Document:

KWK 10-Q 2013.06.30 EX10.1

Exhibit 10.1

QUICKSILVER RESOURCES INC. 
SEVENTH AMENDED AND RESTATED 
2006 EQUITY PLAN

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Table of Contents
	
			
	 
	 
	Page

	Section 1.
	Purpose
	1

	Section 2.
	Term
	1

	Section 3.
	Definitions
	1

	Section 4.
	Shares Available Under Plan
	6

	Section 5.
	Limitations on Awards
	6

	Section 6.
	Stock Options
	7

	Section 7.
	Appreciation Rights
	8

	Section 8.
	Restricted Shares
	10

	Section 9.
	Restricted Stock Units
	11

	Section 10.
	Performance Shares and Performance Units
	12

	Section 11.
	Senior Executive Plan Bonuses
	13

	Section 12.
	Awards to Eligible Directors
	14

	Section 13.
	Transferability
	18

	Section 14.
	Adjustments
	19

	Section 15.
	Fractional Shares
	19

	Section 16.
	Withholding Taxes
	20

	Section 17.
	Administration of the Plan
	20

	Section 18.
	Amendments and Other Matters
	21

	Section 19.
	Governing Law
	22

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The Quicksilver Resources Inc. 2006 Equity Plan (the “Plan”) was established by Quicksilver Resources Inc., a Delaware corporation (the “Company”), effective as of May 23, 2006, and approved by stockholders of the Company on May 23, 2006.  The Company amended and restated the Plan effective as of May 23, 2007, November 24, 2008, May 20, 2009, November 16, 2011, April 13, 2012, and December 10, 2012, and again amends and restates the Plan effective as of May 15, 2013.
Section 1.Purpose.  The purpose of the Plan is to attract and retain the best available talent and encourage the highest level of performance by directors, executive officers and selected employees and consultants, and to provide them incentives to put forth maximum efforts for the success of the Company’s business, in order to serve the best interests of the Company and its stockholders.
Section 2.    Term.  The Plan will expire on May 23, 2016.  No further Awards will be made under the Plan on or after such date.  Awards that are outstanding on the date the Plan terminates will remain in effect according to their terms and the provisions of the Plan.
Section 3.    Definitions.  The following terms, when used in the Plan with initial capital letters, will have the following meanings:
(a)    “Appreciation Right” means a right granted pursuant to Section 7.
(b)    “Award” means the award of a Senior Executive Plan Bonus; the grant of Appreciation Rights, Stock Options, Performance Shares, Performance Units or Restricted Stock Units; or the grant or sale of Restricted Shares.  An Award may be an obligation of the Company or any Subsidiary.
(c)    “Board” means the Board of Directors of the Company.
(d)    “Change in Control” means 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, 

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the estate of Frank Darden, Lucy Darden, Anne Darden Self, Glenn Darden or Thomas Darden, or their respective successors, assigns, designees, heirs, beneficiaries, trusts, estates or controlled affiliates;
(ii)    a majority of the Board ceases to be comprised of Incumbent Directors; or
(iii)    the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the consolidated assets of the Company (each, a “Business Combination Transaction”) immediately after which (A) the Voting Stock of the Company outstanding immediately prior to such Business Combination Transaction does not continue to represent (either by remaining outstanding or by being converted into Voting Stock of the entity surviving, resulting from, or succeeding to all or substantially all of the Company’s consolidated assets as a result of, such Business Combination Transaction or any parent of such entity), at least 50% of the combined voting power of the then-outstanding shares of Voting Stock of the entity surviving, resulting from, or succeeding to all or substantially all of the Company’s consolidated assets as a result of, such Business Combination Transaction or any parent of any such entity (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries).
(e)    “Code” means the Internal Revenue Code of 1986, as amended.
(f)    “Committee” means the Compensation Committee of the Board and, to the extent that the administration of the Plan has been assumed by the Board pursuant to Section 17 or with respect to the administration of Section 12, the Board.
(g)    “Common Stock” means the common stock, par value $.01 per share, of the Company or any security into which such Common Stock may be changed by reason of any transaction or event of the type described in Section 14.
(h)    “Covered Employee” means a Participant who is, or is determined by the Committee to be likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision) and who is identified in writing by the Committee as a Covered Employee within the period specified in Section 11(a) for the fiscal year.
(i)    “Date of Grant” means the date specified by the Committee on which an Award will become effective.
(j)    “Deferral Period” means the period of time during which Restricted Stock Units are subject to deferral limitations under Section 9.

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(k)    “Eligible Director” means a member of the Board who is not an employee of the Company or any Subsidiary.
(l)    “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee which sets forth the terms and conditions of an Award.  An Evidence of Award may be in any electronic medium, may be limited to a notation on the books and records of the Company and need not be signed by a representative of the Company or a Participant.
(m)    “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(n)    “Grant Price” means the price per share of Common Stock at which an Appreciation Right is granted.
(o)    “Incumbent Directors” means the individuals who, as of the date first set forth above, are Directors of the Company and any individual becoming a Director subsequent to the date thereof 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).
(p)    “Management Objectives” means the measurable performance objectives, if any, established by the Committee for a Performance Period that are to be achieved with respect to an Award.  Management Objectives may be described in terms of company-wide objectives (i.e., the performance of the Company and all of its Subsidiaries) or in terms of objectives that are related to the performance of the individual Participant or of the division, Subsidiary, department, region or function within the Company or a Subsidiary in which the Participant receiving the Award is employed or on which the Participant’s efforts have the most influence.  The achievement of the Management Objectives established by the Committee for any Performance Period will be determined without regard to the effect on such Management Objectives of any acquisition or disposition by the Company of a trade or business, or of substantially all of the assets of a trade or business, during the Performance Period and without regard to any change in accounting standards by the Financial Accounting Standards Board or any successor entity.
The Management Objectives applicable to any Award that is intended to be qualified “performance-based compensation” within the meaning of Section 162(m) of the Code will be limited to specified levels of, growth in, or performance in, one or more of the following performance measures (excluding the effect of extraordinary or nonrecurring items unless the Committee specifically includes any such extraordinary or nonrecurring item at the time such Award is granted):
(i)    profitability measures;

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(ii)    cash flow measures;
(iii)    proven reserves;
(iv)    production growth rate;
(v)    revenue measures;
(vi)    business unit performance;
(vii)    leverage measures;
(viii)    stockholder return;
(ix)    expense management;
(x)    asset and liability measures;
(xi)    individual performance;
(xii)    supply chain efficiency;
(xiii)    productivity measures;
(xiv)    return measures; or
(xv)    product development and/or performance.
Subject to Section 162(m) of the Code to the extent an Award is intended to be qualified “performance-based compensation”, if the Committee determines that, as a result of a change in the business, operations, corporate structure or capital structure of the Company (other than an acquisition or disposition described in the first paragraph of this Section 3(p)), or the manner in which the Company conducts its business, or any other events or circumstances, the Management Objectives are no longer suitable, the Committee may in its discretion modify such Management Objectives or the related minimum acceptable level of achievement, in whole or in part, with respect to a Performance Period as the Committee deems appropriate and equitable.
(q)    “Market Value per Share” means, at any date, the closing sale price of the Common Stock on that date (or, if there are no sales on that date, the last preceding date on which there was a sale) on the principal national securities exchange or in the principal market on or in which the Common Stock is traded.
(r)    “Option Price” means the purchase price per share payable on exercise of a Stock Option.

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(s)    “Participant” means a (i) person who is selected by the Committee to receive an Award under the Plan and who at that time is an executive officer or other employee of or a consultant to the Company or any Subsidiary or (ii) an Eligible Director.
(t)    “Performance Period” means, with respect to an Award, a period of time within which the Management Objectives relating to such Award are to be measured. The Performance Period for a Senior Executive Plan Bonus will be the fiscal year of the Company, and, unless otherwise expressly provided in the Plan, the Performance Period for all other Awards will be established by the Committee at the time of the Award.
(u)    “Performance Share” means a bookkeeping entry that records the equivalent of one share of Common Stock awarded pursuant to Section 10.
(v)    “Performance Unit” means a unit equivalent to $1.00 (or such other value as the Committee determines) granted pursuant to Section 10.
(w)    “Restricted Stock Units” means an Award pursuant to Section 9 of the right to receive shares of Common Stock, cash or other consideration at the end of a specified Deferral Period.
(x)    “Restricted Shares” means shares of Common Stock granted or sold pursuant to Section 8 or Section 12 as to which neither the ownership restrictions nor the restrictions on transfer have expired.
(y)    “Rule 16b-3” means Rule 16b-3 under Section 16 of the Exchange Act, as amended (or any successor rule to the same effect).
(z)    “Senior Executive Plan Bonus” means an Award of annual incentive compensation made pursuant to and subject to the conditions set forth in Section 11.
(aa)    “Spread” means the excess of the Market Value per Share on the date an Appreciation Right is exercised over (i) the Option Price provided for in the Stock Option granted in tandem with the Appreciation Right or (ii) if there is no tandem Stock Option, the Grant Price provided for in the Appreciation Right, in either case multiplied by the number of shares of Common Stock in respect of which the Appreciation Right is exercised.
(bb)    “Stock Option” means the right to purchase shares of Common Stock upon exercise of an option granted pursuant to Section 6 or Section 12.
(cc)    “Subsidiary” means (i) any corporation of which at least 50% of the combined voting power of the then-outstanding shares of Voting Stock is owned directly or indirectly by the Company, (ii) any partnership of which at least 50% of the profits interest or capital interest is owned directly or indirectly by the Company and (iii) any other entity of which at least 50% of the total equity interest is owned directly or indirectly by the Company.

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(dd)    “Voting Stock” means the securities entitled to vote generally in the election of directors or persons who serve similar functions.
Section 4.    Shares Available Under Plan.  The number of shares of Common Stock that may be (a) subject to an Award of Appreciation Rights or Stock Options or (b) issued or transferred as Restricted Shares and released from all restrictions or in payment of Performance Shares, Performance Units, Restricted Stock Units or Senior Executive Plan Bonuses, in each case available for grant after May 15, 2013, will not exceed the number of Shares of Common Stock available for grant pursuant to prior approval of the Plan as of such date plus 12 million.  Such shares may be shares of original issuance, treasury shares, shares acquired by the Company or any of its Subsidiaries in the open market or otherwise or a combination of the foregoing.  The number of shares of Common Stock available under this Section 4 will be subject to adjustment as provided in Section 14 and will be further adjusted to include shares that relate to Awards that (i) expire or are forfeited, (ii) are withheld by, or tendered to, the Company or a Subsidiary in payment of the Option Price with respect to a Stock Option or in satisfaction of the taxes required to be withheld in connection with any Award granted under the Plan or (iii) are subject to an Appreciation Right that are not transferred to a Participant upon exercise of the Appreciation Right.
Section 5.    Limitations on Awards.  Awards under the Plan will be subject to the following limitations:
(a)    No more than 15 million shares of Common Stock, subject to adjustment as provided in Section 4, may be subject to an Award of Stock Options that are intended to qualify as incentive stock options under Section 422 of the Code.
(b)    The maximum number of shares of Common Stock that may be subject to Awards of Stock Options or Appreciation Rights granted to a Participant during any calendar year will not exceed 1,500,000 shares. The limitations set forth in this Section 5(b) will apply without regard to whether an Award of a Stock Option or Appreciation Right is settled in cash or in shares of Common Stock.
(c)    Except for Awards of Stock Options or Appreciation Rights the shares of Common Stock underlying which are counted against the individual limit set forth in Section 5(b), the maximum number of shares of Common Stock that may be subject to Awards that are intended to be qualified “performance-based compensation” within the meaning of Section 162(m) of the Code granted to a Participant during any calendar year will not exceed 1,500,000 shares.  The limitations set forth in this Section 5(c) will apply without regard to whether any such Award is settled in cash or in shares of Common Stock. 
(d)    The maximum aggregate cash value of payments to any Participant for any Performance Period pursuant to an award that is not denominated in shares and is intended to be qualified “performance-based compensation” (as such term is defined under Section 162(m) of the Code) will not exceed $5 million.

