relating to my
employment with the Company, or compensation for that employment. I understand that the
consideration provided for in the Plan exceeds anything of value to which I am already entitled
without the Plan.

     Without limiting the generality of the foregoing, I understand and agree that this release
includes, but is not limited to, claims based on or relating to: (a) any express or implied

1

 

Exhibit A

employment contract; (b) wrongful discharge; (c) termination in breach of public policy ; (d) age
discrimination under the Age Discrimination in Employment Act of 1967, as amended; (e) claims of
discrimination, harassment or retaliation under Title VII of the Civil Rights Act of 1964, as
amended, the Americans with Disabilities Act, or any other law which prohibits discrimination based
on race, color, age, ancestry, national origin, sex, sexual orientation, religion, mental or
physical disabilities, or marital status; (f) any other federal, state or local laws or regulations
prohibiting employment discrimination; (g) personal injury, defamation, assault, battery, invasion
of privacy, fraud, intentional or negligent misrepresentation of fact, intentional or negligent
infliction of emotional distress, or false imprisonment; (h) claims for additional wages,
compensation, overtime pay, severance pay or bonuses; and (i) claims for attorneys’ fees or costs.
I further understand that I am only waiving those claims that I have as of the date I sign this
Release, and not any claims that might arise in the future.

     I UNDERSTAND THAT THIS RELEASE COVERS BOTH CLAIMS THAT I KNOW ABOUT AND THOSE THAT I MAY NOT KNOW ABOUT.

     2. Indemnification Agreement. I, for myself, my heirs, executors, administrators and assigns,
release and agree to indemnify and hold harmless the Company and all other persons and firms
released above from all claims and causes of action of any nature, without limitation, which may be
asserted by any person, firm, or entity claiming by, through, or under me for any relief claimed to
be due me and released by this document.

     3. No Knowledge of Legal Violations. I further assert that during my employment with the
Company and activities regarding any company or organization affiliated with the Company, that I
have no information or knowledge of any legal irregularity, violation, or alleged violation of any
law, regulation, statute, or ordinance of any kind resulting from the operations of the Company, or
any other company or organization affiliated with the Company. I have never

2

 

Exhibit A

reported any such irregularity or violation to any superior with respect to the Company or any
company or organization affiliated with the Company.

     4. Forty-five (45) Day Review Period. I acknowledge that I am hereby advised in writing to
consult with an attorney prior to executing this Release to discuss the contents of this document
and its meaning. I understand that I have forty-five (45) days within which to consider this
waiver and release of my rights. I understand the terms and conditions of this Release in full,
agree to abide by this, and knowingly and voluntarily execute it without hidden reservations.

     5. Seven (7) Day Revocation Period. I understand that I will have 7 days after I sign this
Release during which I can revoke my signature and cancel my acceptance of the benefits under the
Plan for any reason, and that this Release shall not become effective or enforceable until after
this revocation period has expired. I understand that I may revoke or rescind this Release by
providing written notice of revocation to the Company’s General Counsel, [name, address, fax
number], within the 7-day revocation period. I understand that I will not be entitled to any
severance benefits under the Plan until the end of the 7-day revocation period.

     6. Receipt of Disclosures. I acknowledge that I have received the Disclosures that are
attached to this Release as Exhibit 1.

     7. Governing Law. The provisions of the Plan and this Release shall be construed,
administered and governed under the laws of the State of Texas and, to the extent applicable, the
laws of the United States.

     8. Entire Agreement. I understand that the Plan and this Release contain the entire agreement
and understanding between me and the Company regarding my employment and separation from that
employment and that no other covenants or promises have been made except those contained in the
Plan and this Release. The Plan and this document supersede all other agreements and arrangements
between the Company and me, whether written or oral.

     9. Attorneys’ Fees. I further agree I am fully responsible for any attorneys’ fees incurred
by me in consulting with an attorney and will indemnify and hold harmless the

3

 

Exhibit A

Company, and the other persons and entities released in this document for any claims or fees
asserted by any attorney claiming by and through me for attorneys’ fees or costs in connection with
the review or execution of this document.

     EXECUTED in multiple originals this                      day of                     , 200___.

	 	 	 
	 

	 	Signature of Employee
	 
	 	 
	 

	 	 

	 
	 	 
	 

	 	 

	 

	 	WITNESS

4

 

Exhibit A

NON-REVOCATION STATEMENT

     I,                     , acknowledge that at least seven (7) days have expired
since the execution of the Agreement by me on the                      day of                     , 200___, and I knowingly and voluntarily elect not to revoke this waiver and release of my
rights under the Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621 et seq..

     EXECUTED in multiple originals this                      day of                     , 200___.

	 	 	 
	 

	 	 

Signature of Employee

5

 

Exhibit 1

45-DAY WAIVER

DISCLOSURES

     Covered Class of Employees, Eligibility and Time Limits.

     The individuals selected to participate in the Plan are those employees of                     
(Company) who have completed six months of employment with the Company and who incur Involuntary
Terminations as defined in the Quicksilver Resources, Inc. Amended and Restated Key Employee Change
in Control Retention Incentive Plan (the “Plan”). This program will end on the date of                     .

     Eligible Employees.

     The following is a list of the job titles and ages of all employees who are eligible to
participate in the Plan:

	 	 	 
	Job Title	 	Age
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    

     Employees Not Eligible.

     The following is a list of the ages of employees who are not eligible to participate in the
Plan:

	 	 	 
	Job Title	 	Age
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    

6

 

Exhibit B

QUICKSILVER RESOURCES INC.

AMENDED AND RESTATED

KEY EMPLOYEE

CHANGE IN CONTROL RETENTION INCENTIVE PLAN

List of Key Employees of Quicksilver Resources Inc.

7

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