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(e)    Awards granted to an Eligible Director will be granted in accordance with and pursuant to Section 12.
Section 6.    Stock Options.  The Committee may from time to time authorize grants of options to any Participant to purchase shares of Common Stock upon such terms and conditions as it may determine in accordance with this Section 6.  Each Participant who is an employee of the Company or any Subsidiary will be eligible to receive a grant of Stock Options that are intended to qualify as incentive stock options within the meaning of Section 422 of the Code. Each grant of Stock Options may utilize any or all of the authorizations, and will be subject to all of the requirements, that are contained in the following provisions:
(a)    Each grant will specify the number of shares of Common Stock to which it relates.
(b)    Each grant will specify the Option Price, which will not be less than 100% of the Market Value per Share on the Date of Grant.
(c)    Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or a Subsidiary, as the case may be, or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company or a Subsidiary of shares of Common Stock owned by the Participant and having an aggregate Market Value per Share at the date of exercise equal to the aggregate Option Price, (iii) with the consent of the Committee, by authorizing the Company or a Subsidiary to withhold a number of shares of Common Stock otherwise issuable or deliverable to the Participant having an aggregate Market Value per Share on the date of exercise equal to the aggregate Option Price, (iv) by a combination of such methods of payment or (v) by any other method of payment approved by the Committee; provided, however, that the payment methods described in clauses (ii) and (iii) will not be available at any time that the Company or, if applicable, the Subsidiary is prohibited from purchasing or acquiring such shares of Common Stock.
(d)    To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker of some or all of the shares to which such exercise relates.
(e)    Successive grants may be made to the same Participant whether or not any Stock Options or other Awards previously granted to such Participant remain unexercised or outstanding.
(f)    Each grant will specify the required period or periods of continuous service by the Participant with the Company or any Subsidiary that are necessary before the Stock Options or installments thereof will become exercisable.
(g)    Any grant may specify the Management Objectives that must be achieved as a condition to the exercise of the Stock Options.

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(h)    Any grant may provide for the earlier exercise of the Stock Options in the event of a Change in Control or other similar transaction or event.
(i)    Stock Options may be (i) options which are intended to qualify under particular provisions of the Code, (ii) options which are not intended to so qualify or (iii) combinations of the foregoing.
(j)    On or after the Date of Grant, the Committee may provide for the payment to the Participant of dividend equivalents thereon in cash or Common Stock on a current, deferred or contingent basis.
(k)    No Stock Option will be exercisable more than ten years from the Date of Grant, unless the Evidence of Award provides for an extended exercise period in the event of death, disability or retirement.
(l)    The Committee will have the right to substitute Appreciation Rights for outstanding Options granted to one or more Participants, provided the terms and the economic benefit of the substituted Appreciation Rights are at least equivalent to the terms and economic benefit of such Options, as determined by the Committee in its discretion.
(m)    Any grant may provide for the effect on the Stock Options or any shares of Common Stock issued, or other payment made, with respect to the Stock Options of any conduct of the Participant determined by the Committee to be injurious, detrimental or prejudicial to any significant interest of the Company or any Subsidiary.
(n)    Each grant will be evidenced by an Evidence of Award, which may contain such terms and provisions, consistent with the Plan, as the Committee may approve, including without limitation provisions relating to the Participant’s termination of employment or other termination of service by reason of retirement, death, disability or otherwise.
Section 7.    Appreciation Rights.  The Committee may also from time to time authorize grants to any Participant of Appreciation Rights upon such terms and conditions as it may determine in accordance with this Section 7.  Appreciation Rights may be granted in tandem with Stock Options or separate and apart from a grant of Stock Options.  An Appreciation Right will be a right of the Participant to receive from the Company or a Subsidiary upon exercise an amount which will be determined by the Committee at the Date of Grant and will be expressed as a percentage of the Spread (not exceeding 100%) at the time of exercise.  An Appreciation Right granted in tandem with a Stock Option may be exercised only by surrender of the related Stock Option.  Each grant of an Appreciation Right may utilize any or all of the authorizations, and will be subject to all of the requirements, that are contained in the following provisions:

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(a)    Each grant will state whether it is made in tandem with Stock Options and, if not made in tandem with any Stock Options, will specify the number of shares of Common Stock in respect of which it is made.
(b)    Each grant made in tandem with Stock Options will specify the Option Price and each grant not made in tandem with Stock Options will specify the Grant Price, which in either case will not be less than 100% of the Market Value per Share on the Date of Grant.
(c)    Any grant may provide that the amount payable on exercise of an Appreciation Right may be paid (i) in cash or other consideration, (ii) in shares of Common Stock having an aggregate Market Value per Share equal to the Spread (or the designated percentage of the Spread) or (iii) in a combination thereof, as determined by the Committee in its discretion.
(d)    Any grant may specify that the amount payable to the Participant on exercise of an Appreciation Right may not exceed a maximum amount specified by the Committee at the Date of Grant.
(e)    Successive grants may be made to the same Participant whether or not any Appreciation Rights or other Awards previously granted to such Participant remain unexercised or outstanding.
(f)    Each grant will specify the required period or periods of continuous service by the Participant with the Company or any Subsidiary that are necessary before the Appreciation Rights or installments thereof will become exercisable, and will provide that no Appreciation Rights may be exercised except at a time when the Spread is positive and, with respect to any grant made in tandem with Stock Options, when the related Stock Options are also exercisable.
(g)    Any grant may specify the Management Objectives that must be achieved as a condition to the exercise of the Appreciation Rights.
(h)    Any grant may provide for the earlier exercise of the Appreciation Rights in the event of a Change in Control or other similar transaction or event.
(i)    On or after the Date of Grant, the Committee may provide for the payment to the Participant of dividend equivalents thereon in cash or Common Stock on a current, deferred or contingent basis.
(j)    No Appreciation Right will be exercisable more than ten years from the Date of Grant.
(k)    Any grant may provide for the effect on the Appreciation Rights or any shares of Common Stock issued, or other payment made, with respect to the Appreciation 

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Rights of any conduct of the Participant determined by the Committee to be injurious, detrimental or prejudicial to any significant interest of the Company or any Subsidiary.
(l)    Each grant will be evidenced by an Evidence of Award, which may contain such terms and provisions, consistent with the Plan, as the Committee may approve, including without limitation provisions relating to the Participant’s termination of employment or other termination of service by reason of retirement, death, disability or otherwise.
Section 8.    Restricted Shares.  The Committee may also from time to time authorize grants or sales to any Participant of Restricted Shares upon such terms and conditions as it may determine in accordance with this Section 8.  Each grant or sale will constitute an immediate transfer of the ownership of shares of Common Stock to the Participant in consideration of the performance of services, entitling such Participant to voting and other ownership rights, but subject to the restrictions set forth in this Section 8.  Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, that are contained in the following provisions:
(a)    Each grant or sale may be made without additional consideration or in consideration of a payment by the Participant that is less than the Market Value per Share at the Date of Grant, except as may otherwise be required by the Delaware General Corporation Law or other applicable law.
(b)    Each grant or sale may limit the Participant’s dividend rights during the period in which the shares of Restricted Shares are subject to any such restrictions.
(c)    Each grant or sale will provide that the Restricted Shares will be subject, for a period to be determined by the Committee at the Date of Grant, to one or more restrictions, including without limitation a restriction that constitutes a “substantial risk of forfeiture” within the meaning of Section 83 of the Code and the regulations of the Internal Revenue Service under such section.
(d)    Any grant or sale may specify the Management Objectives that, if achieved, will result in the termination or early termination of the restrictions applicable to the shares, provided that the Performance Period associated with such Management Objectives will be a period of no less than 12 calendar months.
(e)    Any grant or sale may provide for the early termination of any such restrictions in the event of a Change in Control or other similar transaction or event or the Participant’s termination of employment or service by reason of death, disability, retirement or otherwise.
(f)    Each grant or sale will provide that, during the period for which such restriction or restrictions are to continue, the transferability of the Restricted Shares will be prohibited or restricted in a manner and to the extent prescribed by the Committee at the Date of Grant (which restrictions may include without limitation rights of repurchase 

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or first refusal in favor of the Company or provisions subjecting the Restricted Shares to continuing restrictions in the hands of any transferee).
(g)    Any grant or sale may provide for the effect on the Restricted Shares or any shares of Common Stock issued free of restrictions, or other payment made, with respect to the Restricted Shares of any conduct of the Participant determined by the Committee to be injurious, detrimental or prejudicial to any significant interest of the Company or any Subsidiary.
(h)    Each grant or sale will be evidenced by an Evidence of Award, which may contain such terms and provisions, consistent with the Plan, as the Committee may approve, including without limitation provisions relating to the Participant’s termination of employment or other termination of service by reason of retirement, death, disability or otherwise.
Section 9.    Restricted Stock Units.  The Committee may also from time to time authorize grants or sales to any Participant of Restricted Stock Units upon such terms and conditions as it may determine in accordance with this Section 9. Each grant or sale will constitute the agreement by the Company or a Subsidiary to deliver shares of Common Stock, cash or other consideration to the Participant in the future in consideration of the performance of services, subject to the fulfillment during the Deferral Period of such conditions as the Committee may specify.  Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, that are contained in the following provisions:
(a)    Each grant or sale may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Market Value per Share on the Date of Grant, except as may otherwise be required by the Delaware General Corporation Law or other applicable law.
(b)    Each grant or sale will provide that the Restricted Stock Units will be subject to a Deferral Period, which will be fixed by the Committee on the Date of Grant.
(c)    Any grant or sale may specify the Management Objectives that, if achieved, will result in the termination or early termination of the Deferral Period, provided that the Performance Period associated with such Management Objectives will be a period of no less than 12 calendar months.
(d)    Any grant or sale may provide for the earlier termination of the Deferral Period in the event of a Change in Control or other similar transaction or event or the Participant’s termination of employment or service by reason of death, disability, retirement or otherwise.
(e)    During the Deferral Period, the Participant will not have any right to transfer any rights under the Restricted Stock Units, and will not have any rights of ownership in or any right to vote any shares of Common Stock that may be issued in 

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settlement of Restricted Stock Units, but the Committee may on or after the Date of Grant authorize the payment of dividend equivalents on such shares in cash or Common Stock on a current, deferred or contingent basis.
(f)    Any grant or sale may provide for the effect on the Restricted Stock Units or any shares of Common Stock issued free of restrictions, or other payment made, with respect to the Restricted Stock Units of any conduct of the Participant determined by the Committee to be injurious, detrimental or prejudicial to any significant interest of the Company or any Subsidiary.
(g)    Each grant or sale will be evidenced by an Evidence of Award, which will contain such terms and provisions as the Committee may determine consistent with the Plan, including without limitation provisions relating to the Participant’s termination of employment or other termination of service by reason of retirement, death, disability or otherwise.
Section 10.    Performance Shares and Performance Units.  The Committee may also from time to time authorize grants to any Participant of Performance Shares and Performance Units, which will become payable upon achievement of specified Management Objectives, upon such terms and conditions as it may determine in accordance with this Section 10 and, to the extent that such Award is intended to qualify as “performance-based compensation” under Section 162(m) of the Code, Section 162(m) of the Code (including making such determinations at the times required by Section 162(m) of the Code).  Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, that are contained in the following provisions:
(a)    Each grant will specify the number of Performance Shares or Performance Units to which it relates.
(b)    The Performance Period with respect to each Performance Share and Performance Unit will be determined by the Committee at the time of grant.
(c)    Each grant will specify the Management Objectives that, if achieved, will result in the payment of the Performance Shares or Performance Units.
(d)    Each grant will specify the time and manner of payment of Performance Shares or Performance Units which have become payable, which payment may be made in (i) cash, (ii) shares of Common Stock having an aggregate Market Value per Share equal to the aggregate value of the Performance Shares or Performance Units which have become payable or (iii) any combination thereof, as determined by the Committee in its discretion at the time of payment.
(e)    Any grant of Performance Shares may specify that the amount payable with respect thereto may not exceed a maximum specified by the Committee on the Date of Grant.  Any grant of Performance Units may specify that the amount payable, or the 

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number of shares of Common Stock issued, with respect to the Performance Units may not exceed maximums specified by the Committee on the Date of Grant.
(f)    On or after the Date of Grant, the Committee may provide for the payment to the Participant of dividend equivalents on Performance Shares in cash or Common Stock on a current, deferred or contingent basis.
(g)    Any grant may provide for the effect on the Performance Shares or Performance Units or any shares of Common Stock issued, or other payment made, with respect to the Performance Shares or Performance Units of any conduct of the Participant determined by the Committee to be injurious, detrimental or prejudicial to any significant interest of the Company or any Subsidiary.
(h)    Each grant will be evidenced by an Evidence of Award, which will contain such terms and provisions as the Committee may determine consistent with the Plan, including without limitation provisions relating to the payment of the Performance Shares or Performance Units in the event of a Change in Control or other similar transaction or event and provisions relating to the Participant’s termination of employment or other termination of service by reason of retirement, death, disability or otherwise.
Section 11.    Senior Executive Plan Bonuses.  The Committee may from time to time authorize the payment of annual incentive compensation to a Participant who is a Covered Employee, which incentive compensation may become payable upon achievement of specified Management Objectives.  Subject to Section 5(c), Senior Executive Plan Bonuses will be payable upon such terms and conditions as the Committee may determine in accordance with the following provisions and Section 162(m) of the Code:
(a)    No later than 90 days after the first day of the Company’s fiscal year, the Committee will specify the Management Objectives that, if achieved, will result in the payment of a Senior Executive Plan Bonus for such year.
(b)    Following the close of the Company’s fiscal year, the Committee will certify in writing whether the specified Management Objectives have been achieved. Approved minutes of a meeting of the Committee at which such certification is made will be treated as written certification for this purpose.  The Committee will also specify the time and manner of payment of a Senior Executive Plan Bonus which becomes payable, which payment may be made in (i) cash or other consideration, (ii) shares of Common Stock having an aggregate Market Value per Share equal to the aggregate value of the Senior Executive Plan Bonus which has become payable or (iii) any combination thereof, as determined by the Committee in its discretion at the time of payment.
(c)    If a Change in Control occurs during a Performance Period, the Senior Executive Plan Bonus payable to each Participant for the Performance Period will be determined at the highest level of achievement of the Management Objectives, without regard to actual performance and without proration for less than a full Performance 

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Period.  The Senior Executive Plan Bonus will be paid at such time following the Change in Control as the Committee determines in its discretion, but in no event later than 30 days after the date of an event which results in a Change in Control.
(d)    Each grant may be evidenced by an Evidence of Award, which will contain such terms and provisions as the Committee may determine consistent with the Plan, including without limitation provisions relating to the Participant’s termination of employment by reason of retirement, death, disability or otherwise.
Section 12.    Awards to Eligible Directors.
(a)    Each individual who first becomes an Eligible Director after December 31, 2012, on a date subsequent to the first business day of a calendar year will be granted a number of Restricted Shares as of the date such individual becomes an Eligible Director equal to $99,000 (if the individual becomes an Eligible Director prior to July 1 of any year) or $49,500 (if the individual becomes an Eligible Director on or after July 1 of any year) divided by the Market Value per Share as of the date the individual first becomes an Eligible Director.  For purposes of this Section 12(a), an Eligible Director who ceases to be a member of the Board and thereafter becomes an Eligible Director again will be deemed to first become an Eligible Director on the date that such individual again becomes an Eligible Director.
(b)    On the first business day of each calendar year beginning during the term of the Plan and after December 31, 2012, each individual who is an Eligible Director (i) will be granted as of such first business day a number of Restricted Shares equal to $99,000 divided by the Market Value per Share as of that date and (ii) may elect to receive either an additional grant of Restricted Shares or a Stock Option to purchase shares of Common Stock in lieu of all or any portion of additional cash compensation of $106,000, provided that, in either case, the Eligible Director has elected in writing on or prior to the last day of the preceding calendar year to receive the Restricted Shares or the Stock Option described in this Section 12(b)(ii) in lieu of an equivalent amount of cash compensation from the Company.  If applicable, the number of Restricted Shares to be granted under Section 12(b)(ii) will be determined by dividing the amount of cash compensation the Restricted Shares are replacing by the Market Value per Share as of such first business day of the calendar year, and the number of shares covered by a Stock Option elected under Section 12(b)(ii) will be determined by dividing the amount of cash compensation the Stock Option is replacing by the Fair Value as of such first business day of the calendar year.
(c)    For purposes of this Section 12, “Fair Value” means either the Black Scholes Value (described below) or the value of a Stock Option to purchase one share of Common Stock calculated using such other valuation methodology as may at the time of grant be used by the Company to value Stock Options for financial reporting purposes, in each case calculated as of the date of grant of the Stock Option.  For this purpose, “Black Scholes Value” means the value of a Stock Option to purchase one share of Common Stock calculated using the Black Scholes option value model.  Unless otherwise provided 

14

by the Board prior to the applicable date of grant, the Black Scholes option valuation for a Stock Option to be granted on any date will be based on the following assumptions:
(i)    the then-current price of a share of Common Stock is equal to the Market Value per Share of Common Stock as of the date of grant of the Stock Option;
(ii)    the per share Option Price is equal to the Market Value per Share of Common Stock as of the date of grant of the Stock Option;
(iii)    the time until expiration of the Stock Option is equal to the actual time until expiration of the Stock Option (determined without regard to the provisions of Section 12(e)(vii) and Section 12(e)(viii));
(iv)    the risk-free interest rate is the asked yield rate, as of the business day preceding the date of grant of the Stock Option and as reported in the Wall Street Journal, for the U.S. Treasury Note or Bond having a maturity date that is closest to the date that is five years after the date of grant of the Stock Option;
(v)    the volatility of the price of the Common Stock is calculated based on the closing price of a share of Common Stock on the last trading day of each month for each of the 60 months preceding the month in which the date of grant of the Stock Option occurs; and
(vi)    the dividend yield on the Common Stock equals the rate determined by dividing the product of four and the most recent quarterly dividend on the Common Stock as of the date of grant of the Stock Option by the Market Value per Share of Common Stock as of the date of grant of the Stock Option.
(d)    Each grant of Restricted Shares to an Eligible Director may utilize any or all of the authorizations, and will be subject to all of the requirements, that are contained in the following provisions:
(i)    At the time of grant of Restricted Shares to an Eligible Director, either (A) a stock certificate evidencing the shares of Common Stock granted will be registered in the Eligible Director’s name to be held by the Company for his or her account or (B) an appropriate entry evidencing the Eligible Director’s ownership of the shares of Common Stock granted will be made in the stock ownership records or other books and records maintained by or on behalf of the Company.  The Eligible Director will have the entire beneficial ownership interest in, and all rights and privileges of a stockholder as to, such Restricted Shares, including the right to vote such Restricted Shares and, unless the Board shall determine otherwise, the right to receive dividends thereon, subject to the following: (1) subject to Section 12(d)(iii), the Eligible Director will not be entitled to delivery of any stock certificate evidencing such Restricted Shares until the expiration of the restriction period described in Section 12(d)(ii); (2) none of 

15

the Restricted Shares may be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during the restriction period; and (3) all of the Restricted Shares will be forfeited and all rights of the Eligible Director to the Restricted Shares will terminate without further obligation on the part of the Company unless the Eligible Director remains as a member of the Board for the entire restriction period, except as provided by Section 12(d)(iii).  Any shares of Common Stock or other securities or property received as a result of a transaction described in Section 14 will be subject to the same restrictions as such Restricted Shares.
(ii)    Each grant of Restricted Shares under Section 12(a) or Section 12(b)(i) will become nonforfeitable and the restrictions described in Section 12(d)(i) will expire as to 1/3rd of the total number of shares subject thereto on each of the first three anniversaries of the date of grant of Restricted Shares; provided, in each case, that the Eligible Director who received the Restricted Shares has remained a member of the Board through each such anniversary date.  Each grant of Restricted Shares under Section 12(b)(ii) will become nonforfeitable and the restrictions described in Section 12(d)(i) will expire as to the total number of shares subject thereto on the first anniversary of the date of grant of Restricted Shares; provided, in each case, that the Eligible Director who received the Restricted Shares has remained a member of the Board through such anniversary date.
(iii)    Except as provided in an Evidence of Award, upon an Eligible Director’s ceasing to be a member of the Board prior to the end of a restriction period for any reason, the Eligible Director will immediately forfeit all Restricted Shares then subject to the restrictions of Section 12(d)(i), unless the Board, in its discretion, allows the Eligible Director to retain any or all of the Restricted Shares then subject to such restrictions, in which case the restriction period applicable to the retained shares will immediately expire and all restrictions applicable to the retained shares will immediately lapse.
(iv)    At the end of the restriction period, or at such earlier time as provided for in Section 12(d)(iii) or as the Board, in its sole discretion, may otherwise determine, all restrictions applicable to the Restricted Shares will lapse and, if the Restricted Shares are evidenced by a stock certificate, a stock certificate evidencing a number of shares of Common Stock equal to the number of Restricted Shares, free of all restrictions, will be delivered to the Eligible Director.
(e)    Each grant of Stock Options to an Eligible Director may utilize any or all of the authorizations, and will be subject to all the requirements, that are contained in the following provisions:
(i)    Each grant will specify the Option Price, which will equal 100% of the Market Value per Share on the Date of Grant.

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(ii)    Each Stock Option will be exercisable only to the extent that it is vested.  Except as may otherwise be provided in the agreement evidencing the Stock Option or as determined by the Board, each Stock Option granted under Section 12(b)(ii) will vest as to 1/12th of the total number of shares of Common Stock subject thereto (rounded up to the nearest whole share) on the last day of the first full calendar month following the date of grant of the Stock Option, as to 1/12th of the total number of shares subject thereto (rounded up to the nearest whole share) on the last day of each of the 10 succeeding calendar months, and as to the balance of the shares of Common Stock subject thereto on the last day of the calendar month preceding the one-year anniversary of the date of grant of the Stock Option; provided, in each case, that the Eligible Director who received the Stock Option has remained a member of the Board through the respective vesting date.
(iii)    No Stock Option will be exercisable more than ten years from the Date of Grant.
(iv)    Each Stock Option granted to an Eligible Director will be a nonqualified stock option and will not be an “incentive stock option” within the meaning of Section 422 of the Code.
(v)    Each grant will specify whether the Option Price will be payable (A) in cash or by check acceptable to the Company, (B) by the actual or constructive transfer to the Company of shares of Common Stock owned by the Eligible Director and having an aggregate Market Value per Share at the date of exercise equal to the aggregate Option Price, (C) by authorizing the Company to withhold a number of shares of Common Stock otherwise issuable to the Eligible Director having an aggregate Market Value per Share on the date of exercise equal to the aggregate Option Price, (D) by a combination of such methods of payment or (E) by any other method of payment approved by the Board; provided, however, that the payment methods described in clauses (B) and (C) will not be available at any time that the Company is prohibited from purchasing or acquiring such shares of Common Stock.
(vi)    During an Eligible Director’s lifetime, the Stock Option may be exercised only by the Eligible Director. Stock Options will not be transferable, except for exercise by the Eligible Director’s legal representatives or heirs; provided, however, that an Eligible Director may, with prior approval from the Board (or its designee), transfer an exercisable Stock Option to (A) a member or members of the Eligible Director’s immediate family, (B) a trust, the beneficiaries of which consist exclusively of members of the Eligible Director’s immediate family, (C) a partnership, the partners of which consist exclusively of members of the Eligible Director’s immediate family, or (D) any similar entity created for the exclusive benefit of members of the Eligible Director’s immediate family; provided that no such transfer may be made in connection with a divorce or 

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marital dissolution proceeding.  The Board or its designee must approve the form of any transfer of a Stock Option to or for the benefit of any immediate family member or members before such transfer will be recognized as valid hereunder. For purposes of the preceding sentence, any remote, contingent interest of persons other than a member of the Eligible Director’s immediate family will be disregarded.  For purposes of this Section 12(e)(vi), immediate family means an Eligible Director’s spouse, children and grandchildren, including step and adopted children and grandchildren, but shall not include a former spouse.
(vii)    Upon an Eligible Director’s ceasing to be a member of the Board for any reason other than death, each Stock Option of such Eligible Director will be exercisable only as to those shares of Common Stock which were then subject to the exercise of such Stock Option. The Stock Option will expire: (A) unless exercised, five years after the Eligible Director’s retirement from the Board if the Eligible Director retires at or after age 55 with at least five years of service on the Board; (B) unless exercised, five years after the date the Eligible Director’s service on the Board is terminated due to the Eligible Director’s total and permanent disability; (C) upon the Eligible Director’s service on the Board being terminated for cause pursuant to Section 141(k) of the Delaware General Corporation Law (or any successor provision); or (D) unless exercised, three months after the date of such termination.  In no event, however, will any Stock Option be exercisable pursuant to this Section 12(e)(vii) after the tenth anniversary of the Date of Grant or after any earlier termination in accordance with the terms of the agreement evidencing the Stock Option.
(viii)    Upon the death of an Eligible Director during his or her term of service on the Board, a Stock Option will be exercisable only as to those shares of Common Stock which were subject to the exercise of the Stock Option at the time of his or her death.  The Stock Option will expire, unless exercised by the Eligible Director’s legal representatives or heirs, five years after the date of death.  In no event, however, will any Stock Option be exercisable pursuant to this Section 12(e)(viii) after the tenth anniversary of the Date of Grant or after any earlier termination in accordance with the terms of the agreement evidencing the Stock Option.
(ix)    Except as otherwise determined by the Board, the vesting schedule applicable to a Stock Option requires continued service through each applicable vesting date as a condition to the vesting of the applicable installment of the Stock Option.  Service for only a portion of a vesting period, even if substantial, will not entitle the Eligible Director to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of service as a Board member as provided in Section 12(e)(vii) or 12(e)(viii).
Section 13.    Transferability.  Except as provided in Section 12(e)(vi) or as otherwise authorized by the Committee, no Award may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution; 

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provided, however, that a Participant who is an officer of the Company may, with the prior approval of the Committee, transfer a Stock Option that is not intended to be an “incentive stock option” (within the meaning of Section 422 of the Code) to family members of the Participant, including to trusts in which family members of the Participant own more than 50% of the beneficial interests, to foundations in which family members of the Participant or the Participant controls the management of assets and to other entities in which more than 50% of the voting interests are owned by family members of the Participant or the Participant; provided further that no such transfer may be made in connection with a divorce or marital dissolution proceeding.  For purposes of this Section 13, family member shall not include a former spouse.  Except as otherwise authorized by the Committee, no Stock Option or Appreciation Right granted to a Participant will be exercisable during the Participant’s lifetime by any person other than the Participant or the Participant’s guardian or legal representative or any permitted transferee.
Section 14.    Adjustments.
(a)    The Committee will make or provide for such adjustments in (i) the maximum number of shares of Common Stock specified in Sections 4 and 5, (ii) the number of shares of Common Stock covered by outstanding Stock Options, Appreciation Rights, Performance Shares and Restricted Stock Units granted under the Plan, (iii) the Option Price or Grant Price applicable to any Stock Options and Appreciation Rights, and (iv) the kind of shares covered by any such Awards (including shares of another issuer), as is equitably required to prevent dilution or enlargement of the rights of Participants that otherwise would result from (x) any stock dividend, stock split, combination or exchange of shares, recapitalization or other change in the capital structure of the Company, or (y) any merger, consolidation, separation, spin-off, split-off, spin-out, split- up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (z) any other corporate transaction or event having an effect similar to any of the foregoing.  In the event of any such transaction or event, the Committee, in its discretion, may provide in substitution for any or all outstanding Awards such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection with such substitution the surrender of all Awards so replaced.
(b)    The Committee may accelerate the payment of, or vesting with respect to, any Award under the Plan upon the occurrence of a transaction or event described in this Section 14; provided, however, that in the case of any Award that constitutes a deferral of compensation within the meaning of Section 409A of the Code, the Committee will not accelerate the payment of the Award unless it determines in good faith that such transaction or event satisfies the requirements of a change in control event under guidance issued by the Secretary of the Treasury under Section 409A of the Code.
Section 15.    Fractional Shares.  Neither the Company nor any Subsidiary will be required to deliver any fractional share of Common Stock pursuant to the Plan.  The 

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Committee may provide for the elimination of fractions or for the settlement of fractions in cash.
Section 16.    Withholding Taxes.  To the extent that the Company or a Subsidiary is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under the Plan, and the amounts available to the Company or the Subsidiary for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person shall make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld.  If a Participant’s Award is to be paid in the form of shares of Common Stock and the Participant fails to make arrangements for the payment of tax, the Company or the Subsidiary may withhold shares of Common Stock having a value equal to the amount required to be withheld.  In addition, if permitted by the Committee, the Participant or such other person may elect to have any withholding obligation of the Company or the Subsidiary satisfied with shares of Common Stock that would otherwise be transferred to the Participant or such other person in payment of the Participant’s Award. However, without the consent of the Committee, shares of Common Stock will not be withheld in excess of the minimum number of shares required to satisfy the withholding obligation of the Company or the Subsidiary.
Section 17.    Administration of the Plan.
(a)    Unless the administration of the Plan has been expressly assumed by the Board pursuant to a resolution of the Board, the Plan will be administered by the Committee, which at all times will consist of three or more Directors appointed by the Board, all of whom are intended (i) to meet all applicable independence requirements of the New York Stock Exchange or the principal national securities exchange or principal market on or in which the Common Stock is traded and (ii) to qualify as “non-employee directors” as defined in Rule 16b-3 and as “outside directors” as defined in regulations adopted under Section 162(m) of the Code, as such terms may be amended from time to time; provided, however, that the failure of a member of the Committee to so qualify will not invalidate any Award granted under the Plan.  Notwithstanding the foregoing, the provisions of Section 12 will be administered by the Board.  A majority of the Committee will constitute a quorum, and the action of the members of the Committee present at any meeting at which a quorum is present, or acts unanimously approved in writing, will be the acts of the Committee.
(b)    The Committee has the full authority and discretion to administer the Plan and to take any action that is necessary or advisable in connection with the administration of the Plan, including without limitation the authority and discretion to interpret and construe any provision of the Plan or of any agreement, notification or document evidencing an Award.  The interpretation and construction by the Committee of any such provision and any determination by the Committee pursuant to any provision of the Plan or of any such agreement, notification or document will be final and conclusive.  No 

20

member of the Committee will be liable for any such action or determination made in good faith.
(c)    To the extent permitted by applicable law, the Committee may delegate its authority under the Plan to a subcommittee of the Committee, to one or more committees of the Board or to one or more executive officers of the Company; provided, however, that no delegation may be made of authority to take an action which is required by Rule 16b-3 to be taken by “non-employee directors” in order that the Plan and transactions thereunder meet the requirements of such Rule.
(d)    It is the Company’s intention that any Award granted under the Plan that constitutes a deferral of compensation within the meaning of Section 409A of the Code and the guidance issued by the Secretary of the Treasury under Section 409A satisfy the requirements of Section 409A.  In granting such an Award, the Committee will use its best efforts to exercise its authority under the Plan with respect to the terms of such Award in a manner that the Committee determines in good faith will cause the Award to comply with Section 409A and thereby avoid the imposition of penalty taxes and interest upon the Participant receiving the Award.  Notwithstanding any provision of the Plan or an Evidence of Award to the contrary, (i) if the Company makes a good faith determination that a payment of an Award (A) constitutes a deferral of compensation for purposes of Section 409A of the Code, (B) is made to a Participant by reason of his or her “separation from service” (within the meaning of Section 409A of the Code) and (C) at the time such payment would otherwise be made the Participant is a “specified employee” (within the meaning of Section 409A of the Code), the payment will be delayed until the first day of the seventh month following the date of such separation from service, (ii) if a Change in Control would be the date of payment of an Award that is determined to constitute a deferral of compensation, but the Change in Control does not constitute a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company (within the meaning of Section 409A of the Code), then the date of payment will be determined without regard to the occurrence of the Change in Control and (iii) the tax treatment of any payment made or benefit realized under the Plan is not warranted or guaranteed.
(e)    With respect to the administration of the provisions of Section 12 or if the administration of the Plan is assumed by the Board pursuant to Section 17(a), the Board will have the same authority, power, duties, responsibilities and discretion given to the Committee under the terms of the Plan.
Section 18.    Amendments and Other Matters.
(a)    The Plan may be amended from time to time by the Board or, with respect to those provisions of the Plan other than Section 12, the Committee; provided, however, that the Plan may not be amended without further approval by the stockholders of the Company if such amendment would result in the Plan no longer satisfying any applicable requirements of the New York Stock Exchange (or the principal national securities 

21

exchange on which the Common Stock is traded), Rule 16b-3 or Section 162(m) of the Code.
(b)    Neither the Committee nor the Board will authorize the amendment of any outstanding Stock Option to reduce the Option Price without the further approval of the stockholders of the Company.  Furthermore, no Stock Option will be cancelled and replaced with Stock Options having a lower Option Price without further approval of the stockholders of the Company.  The provisions of this Section 18(b) are intended to prohibit the repricing of “underwater” Stock Options and will not be construed to prohibit the adjustments provided for in Section 14.
(c)    The Plan may be terminated at any time by action of the Board.  The termination of the Plan will not adversely affect the terms of any outstanding Award.
(d)    The Company will not be required to issue, and neither the Company nor a Subsidiary will be required to transfer, shares of Common Stock under the Plan prior to (i) obtaining any approval from any governmental agency which the Company, in its sole discretion, determines to be necessary or advisable, (ii) admission of such shares to listing on any stock exchange on which the Common Stock may then be listed, and (iii) completion of any registration or other qualification of such shares under any state or federal law or rulings or regulations of any governmental body which the Company, in its sole discretion, determines to be necessary or advisable.
(e)    The Plan does not confer upon any 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 that the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time.
(f)    If the Committee determines, with the advice of legal counsel, that any provision of the Plan would prevent the payment of any Award intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code from so qualifying, such Plan provision will be invalid and cease to have any effect without affecting the validity or effectiveness of any other provision of the Plan.
(g)    No Participant will have any of the rights of a stockholder with respect to shares of Common Stock subject to an Award prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Company.
Section 19.    Governing Law.  The Plan, all Awards and all actions taken under the Plan and the Awards will be governed in all respects in accordance with the laws of the state of Delaware, including without limitation, the Delaware statute of limitations, but without giving effect to the principles of conflicts of laws of such state.

22KWK 10-Q 2013.06.30 EX10.2

Exhibit 10.2

AGREEMENT
THIS AGREEMENT (the “Agreement”) is made as of May 15, 2013, between QUICKSILVER RESOURCES INC. (the “Company”) and Thomas F. Darden (“Executive” and, together with the Company, the “Parties”).
RECITALS
WHEREAS, Executive has expressed his desire to retire from his officer role with the Company and its subsidiaries (collectively, the “Group Companies”) as of May 15, 2013 (the “Retirement Date”), in order to transition his role with the Group Companies;
WHEREAS, Executive has expressed his desire to retire from his employment with the Group Companies as of December 31, 2013 (the “Employment Separation Date”);
WHEREAS, the Company desires to express its appreciation to Executive for his long and dedicated service to the Group Companies and also desires to benefit from Executive’s services to the Group Companies in different capacities; and
WHEREAS, Executive and the Company desire to enter into this Agreement in order to memorialize the terms and conditions of Executive’s changing role with the Group Companies.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.    Executive’s Retirement as an Officer.  (a)  Executive shall cease to be an officer of the Company and all other Group Companies and Chairman of the Board of Directors of the Company (the “Board”) as of the close of business on the Retirement Date, and Executive hereby agrees:
(i)    to resign and relinquish, effective as of the Retirement Date, all director or officer positions (or comparable positions) with or in connection with the Group Companies, provided that Executive shall remain a non-officer employee of the Company as set forth herein and a director of the Company;
(ii)    upon the request of the Company from time to time, to resign and relinquish his position or membership on behalf of the Company with or in connection with any trade or similar organization and take any action reasonably requested by the Company to facilitate another employee of the Company succeeding to such position or membership;  
(iii)    to complete any formalities by signing any required resignation letters or other similar documents that are reasonably requested by any Group Company in connection with such resignation; and

    

(iv)    to continue to comply with the provisions of this Agreement.
(b)    During the period beginning on the Retirement Date and ending on the Employment Separation Date, unless earlier terminated in accordance with Section 1(e) (the “Employment Period”), Executive shall be an employee of the Company that does not serve as an officer of any Group Company. As an employee, Executive’s sole duties shall be to advise on strategic transactions contemplated by the Group Companies with respect to the Horn River Basin located in the Canadian Provinces of British Columbia and Northwest Territories (the “Horn River Basin”) as directed by the Company from time to time.  During the Employment Period, Executive shall report to the Chief Executive Officer of the Company and shall not have responsibility for or authority to direct capital or other spending by the Group Companies or any employee of the Group Companies nor shall any employee of the Group Companies report to Executive.
(c)    During the Employment Period, Executive shall:
(i)    receive a base salary at the annual rate of $455,000 payable in accordance with the ordinary payroll practices of the Company;
(ii)    be eligible to participate in the same health and welfare benefit plans that Executive participated in immediately prior to the Retirement Date, subject to any amendment to, or replacement of, an applicable plan that affects similarly situated participants of such plan;
(iii)    subject to Executive’s timely execution, return and non-revocation of the Release Agreement on or before January 28, 2014 (the 28th day following the Employment Separation Date), be eligible to receive (A) a cash payment equal to the product of (1) $682,500 and (2) the percentage applied, based only on Company performance, to the target annual bonus of the Company’s most senior executive officer that is paid a bonus with respect to 2013 (such percentage, the “2013 Payout Percentage” and such cash payment, the “2013 Cash Bonus”) and (B) a restricted share award granted pursuant to the Company’s Sixth Amended and Restated 2006 Equity Plan, as may be amended from time to time (the “Stock Plan”), with a grant date fair value equal to the product of (x) $455,000 and (y) the 2013 Payout Percentage, which such award will be 100% vested on the date of grant (the “2013 Stock Bonus”), with the 2013 Cash Bonus payable, and the 2013 Stock Bonus granted, on the same date as annual bonuses with respect to 2013 are paid or granted, as applicable, to the Company’s most senior executive officer that receives such a bonus with respect to 2013; provided that both such payment and grant are subject to Executive’s continued provision of services to the Company through the payment date or the grant date, as applicable, and continued compliance with the terms of this Agreement;
(iv)    receive a payment of $6,250 on the Retirement Date and a payment of $12,500 on the first business day of each full calendar month within the Employment Period to defray expenses incurred by Executive with respect to the rental of office space (which will be at a location other than the office building in which the Company’s principal 

2

executive offices are located) and associated parking in Fort Worth, Texas and secretarial assistance; and
(v)    be entitled to reimbursement by the Company for reasonable out-of-pocket business expenses (including travel, but not including any expenses related to the items set forth in Section 1(c)(iv)) incurred by Executive in connection with his employment in accordance with the Company’s expense reimbursement policies for employees, subject to Executive’s provision of documentation of the expenses reasonably satisfactory to the Company and, in the case of a single expense or a group of related expenses that are individually or in the aggregate in excess of $5,000, advance written notice of a request for reimbursement pre-approved by the Chief Executive Officer of the Company.
(d)    In recognition of Executive’s contributions to the sale and transfer of a 25% interest in the Company’s Barnett Shale assets to TG Barnett Resources LP (the “TG Transaction”), Executive shall be entitled to (i) a cash payment of $569,000 payable on each of the Retirement Date and August 12, 2013 and (ii) a stock option award with respect to shares of common stock of the Company (“Shares”) with a grant date fair value of $1,138,000 (the “Option Value”) granted on the earlier of (A) August 12, 2013 or (B) the date of the later of the public announcements by the Company regarding (1) a second lien debt offering and (2) an unsecured debt offering (such date, the “Option Grant Date”); provided that, if the number of Shares underlying an option award equal to the Option Value would exceed the maximum number of Shares that may be subject to a stock option award granted to Executive on the Option Grant Date under the Company’s Sixth Amended and Restated 2006 Equity Plan, as may be amended from time to time (the “Stock Plan”), then Executive shall not be entitled to the stock option award described above, but instead shall be granted two stock option awards: (x) a stock option award with a grant date fair value equal to the maximum value that can be awarded to Executive under the Stock Plan on the Option Grant Date (the “2013 Option”) and (y) a stock option award with a grant date fair value equal to the excess of the Option Value over the grant date fair value of the 2013 Option granted on January 2, 2014.  Both the payment and the grant set forth in the preceding sentence are subject to Executive’s continued provision of services to the Company through the applicable stock option award grant dates and continued compliance with the terms of this Agreement.  Executive expressly acknowledges that the compensation opportunity provided in this Section 1(d), whether or not actually paid or granted to Executive, is in lieu of any incentive compensation (whether in the form of cash, equity compensation or otherwise) to which Executive may have otherwise been eligible with respect to the 2012 fiscal year of the Company.
(e)    The Employment Period shall terminate immediately upon (i) Executive’s resignation as an employee, (ii) Executive’s death or Disability (as defined below) or (iii) the Company’s exercise of its right in its sole discretion to terminate the Employment Period immediately if Executive: (1) becomes an employee or partner of, or enters into any similar relationship (other than as a non-employee director) with, any person or entity other than the Company or Mercury Exploration Company, a Texas corporation; 

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(2) renders any services in any capacity to a direct competitor of the Company in a manner that is either competitive with the Company or adverse to the Company; (3) makes a Restricted Acquisition (as defined below), unless Executive has first provided the Company with the full particulars of the proposed Restricted Acquisition and the opportunity to acquire an undivided 50% thereof on the same terms on which Executive has the opportunity to acquire same; (4) acquires any leasehold working interest, mineral interest or other interest in oil, gas or other minerals in the Horn River Basin; (5) engages in any conduct or behavior that is in violation of any Company standard or code of conduct policy that is applicable to Executive; (6) breaches any representation or warranty contained in this Agreement or has made any inaccurate statement in any representation or warranty contained in this Agreement; or (7) violates any other provision of this Agreement (which, if curable, is not cured with 10 days after notice thereof to Executive by the Chief Executive Officer of the Company).

(f)    For purposes of this Agreement, “Disability” means any condition that would qualify for a benefit under any group long-term disability plan maintained by the Company and applicable to Executive immediately prior to the Retirement Date.   For purposes of this Agreement, “Restricted Acquisition” means (i) the acquisition by Executive of any leasehold working interest, mineral interest or other interest in oil, gas or other minerals (“Subject Interest”) within two (2) miles of any Group Company Interest (as defined below); or (ii) the acquisition by any entity controlled by Executive of any Subject Interest within two (2) miles of any Group Company Interest.  For purposes of this Agreement, “Group Company Interest” means any Subject Interest owned by any of the Group Companies as of May 15, 2013.
2.    Executive’s Separation from Employment.  (a)  Executive’s employment with the Company shall cease effective as of the close of business on the Employment Separation Date, and Executive hereby agrees:
(i)    to resign and relinquish, effective as of the Employment Separation Date, all positions with or in connection with the Group Companies, other than as a director of the Company;
(ii)    to complete any formalities by signing any required resignation letters or other similar documents that are reasonably requested by any Group Company in connection with such separation;
(iii)    to acknowledge the settlement of all outstanding matters by executing, returning to the Company and not revoking the Release Agreement (attached hereto as Exhibit A) (the “Release Agreement”) after the Employment Separation Date and on or before January 28, 2014 (the 28th day following the Employment Separation Date); and
(iv)    to continue to comply with the provisions of this Agreement.
(b)    Subject to Executive’s timely execution, return and non-revocation of the Release Agreement and continued compliance with the terms of this Agreement, all 

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restricted share and option awards held by Executive as of the date hereof that would have vested following the Retirement Date if Executive had remained employed by the Company on the vesting date applicable to such award (as set forth in the table below), shall vest on January 29, 2014:
	
		
	Award
	Portion to Become Vested

	Restricted Share Award granted January 3, 2011
	34,722 restricted shares

	Restricted Share Award granted March 11, 2011
	10,356 restricted shares

	Restricted Share Award granted January 3, 2012
	148,467 restricted shares

	Restricted Share Award granted April 16, 2012
	49,179 restricted shares

	Option Award granted January 3, 2011
	Option to purchase 56,582 shares

	Option Award granted January 3, 2012
	Option to purchase 247,825 shares

with the expiration date for each option award held by Executive that is vested as of the Retirement Date or that shall vest pursuant to this Section 2(b) being the earlier of (A) December 31, 2018, or (B) the original expiration date of such option pursuant to the applicable award agreement.
(c)    On the first regularly scheduled payroll date of the Company following the Employment Separation Date, the Company shall make a lump sum cash payment to Executive in respect of vacation days accrued but unused by Executive as of the Employment Separation Date and the Company’s reasonable estimate of Executive’s expected COBRA premiums during the period beginning on the Employment Separation Date and ending on June 30, 2015 (the “COBRA Period”). In the event that the Company’s reasonable estimate of Executive’s expected COBRA premiums is more or less than the actual amount of such premiums, Executive shall reimburse the Company, or the Company shall reimburse Executive, as the case may be, for the amount of the difference on a monthly basis during the COBRA Period.
(d)    As soon as practicable following the Employment Separation Date, and in accordance with the Company’s expense reimbursement policies for employees, the Company shall reimburse Executive for any reimbursable (but not yet reimbursed) out-of-pocket business expenses incurred by Executive prior to the Employment Separation Date in accordance with Section 1(c)(v).
(e)    Effective as of the close of business on the Employee Separation Date, the Company hereby assigns, transfers, conveys and quitclaims to Executive all of the Company’s right, title and interest, if any, in or to the name “Makarios” and any domain names and other source identifiers solely to the extent that they are comprised of such name.  For the avoidance of doubt, the foregoing assignment, transfer, conveyance and quitclaim is made on an “as is” basis and the Company hereby disclaims any express or implied representations or warranties of any kind with respect thereto including, without limitation, those regarding merchantability, fitness for a particular purpose or non-infringement.

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3.     Board Service.  (a)  Following the Retirement Date, Executive shall remain a director of the Company for the duration of his term in effect as of the Retirement Date and for future terms, subject to Executive’s nomination by the Nominating and Governance Committee of the Board (the “Committee”) and election by the shareholders of the Company and Executive’s right to resign at any time for any reason.  Subject to the ordinary nomination standards of the Committee, the Committee will recommend to the Board that Executive stand for reelection as a director of the Company at the Company’s 2014 Annual Stockholders’ Meeting.
(b)    Following the Retirement Date and during Executive’s tenure as a member of the Board, Executive shall have the honorary title of Chairman Emeritus.
(c)    Commencing on January 1, 2014 and during Executive’s tenure thereafter as a director of the Company, Executive shall receive compensation as a nonemployee director in accordance with the Company’s nonemployee director compensation policies, as amended from time to time, as applied to all other nonemployee directors.
4.    Consulting Services.  (a)  On the terms and conditions contained in this Agreement, and subject to Executive’s timely execution, return and non-revocation of the Release Agreement on or before January 28, 2014 (the 28th day following the Employment Separation Date), and continued compliance with the terms of this Agreement, during the period beginning on January 1, 2014 and ending on December 31, 2016, unless earlier terminated in accordance with Section 4(f) (the “Consulting Period”), the Company agrees to retain Executive as, and Executive agrees to serve as, a consultant of the Company to advise on strategic transactions contemplated by the Group Companies with respect to the Horn River Basin as directed by the Company from time to time (collectively, the “Consulting Services”).  During the Consulting Period, Executive shall report to the Chief Executive Officer of the Company and shall not have responsibility for or authority to direct capital or other spending by the Group Companies or any employee of the Group Companies nor shall any employee of the Group Companies report to Executive.  The Consulting Services are in addition to any services Executive provides to the Company as a director, for which Executive will receive compensation in accordance with Section 3(c).
(b)    In consideration for the performance of the Consulting Services, during the Consulting Period, the Company agrees to pay Executive a monthly cash consulting retainer of $45,000 (a “Consulting Fee”) payable in arrears (but in any event on or prior to March 15 of the year following the year in which the month for which the payment was earned occurred).
(c)    (i)    If (A) one or more Approved Parties (as defined below) is or are a party to a Project Discovery Upstream Assets Transaction (as defined below) that closes on or before December 31, 2016, Executive shall become entitled to a lump sum cash payment in an amount equal to 0.25% of the Upstream Aggregate Value (as defined below) paid by the Approved Party or Approved Parties, and/or (B) one or more Approved Parties is or are a party to a Project Discovery Downstream Assets Transaction 

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and a Final Investment Decision (as defined below) is formally made with respect to such Project Discovery Downstream Assets Transaction on or before December 31, 2016, Executive shall become entitled to a lump sum cash payment in an amount equal to 0.25% of the Downstream Aggregate Value (as defined below) paid by the Approved Party or Approved Parties; provided, however, that the maximum aggregate amount payable under this Section 4(c)(i) for all Project Discovery Upstream Assets Transactions and Project Discovery Downstream Assets Transactions is $2,500,000.  Any such payment shall be made by the Company to Executive within three (3) business days after the closing of such Project Discovery Upstream Assets Transaction (and in any event on or prior to March 15 of the year following the year in which such closing occurs) or such Final Investment Decision is formally made (and in any event on or prior to March 15 of the year following the year in which such closing occurs), as the case may be.  The compensation provided in this Section 4(c)(i) is conditioned in all respects upon the closing of the Project Discovery Upstream Assets Transaction on or before December 31, 2016, or a Final Investment Decision being formally made with respect to the Project Discovery Downstream Assets Transaction on or before December 31, 2016, as the case may be.  Should the closing of the Project Discovery Upstream Assets Transaction not occur on or before December 31, 2016, Executive shall not be entitled to any compensation pursuant to this Section 4(c)(i) with respect to such Project Discovery Upstream Assets Transaction.  If a Final Investment Decision is not formally made with respect to the Project Discovery Downstream Assets Transaction on or before December 31, 2016, Executive shall not be entitled to any compensation pursuant to this Section 4(c)(i) with respect to such Project Discovery Downstream Assets Transaction..
(ii)    For purposes of this Agreement, the “Project Discovery Upstream Assets Transaction” shall mean, whether in one or more, or a series of, transactions, any joint venture, partnership, working interest farm-out, volumetric production payment or other asset monetization involving the Project Discovery Upstream Assets (as defined below); any sale of all or a substantial portion of such assets; any merger or other business combination with a third party involving such assets; or any other form of transaction that results in the effective sale, transfer or other disposition of ownership or control over a substantial portion of the principal businesses or operations of such assets to a third party or parties. For purposes of this Agreement, the “Project Discovery Upstream Assets” shall mean leases and other mineral rights owned by any of the Group Companies in connection with hydrocarbon production in the Horn River geologic formation located in the Canadian Provinces of British Columbia and Northwest Territories and any associated drilling equipment, pipelines, and other gathering and transmission assets owned by any of the Group Companies and associated with production or disposal wells.
(iii)    For purposes of this Agreement, the “Project Discovery Downstream Assets Transaction” shall mean, whether in one or more, or a series of, transactions, any joint venture, partnership, or other asset monetization involving the Project Discovery Downstream Assets (as defined below); any sale of all or a substantial portion of such assets; any merger or other business combination with a third party 

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involving the such assets; or any other form of transaction that results in the effective sale, transfer or other disposition of ownership or control over a substantial portion of the principal businesses or operations of such assets to a third party or parties. For purposes of this Agreement, the “Project Discovery Downstream Assets” shall mean any liquefaction facility owned by any of the Group Companies, and any transmission pipeline assets and any associated asset component owned by any of the Group Companies and not included in the Project Discovery Upstream Assets, developed in connection with hydrocarbon production in the Horn River geologic formation located in the Canadian Provinces of British Columbia and Northwest Territories.
(iv)    For purposes of this Agreement, “Upstream Aggregate Value” shall mean the total fair market value (at the time of closing) of all consideration paid or payable (including the fair market value of any assets contributed or used as payment, but excluding any debt, liability or obligation funded, recapitalized or assumed other than a carried interest for future capital expenditures) by one or more Approved Parties to the Company, its affiliates or its stockholders, in connection with the Project Discovery Upstream Assets Transaction Project, including any carried costs, bonus, incentive, milestone or similar payments.  For purposes of this Section 4(c)(iv), consideration includes cash, securities, contractual rights and any other form of consideration.  If there is no readily available measure of calculating the fair market value of any portion of the consideration, the fair market value shall be reasonably determined by the Company.
(v)    For purposes of this Agreement, “Downstream Aggregate Value” shall mean the total fair market value (at the time of a Final Investment Decision) of all capital contributed or committed to be contributed to capital by one or more Approved Parties (including the fair market value of any assets contributed, but excluding any debt, project financing, liability or obligation funded, recapitalized or assumed) in connection with the Project Discovery Downstream Assets Transaction.  For purposes of this Section 4(c)(v), consideration includes cash, securities, contractual rights and any other form of consideration.  If there is no readily available measure of calculating the fair market value of any portion of the consideration, the fair market value shall be reasonably determined by the Company.
(vi)    For purposes of this Agreement, “Approved Party” means any person listed on Exhibit B attached hereto and any Affiliate of such person.  For purposes of the immediately preceding sentence, “Affiliate” of any specified person means any other person or entity which, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under direct or indirect common control with such specified person or entity.  For purposes of this definition “control” when used with respect to any person or entity means the right to direct the management or operations of such person or entity, directly or indirectly, whether through the ownership (directly or indirectly) of securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.  Additional persons may be added to Exhibit B upon the written request of Executive and the prior written approval of the Board, which approval may be granted or withheld in the Board’s sole discretion.

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(vii)    For purposes of this Agreement, and with respect to any Project Discovery Downstream Assets Transaction, the meaning of “Final Investment Decision” shall be as defined in the applicable documentation relating to such Project Discovery Downstream Assets Transaction.    
(d)    The Company agrees to pay Executive $12,500 on the first business day of each calendar month of the Consulting Period to defray expenses incurred by Executive with respect to the rental of office space (which will be at a location other than the office building in which the Company’s principal executive offices are located) and associated parking in Fort Worth, Texas, and secretarial assistance.
(e)    During the Consulting Period, Company shall reimburse Executive for reasonable and necessary out-of-pocket expenses incurred by Executive for travel and other expenditures (but not including any expenses related to the items set forth in Section 4(d)) directly related to the Consulting Services in accordance with the Company’s expense reimbursement policies for consultants, subject to Executive’s provision of documentation of the expenses reasonably satisfactory to the Company and, in the case of a single expense or a group of related expenses that are individually or in the aggregate in excess of $5,000, advance written notice of a request for reimbursement pre-approved by the Chief Executive Officer of the Company.
(f)    The Consulting Period shall terminate immediately upon (i) Executive’s resignation as a consultant, (ii) Executive’s death or Disability or (iii) the Company’s determination to terminate the Consulting Period immediately in accordance with Section 11(f), or if Executive (1) renders any services in any capacity to a direct competitor of the Company in a manner that is either competitive with the Company or adverse to the Company; (2) makes a Restricted Acquisition (as defined below), unless Executive has first provided the Company with the full particulars of the proposed Restricted Acquisition and the opportunity to acquire an undivided 50% thereof on the same terms on which Executive has the opportunity to acquire same; (3) acquires any leasehold working interest, mineral interest or other interest in oil, gas or other minerals in the Horn River Basin; (4) engages in any conduct or behavior that is in violation of any Company standard or code of conduct policy that is applicable to Executive; (5) violates any restrictive covenant set forth in this Agreement; (6) breaches any representation or warranty contained in this Agreement or has made any inaccurate statement in any representation or warranty contained in this Agreement; or (7) violates any other provision of this Agreement (which, if curable, is not cured with 10 days after notice thereof to Executive by the Chief Executive Officer of the Company).  In the event that the Consulting Period is terminated pursuant to this Section 4(f), Executive will receive a lump sum cash payment equal to the amount of any accrued but unpaid Consulting Fees through the date of such termination.

(g)    The Company and Executive agree that, at all times during the Consulting Period, Executive will be acting as an independent contractor to the Company, and nothing in this Agreement will be construed to create an employment, partnership, joint 

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venture or other joint undertaking relationship between the Company and Executive during the Consulting Period.  Executive will be responsible for, and will file on a timely basis, all tax returns and payments required to be filed or made to any federal, state or local authority with respect to payments or benefits hereunder and will indemnify and hold the Company harmless for Executive’s failure to file any such return or make any such payment.  The Company will not withhold or pay any federal, state or local income tax or other wage withholding on behalf of Executive.  The Company will not treat Executive as an employee with respect to the services rendered hereunder for federal, state or local tax purposes. If, for any reason, the Company will become liable to pay, or will pay, any such taxes, it will be entitled to deduct from any payments payable to Executive hereunder all amounts so paid or required to be paid.  To the extent that taxes paid or required to be paid by the Company exceed the amount payable to Executive hereunder, Executive will reimburse the Company such excess within ten business days of notice from the Company.  The Executive assumes full responsibility and discretion for methods, techniques and procedures in the provision of the Consulting Services.  Executive is not authorized to (i) represent that Executive is an agent of any Group Company, (ii) enter into contracts on behalf of any Group Company or (iii) otherwise commit any Group Company to any legally binding liabilities or obligations. Executive is permitted to perform services for or become employed by others during the Consulting Period.  Executive acknowledges that Executive is not entitled to participate in any of the Company’s compensation or benefit plans or programs for active employees during the Consulting Period.
5.    Communications.  Each Party will consult with the other Party before issuing any internal or external communications (other than communications among members of the Board, the Chief Executive Officer of the Company and the Company’s Human Resources Department personnel) with respect to this Agreement or Executive’s retirement or separation and, except in respect of any communication as may be required by applicable law, obligation to or rule of any national securities exchange or association, neither Party shall issue any such communication without the consent of the other Party.  Each Party shall give the other Party a reasonable opportunity to review and comment on communication as may be required by applicable law or any listing agreement with or rule of any national securities exchange or association.
6.    Legal Expenses.  The Company shall reimburse Executive for the reasonable out-of-pocket legal fees and expenses incurred by Executive in connection with the review and negotiation of this Agreement, up to a maximum reimbursement amount of $40,000 and subject to Executive’s request for reimbursement and provision of documentation of the expenses reasonably satisfactory to the Company.
7.    Confidentiality.  Executive acknowledges and agrees that the information, observations and data obtained by him concerning any Group Company while employed by the Company or providing services as an officer or director of any Group Company, or obtained by him, his employees, officers, contractors, agents and representatives in connection with providing the Consulting Services (collectively, “Confidential 

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Information”) are the property of the Group Companies.  Therefore, Executive agrees that, until December 31, 2018, Executive will (and will cause his employees, officers, contractors, agents and representatives to) keep secret and retain in the strictest confidence all Confidential Information, including, without limitation, trade “know-how” secrets, customer lists, pricing policies, operational methods, technical processes, formulae, inventions and research projects and other business affairs of any Group Company, learned by him, his employees, officers, contractors, agents and representatives prior to the date of this Agreement or during the  Employment Period and the Consulting Period, and not to disclose them to anyone outside the Group Companies, except: (a) with the Company’s express written consent; (b) to the extent that the Confidential Information becomes generally known to and available for use by the public other than as a result of Executive’s acts or omissions; or (c) where required to be disclosed by court order, subpoena or other government process.  If Executive or any of his employees, officers, contractors, agents and representatives shall be required to make disclosure pursuant to the provisions of clause (c) of the preceding sentence, Executive promptly, but in no event more than 48 hours after learning of such subpoena, court order or other governmental process, shall notify the Company, by personal delivery or fax (pursuant to Section 13), and, at the Company’s expense, shall cooperate with the Company in taking all reasonably necessary steps requested by the Company to defend against the enforcement of such subpoena, court order or other governmental process and permit any Group Company to intervene and participate with counsel of its own choice in any related proceeding.  Executive shall deliver to the Company prior to the Retirement Date, prior to the Employment Separation Date and at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) containing Confidential Information that he or his employees, officers, contractors, agents and representatives may then possess or have under their control.
8.    Non-Disparagement. (a)  During the Employment Period and the Consulting Period, Executive (directly and indirectly, including through affiliates owned and controlled by Executive) agrees not to criticize, denigrate, or disparage any Group Company.  The immediately preceding sentence shall not prevent Executive from responding to informal or formal requests for information from governmental authorities or taking any action in defense of any litigation or arbitration asserted against Executive or similar proceeding.
(b)    During the Employment Period and the Consulting Period, the Company (directly and indirectly, including through subsidiaries owned and controlled by the Company) agrees to direct the members of the Board and the officers of the Group Companies not to criticize, denigrate, or disparage Executive.  The immediately preceding sentence shall not prevent any Group Company or any of the members of the Board and the officers of the Group Companies from complying with applicable law or responding to informal or formal requests for information from governmental authorities or taking any action in defense of any litigation or arbitration asserted against such person or similar proceeding.

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9.    Non-Solicitation.  (a)  Executive covenants and agrees that, until December 31, 2016, Executive shall not, except with the prior written consent of the Board, directly or indirectly, either alone or jointly with or on behalf of any person, firm, company or entity and whether on his own account or as principal, partner, member, shareholder, director, employee, consultant or in any other capacity whatsoever hire, or engage or solicit the employment or engagement of, any person who immediately prior to the Retirement Date was an employee, contractor or director of any Group Company; provided, however, that the foregoing shall not be violated by hiring any person as a result of general advertising not targeted at any person who immediately prior to the Retirement Date was an employee, consultant or director of any Group Company.  For the avoidance of doubt, nothing contained in this Section 9(a) shall prohibit Executive from hiring a person who was not an employee, contractor or director of any Group Company as of the Retirement Date.
(b)    Executive agrees that the restrictions contained in Section 9(a) are reasonable.  If, at the time of enforcement of Section 9(a), a court shall hold that the duration and other restrictions stated therein are unreasonable under circumstances then existing, the parties agree that the maximum duration or other restrictions reasonable under such circumstances shall be substituted for the stated duration or other restrictions and that the court shall be allowed to revise the restrictions contained therein to cover the maximum duration and other restrictions permitted by law.  In the event of the breach or a threatened breach by Executive of any of Section 9(a), the Company, in addition and supplementary to other rights and remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting of any bond if permitted by the applicable judicial authority).
10.    Intellectual Property.  (a)  Executive shall disclose promptly in writing to the Company any and all Intellectual Property made, conceived, developed, acquired or reduced to practice by the Executive, alone or jointly with others, during or in connection with the performance of the Consulting Services.  All works, information, materials, software, documentation, methods, apparatus, systems and the like developed, conceived, produced, delivered or disclosed by Executive hereunder or as part of or in connection with the provision of the Consulting Services, and all tangible embodiments thereof shall be considered “Work Product”.
(b)    The Company shall have the sole right to apply for and own any patents and have exclusive title and ownership rights, including all Intellectual Property rights, throughout the world in and to any and all Work Product (including, for the avoidance of doubt, those arising from the provision of the Consulting Services).  To the extent that exclusive title and/or ownership rights may not originally vest in the Company as contemplated herein, Executive hereby irrevocably assigns all right, title and interest, including Intellectual Property and ownership rights, in and to the Work Product to the Company, and shall cause those of Executive’s employees, officers, contractors, agents and representatives, if applicable, engaged in the performance of the Consulting Services, 

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to assign all such rights in and to the Work Product.  With respect to any Work Product that may qualify as a Work Made for Hire as defined in 17 U.S.C. § 101, such Work Product is and will be deemed a Work Made for Hire and the Company will have the sole right to the copyright (or, in the event that any such Work Product does not qualify as a Work Made for Hire, the copyright and all other rights thereto shall be assigned as above).
(c)    Executive shall cooperate fully at the Company’s expense to procure such rights for the Company and shall execute and do (and shall cause those of its employees, officers, contractors, agents and representatives, if applicable, engaged in the performance of the Consulting Services, to execute and do) all such other acts, deeds, matters and things as may be necessary or expedient, including without limitation, executing all necessary instruments, to give effect thereto and otherwise assist with enabling the Company to prosecute, perfect, register or record the Company’s rights in any Work Product.
(d)    For the avoidance of doubt, the Company shall have the sole free and unrestricted right to use for any purpose, sell, dispose, transfer, assign and grant licenses relating to any and all Work Product and Intellectual Property rights in or to such Work Product.
(e)    All uses of any trademarks, service marks and trade names in the Work Product or in the performance of the Consulting Services, and the goodwill associated therewith, whether by Consultant or third parties, inures and will inure to the benefit of the Company.
(f)    For purposes of this Agreement, “Intellectual Property” means all (i) patents, patent applications, patent disclosures and inventions (whether patentable or not), (ii) trademarks, service marks, trade dress, trade names, logos, corporate names, Internet domain names, and registrations and applications for the registration thereof together with all of the goodwill associated therewith, (iii) copyrights and copyrightable works (including computer programs and mask works) and registrations and applications thereof, (iv) trade secrets, know-how and other confidential information, (v) waivable or assignable rights of publicity, waivable or assignable moral rights and (vi) unregistered and registered design rights and any applications for registration thereof; and (vii) data, database rights and all other forms of intellectual property.
11.    Compliance; Cooperation.  (a)  Executive agrees (for Executive and Executive’s representatives) to comply with all laws, rules and regulations that are now or may be in the future applicable to the operations of the Group Companies and the provision of his services as an employee of the Company during the Employment Period,  and the Consulting Services during the Consulting Period, in the jurisdictions within which such services the Consulting Services are being performed.  Executive agrees to comply with all policies of the Company that may, from time to time, be in effect, including, but not limited to, the Company’s Code of Business Conduct and Ethics, safety and drug, alcohol and prohibited substance policies.  Upon Executive’s request, the 

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Company agrees to provide copies of such policies to Executive, and to provide updates as required.
 (b)    Executive represents and warrants that:
(i)    Executive is aware of, understands and has been counseled by legal counsel on the meaning of the U.S. Foreign Corrupt Practices Act, as amended from time to time (“FCPA”), as well as the Company’s Code of Business Conduct and Ethics.  Executive is familiar with the FCPA’s prohibition of paying, offering, promising or giving anything of value, either directly or indirectly, by a U.S. company, U.S. person or any other person, the affairs of which or whom are directed by a U.S. company, to an official of a foreign government, political party, state-owned enterprise, or public international organization for the purpose of influencing an act or decision in his official capacity, or inducing him to use his influence with the foreign government, political party, state-owned enterprise, or public international organization, or to receive any improper advantage in order to assist a U.S. company in obtaining or retaining business for or with, or directing business to, any person.  Executive hereby covenants and agrees that Executive will comply fully: (A) with the FCPA, regardless of U.S. jurisdiction over Executive’s activities; (B) with the Company’s Code of Business Conduct and Ethics; and (C) with all other anti-bribery and anti-corruption laws applicable to the provision of his services as an employee of the Company during the Employment Period, and the Consulting Services during the Consulting Period, all of which Executive is also familiar.  Executive agrees that Executive’s employees, partners, agents, and consultants involved in any way in the Consulting Services will participate in annual anti-corruption training provided by the Company if the Company deems it necessary to provide such training and provides Executive with 60 days’ notice of the date upon which the training will be provided;
 (ii)    none of Executive’s employees, partners, agents or consultants or any such person’s child, spouse or other close relative is presently an official, officer or representative of any foreign government or political party or candidate for political office;
(iii)    Executive has not to date offered, given or promised any prohibited payment under the FCPA or any other applicable anti-bribery and/or anti-corruption law in connection with establishing or maintain any business, entering into or securing any necessary approvals or engaging in any other business-related activity on behalf of any Group Company; and
(iv)    Executive’s participation in the Consulting Services will be permitted under the local laws of any jurisdiction in which he may perform any Consulting Services.
(c)    Executive and the Company acknowledge that the Company is currently in the process of augmenting its Code of Business Conduct and Ethics and developing, finalizing and adopting an Anti-corruption Policy and Guidelines (as and when 

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augmented and/or adopted, collectively, the “Policy”).  For the period from and after the time that the Company delivers the Policy to Executive, Executive covenants and agrees to comply with the Policy.  For the period commencing on May 15, 2013, Executive covenants that:  
(i)    Executive will not take any action that would constitute a violation of any law of the various jurisdictions in which Executive performs the Consulting Services or conducts business, or of the United States, including, but not limited to, the FCPA and the Company represents that it does not desire and covenants that it will not request any service or action by Executive that would or might constitute any such violation;
(ii)    Executive will not take any action that would constitute a violation of the Company’s Code of Business Conduct and Ethics, a copy of which has been delivered to Executive;
(iii)    Executive will not (or attempt to) obligate any Group Company to third parties with whom Executive may interact in performing his services as an employee of the Company during the Employment Period, and the Consulting Services during the Consulting Period, except as approved in writing;
(iv)    Executive will immediately notify the Chief Executive Officer and the Compliance Officer of the Company or the Law Department of the Company of any request received to take any action that might constitute a violation of the FCPA or of any violation of applicable law by Executive or by anyone acting on behalf of Executive in connection with the provision of his services as an employee of the Company during the Employment Period, and the Consulting Services during the Consulting Period;
(v)    Executive will immediately notify the Chief Executive Officer and the Compliance Officer of the Company or the Law Department of the Company if there is any change in the management or organization of Executive’s business or any related or affiliated party controlled by Executive involving any foreign government official, relative thereof, or other covered party under the FCPA; and
(vi)    Executive will disclose to the Company the terms and conditions of any contract related the provision of his services as an employee of the Company during the Employment Period, and the Consulting Services during the Consulting Period, that Executive enters into with a foreign government if it becomes necessary to do so under the laws of the United States.
(d)    Executive agrees that Executive shall maintain for at least 24 months following the termination or expiration of the Consulting Period, all books and records, including but not limited to accounting records, relevant to Executive’s performance of the Consulting Services at Executive’s principal place of business.  The Company, or a properly designated representative, shall be entitled, in its sole discretion, in the event it identifies anything that causes it concern or for no reason at all, to audit all books and 

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records of Executive that the Company deems relevant to the Executive’s performance of the Consulting Services at the principal place of business of Executive during normal business hours upon advance written notice so that the Company may confirm compliance by Executive with the terms of this Agreement.  Executive understands and agrees that the Company may deem Executive’s entire set of accounting books and records as relevant to Executive’s performance of the Consulting Services and Executive agrees that it will allow the Company to audit such records so long as the Company, or its properly designated representative, agrees to maintain the confidentiality of such records that the Company, or its properly designated representative, deems, after review, do not pertain to Executive’s performance of the Consulting Services.
(e)    Any activity by Executive deemed by the Company to be in violation of the FCPA, the Company’s Code of Business Conduct and Ethics, or applicable laws will constitute and be deemed to be a breach of a material covenant of this Agreement.
(f)    If the Company learns of or has a good faith belief that Executive or any affiliated person or entity has violated or caused any Group Company to violate the FCPA, regardless of jurisdiction, or any other applicable laws and regulations in connection with the Consulting Services, the Company may immediately terminate the Consulting Period notwithstanding any other provision of this Agreement to the contrary.  In the event of such termination, the Company will be relieved of all liability and obligations of any kind hereunder, including any liability to make payments under this Agreement.
(g)    Executive will reasonably cooperate with and assist any Group Company and their respective representatives and attorneys as reasonably requested by the Company after the Retirement Date with respect to any investigation, litigation, proceeding, arbitration or other formal or informal dispute resolution effort in which Executive is or has had involvement, is regarding events that occurred during Executive’s tenure with the Company or with respect to which Executive has relevant information by being reasonably available to consult with the Company’s counsel and for interviews, depositions and/or testimony in regard to any such matters, except with respect to any such matter with respect to which Executive is or may become a party.  The Company will advance or reimburse Executive for reasonable out-of-pocket fees and expenses (including attorneys’ fees preapproved by the Company) incurred by or on behalf of Executive in connection with this obligation, subject to Executive’s provision of advance written notice of a request for reimbursement pre-approved by the Chief Executive Officer of the Company and documentation of the expenses satisfactory to the Company.  Executive will use reasonable efforts to avoid duplicative fees and expenses.
(h)    None of the executive officers of the Company are aware as of the date hereof that the representation and warranty by Executive set forth in Section 11(b) is false in any material respect.  For purposes of this Section 11(h), Executive shall not be deemed to be an executive officer of the Company.
12.    Other Representations of Executive and the Company.  

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(a)    Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by Executive do not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (b) upon the execution and delivery of this Agreement by the parties, this Agreement will be the valid and binding obligation of Executive, enforceable in accordance with its terms and (c) Executive has disclosed in writing to the General Counsel of the Company every outstanding agreement that Executive has entered into (or caused another person to enter into) on behalf of any of the Group Companies and under which any of the Group Companies could be obligated to another person for a fee, commission or similar remuneration in connection with a project or transaction and provided to the Company full and complete copies of each such agreement to the extent such agreement is in writing.  Executive hereby acknowledges and represents that he has had the opportunity to consult with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.
(b)    The Company hereby represents and warrants to Executive that (a) the execution, delivery and performance of this Agreement by the Company do not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Company is a party or by which it is bound, and (b) upon the execution and delivery of this Agreement by the parties, this Agreement will be the valid and binding obligation of the Company, enforceable in accordance with its terms.
13.    Notices.  Any notice provided for in this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally (whether by overnight courier or otherwise) with receipt acknowledged or sent by registered or certified mail or equivalent, if available, postage prepaid, or by fax if a fax number is provided below (which shall be confirmed by a writing sent by registered or certified mail or equivalent on the same day that such fax was sent), addressed to the parties at the following addresses or to such other address as such Party shall hereafter specify by notice to the other:
		
	Notices to Executive:
	Thomas F. Darden 
44 Valley Ridge Rd. 
Fort Worth, Texas 76107 
817-239-3078 (Phone) 

		
	With a copy to:
	Fred S. Stovall 
Patton Boggs LLP 
2000 McKinney Ave., Suite 1700 
Dallas, Texas 75201 
214-758-1515 (Phone) 
214-758-1550 (Fax)

17

		
	Notices to the Company:
	Quicksilver Resources Inc. 
Attn:  John C. Cirone 
801 Cherry Street, Suite 3700, Unit 19 
Fort Worth, Texas 76102 
(817) 665-4939 (Phone) 
(817) 665-5006 (Fax)

		
	With a copy to:
	Stephen A. Kuntz 
Fulbright & Jaworski L.L.P. 
Fulbright Tower 
1301 McKinney, Suite 5100 
Houston, Texas 77010-3095 
713-651-5241 (Phone) 
713-651-5246 (Fax)

14.    Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein (except with respect to Section 9, for which Section 9(b) shall apply).
15.    Complete Agreement.  This Agreement constitutes the complete agreement and understanding among Executive, on the one hand, and the Company, on the other hand, and supersedes and preempts any prior understandings, agreements or representations, by or among Executive, on the one hand, and the Company or any Group Company, on the other hand, written or oral, whether in agreements, letters, memoranda, term sheets, presentations or otherwise, which may have related to the subject matter hereof in any way. Nothing in this Agreement shall terminate or reduce any obligations of the Group Companies to indemnify Executive for acts as an officer or director of the Group Companies arising under the formation documents of the Group Companies, or pursuant to any separate indemnity agreement entered into between Executive and any of the Group Companies, as any of such documents or agreements may be amended from time to time, which obligations shall continue in full force and effect in accordance with their terms. Executive acknowledges and agrees that he has been given ample opportunity to consider this Agreement and consult with advisers of his choosing regarding his rights generally and the terms of this Agreement, and has used such time as he deems appropriate to review and consider this Agreement prior to his execution of this Agreement.
16.    Amendment and Waiver.  The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, 

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and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.
17.    Counterparts.  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.
18.    Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors and assigns, except that Executive may not assign his rights (other than those quitclaimed pursuant to Section 2(e) with respect to the “Makarios” name) or delegate his obligations hereunder without the prior written consent of the Company.  The Company shall require any successor to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Any attempted assignment in contravention of this Section 18 shall be void ab initio.
19.    Choice of Law.  All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of Texas without giving effect to any choice of law or conflict of law rules or provisions that would cause the application of the laws of any jurisdiction other than Texas.
20.    Interpretation.  The Company, Executive and their respective counsel have mutually contributed to the preparation of the Agreement.  Accordingly, no provision of the Agreement (nor the Agreement as a whole) shall be construed against the Company or Executive on the grounds that such Party or its counsel drafted any provision of the Agreement.
21.    Tax Withholding.  The Company may withhold from any amount payable under this Agreement such taxes as shall be required to be withheld pursuant to any applicable law or regulation.
22.    Code Section 409A.  Executive and the Company agree that it is the intent of the parties that this Agreement not violate any applicable provision of, or result in any additional tax, interest or penalty under, Section 409A of the Internal Revenue Code (“Section 409A”), and that to the extent any provisions of this Agreement do not comply with Section 409A, the parties will make such changes as are mutually agreed upon in order to comply with Section 409A.  Notwithstanding any other provision with respect to the timing of payments under this Agreement, to the extent necessary to comply with the requirements of Section 409A, any payments to which Executive may become entitled under this Agreement which are subject to Section 409A (and not otherwise exempt from its application) that are payable (i) in a lump sum within six months following the date of termination will be withheld until the first business day after the six-month anniversary of the date of termination, at which time Executive shall be paid the amount of such lump 

19

sum payments in a lump sum and (ii) in installments within six months following the date of termination will be withheld until the first business day after the six-month anniversary of the date of termination, at which time Executive shall be paid the aggregate amount of such installment payments in a lump sum, and after the first business day of the seventh month following the date of termination and continuing each month thereafter, Executive shall be paid the regular payments otherwise due to Executive in accordance with the payment terms and schedule set forth herein.  In the case of any reimbursement to Executive pursuant to this Agreement, such reimbursement will be made reasonably promptly following Executive’s submission of a request for reimbursement.  Any reimbursement by the Company during any taxable year of Executive will not affect any reimbursement by the Company in another taxable year of Executive.  Any right to reimbursement is not subject to liquidation or exchange for another benefit.
23.    Arbitration.
(a)    The Company and Executive agree to submit to final and binding arbitration any and all disputes or disagreements concerning the interpretation or application of this Agreement.  Any such dispute or disagreement will be resolved by arbitration in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association.  Arbitration will take place in Fort Worth, Texas, unless the parties mutually agree to a different location.  Within 30 calendar days of the initiation of arbitration hereunder, each party will designate an arbitrator.  The appointed arbitrators will then appoint a third arbitrator.  Executive and the Company agree that the decision of the arbitrators will be final and binding on both parties.  Any court having jurisdiction may enter a judgment upon the award rendered by the arbitrators.  The arbitrator may, in their own discretion, award legal fees and costs to the prevailing party.
(b)    Notwithstanding the provisions of Section 23(a), the Company may, if it so chooses, bring an action in any court of competent jurisdiction for injunctive relief to enforce Executive’s obligations under Sections 7, 8 and 9 hereof.
[The remainder of this page is intentionally left blank.]

20

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
	
	
	QUICKSILVER RESOURCES INC.

	/s/ John C. Regan

	Name:    John C. Regan

	Title:   Senior Vice President –  
   Chief Financial Officer and 
   Chief Accounting Officer

	
	
	EXECUTIVE

	/s/ Thomas F. Darden

	Thomas F. Darden

21

EXHIBIT A
MUTUAL RELEASE AGREEMENT
THIS MUTUAL RELEASE AGREEMENT (this “Release Agreement”) is entered into between Thomas F. Darden (“Executive”) and QUICKSILVER RESOURCES INC. (the “Company”).  The Company, together with its past, present and future parent organizations, subsidiaries, affiliated entities, related companies and divisions and each of their respective past, present and future officers, directors, employees, shareholders, trustees, members, partners, plan administrators, attorneys, and agents (individually and in their official capacities), as well as any predecessors, future successors or assigns or estates of any of the foregoing, is collectively referred to in this Release Agreement as the “Company Released Parties.”  Executive, together with his affiliated entities, related companies and divisions and each of their respective past, present and future officers, directors, employees, shareholders, trustees, members, partners, plan administrators, attorneys, and agents (individually and in their official capacities), as well as any predecessors, future successors or assigns or estates of any of the foregoing, is collectively referred to in this Release Agreement as the “Executive Released Parties.”
1.     Separation from Employment.  Executive acknowledges and understands that Executive’s last day of employment with the Company is December 31, 2013 (the “Employment Separation Date”).  Executive further acknowledges that Executive has received all compensation and benefits to which Executive is entitled as a result of Executive’s employment, except as otherwise provided under this Agreement and Executive’s Agreement with the Company, dated as of May 15, 2013 (the “Separation Agreement.  Executive understands that, except as otherwise expressly provided in the Separation Agreement, Executive is entitled to nothing further from the Company Released Parties, including reinstatement by the Company.
2.     Releases.
(a)    In consideration of the payments and benefits provided under the Separation Agreement, Executive, for himself and on behalf of all of the Executive Released Parties, hereby unconditionally and irrevocably releases, waives, discharges and gives up, to the full extent permitted by law, any and all Claims (as defined below) that any of the Executive Released Parties may have against any of the Company Released Parties, arising on or prior to the date of Executive’s execution and delivery of this Release Agreement to the Company.  “Claims” means any and all actions, charges, controversies, demands, causes of action, suits, rights, and/or claims whatsoever for debts, sums of money, wages, salary, severance pay, expenses, commissions, fees, bonuses, unvested stock options, vacation pay, sick pay, fees and costs, attorneys’ fees, losses, penalties, damages, including damages for pain and suffering and emotional harm, arising, directly or indirectly, out of any promise, agreement, offer letter, contract, understanding, common law, tort, the laws, statutes, and/or regulations of any and all relevant jurisdictions, whether arising directly or indirectly from any act or omission, 

whether intentional or unintentional.  This releases all Claims, including those of which any of the Executive Released Parties is not aware and those not mentioned in this Release Agreement.  Executive specifically releases any and all Claims arising out of Executive’s employment with the Company and any of the other Company Released Parties or termination therefrom.  Executive expressly acknowledges and agrees that, by entering into this Release Agreement, Executive is releasing and waiving any and all Claims which have arisen on or before the date of Executive’s execution and delivery of this Release Agreement to the Company. Notwithstanding anything contained in this Release Agreement to the contrary, nothing contained in this Release Agreement releases any of the Executive Released Parties’ Claims with respect to any breach of any covenant, agreement, representation or warranty made by the Company under this Release Agreement or the Separation Agreement.  
(b)    In consideration of the above release and other agreements provided under the Separation Agreement, the Company, for itself and on behalf of all of the Company Released Parties, hereby unconditionally and irrevocably releases, waives, discharges and gives up, to the full extent permitted by law, any and all Claims (as defined above) that any of the Company Released Parties may have against any Executive Released Parties, arising on or prior to the date of the Company’s execution and delivery of this Release Agreement to the Executive.  This releases all Claims, including those of which any Company Released Party is not aware and those not mentioned in this Release Agreement.  The Company expressly acknowledges and agrees that, by entering into this Release Agreement, the Company is releasing and waiving any and all Claims which have arisen on or before the date of the Company’s execution and delivery of this Release Agreement to the Executive.  Notwithstanding anything contained in this Release Agreement to the contrary, nothing contained in this Release Agreement releases any of the Company Released Parties’ Claims with respect to any breach of any covenant, agreement, representation or warranty made by Executive under this Release Agreement or the Separation Agreement.  
3.     Representations; Covenant not to Sue.  Each of the parties hereto hereby represents and warrants that (a) such party has not filed, caused or permitted to be filed any pending proceeding (nor has such party lodged a complaint with any governmental or quasi-governmental authority) against any of the parties released by such party, nor has such party agreed to do any of the foregoing, (b) such party has not assigned, transferred, sold, encumbered, pledged, hypothecated, mortgaged, distributed, or otherwise disposed of or conveyed to any third party any right or Claim against any of the parties released by such party that has been released in this Release Agreement, and (c) such party has not directly or indirectly assisted any third party in filing, causing or assisting to be filed, any Claim against any of the parties released by such party.  Each party covenants and agrees that such party shall not encourage or solicit or voluntarily assist or participate in any way in the filing, reporting or prosecution by such party or any third party of a proceeding or Claim against any of the parties released by such party.

2

4.     Binding Agreement.  Executive and his heirs, executors, estate, successors and assigns are bound by this Release Agreement.  The Company and its successors and assigns are bound by this Release Agreement. 
5.     The Company Property.  Executive represents and warrants that Executive has returned to the Company all property in Executive’s possession, custody or control belonging to the Company, its affiliates or subsidiaries, including, but not limited to, all equipment, computers, pass codes, keys, swipe cards, credit cards, documents or other materials, in whatever form or format, that Executive received, prepared, or helped prepare.  Executive represents that Executive has not retained any copies, duplicates, reproductions, computer disks, or excerpts thereof, whether in hard copy or electronic form, of the Company’s, its affiliates’ or subsidiaries’ documents.
6.    Remedies.  If Executive breaches any term or condition of this Release Agreement or the Separation Agreement, or any representation made by Executive in this Release Agreement was false when made, it shall constitute a material breach of this Release Agreement and in addition to and not instead of the Company Released Parties’ other remedies under law or in equity, Executive shall immediately, upon written notice from the Company, forfeit (i) all rights granted under Section 1(c)(iii) of the Separation Agreement to receive and/or retain the 2013 Cash Bonus and the 2013 Stock Bonus (as such terms are defined in Section 1(c)(iii) of the Separation Agreement), (ii) all rights granted to the payments or benefits provided for under Section 2(b) of the Separation Agreement, and (iii) all rights granted under Section 4 of the Separation Agreement to receive and/or retain any payment or benefit to or for the benefit of Executive provided for in Section 4 of the Separation Agreement.  Executive agrees that if Executive is required to forfeit any rights under the foregoing sentence, this Release Agreement shall continue to be binding on the Executive Released Parties, and the Company Released Parties shall be entitled to enforce the provisions of this Release Agreement as if such amounts and rights had not been repaid or forfeited and the Company shall have no further obligations to Executive under Sections 1(c)(iii), 2(b) and 4 of the Separation Agreement.  Further, (x) in the event of Executive’s breach of any term or condition of this Release Agreement, Executive agrees to reimburse all of the Company Released Parties’ attorneys’ fees and other costs associated with enforcing this Release Agreement, and (y) in the event of the Company’s breach of any term or condition of this Release Agreement, the Company agrees to reimburse all of the Executive Released Parties’ attorneys’ fees and other costs associated with enforcing this Release Agreement.
7.     Construction of Agreement.  In the event that one or more of the provisions contained in this Release Agreement shall for any reason be held unenforceable in any respect under the law of any relevant jurisdiction, such unenforceability shall not affect any other provision of this Release Agreement, but this Release Agreement shall then be construed as if such unenforceable provision or provisions had never been contained herein.  If it is ever held that any restriction hereunder is too broad to permit enforcement of such restriction to its fullest extent, such restriction shall be enforced to the maximum extent permitted by applicable law.  This 

3

Release Agreement and any and all matters arising directly or indirectly herefrom shall be governed under the laws of Texas without reference to choice of law rules.  The Company and Executive consent to the sole jurisdiction of the federal and state courts of Texas.  EACH OF EXECUTIVE AND THE COMPANY HEREBY WAIVE HIS OR ITS RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS RELEASE AGREEMENT OR ANY AND ALL MATTERS ARISING DIRECTLY OR INDIRECTLY HEREFROM, AND REPRESENT THAT HE OR IT HAS CONSULTED WITH HIS OR ITS OF THEIR CHOICE OR HAVE CHOSEN VOLUNTARILY NOT TO DO SO SPECIFICALLY WITH RESPECT TO THIS WAIVER.
8.     Opportunity for Review.  Executive represents and warrants that Executive (i) has had sufficient opportunity to consider this Release Agreement, (ii) has read this Release Agreement, (iii) understands all the terms and conditions hereof, (iv) is not incompetent or had a guardian, conservator or trustee appointed for Executive, (v) has entered into this Release Agreement of Executive’s own free will and volition, (vi) has duly executed and delivered this Release Agreement, (vii) understands that Executive is responsible for Executive’s own attorneys’ fees and costs, (viii) has had the opportunity to review this Release Agreement with counsel of his choice or has chosen voluntarily not to do so, (ix) has been given 21 days to review this Release Agreement before signing this Release Agreement and 7 days following execution to revoke this Release Agreement and understands that he must execute this Release Agreement and return it to the Company after the Employment Separation Date and on or before January 21, 2014 and has until January 28, 2013 to revoke this Release Agreement, (x) understands that if Executive does not sign this Release Agreement during the specified period, the Company shall have no obligation to enter into this Release Agreement, (xi) understands that if Executive does not sign this Release Agreement during the specified period or Executive revokes this Release Agreement following its execution, Executive shall not be entitled to receive the payments or benefits provided for under Sections 1(c)(iii), 2(b) and 4 of the Separation Agreement, and the Employment Separation Date shall be unaltered; and (xii) understands that this Release Agreement is valid, binding, and enforceable against the parties hereto in accordance with its terms.
9.     Effectiveness.  This Release Agreement shall be effective and enforceable immediately after execution and delivery to the Company by Executive, as specified above, and execution and delivery by the Company to Executive.
[The remainder of this page is intentionally left blank.]

4

 

IN WITNESS WHEREOF, the parties hereto have executed this Release Agreement as of the dates written below.
Agreed to and accepted on this
 
__ day of _________, 2014.
	
		
	 
	EXECUTIVE

	 
	 

	 
	Thomas F. Darden

Agreed to and accepted on this 
__ day of _________, 2014.
	
	
	QUICKSILVER RESOURCES INC.

	 

	Name:   

	Title:
   

5

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