Document:

exhibit10_14.htm

Exhibit 10.14

 

COSTAR GROUP, INC.

 

EMPLOYEE STOCK PURCHASE PLAN

 

WHEREAS, the purpose of this CoStar Group, Inc. Employee Stock Purchase Plan (“Plan”) is to provide eligible employees of CoStar Group, Inc. (the “Company”) and certain of its subsidiaries with the opportunity to purchase shares of the Company’s common stock (“Common Stock”) at a 10% discount.

 

WHEREAS, the Board of Directors initially approved the Plan by unanimous written consent dated effective April 17, 2006.

 

WHEREAS, the Stockholders of the Company approved the Plan at the Annual Meeting of Stockholders held on June 8, 2006.

 

WHEREAS, the Board of Directors of the Company approved certain amendments to the Plan to clarify certain definitions related to the offering periods and exercise dates and to make certain other administrative changes, all of which amendments are incorporated into the Plan as set forth below.  Further, the Board of Directors of the Company approved certain amendments to the Plan to set forth a maximum number of shares that can be purchased in any offering period, which amendments are incorporated into the Plan as set forth below.  All references to the “Plan” herein refer to the Plan as so amended.

 

1. Administration.  The Plan will be administered by the Company’s Board of Directors (the “Board”) or by one or more committees or subcommittees appointed by the Board (a “Committee”).  The Board or a Committee (in either case, the “Administrator”) may delegate to one or more individuals the day-to-day administration of the Plan.  The Administrator shall have full power and authority to promulgate any rules and regulations which it deems necessary or advisable for the proper administration of the Plan, to interpret the provisions and supervise the administration of the Plan, to make factual determinations relevant to Plan entitlements, and to take all action in connection with the administration of the Plan as it deems necessary or advisable, consistent with any delegation from the Board; provided, however, the administration of the Plan shall be consistent with Rule 16b-3 under the Securities Exchange Act of 1934.  The administration, interpretation or application of the Plan by the Administrator shall be final and binding upon all participants and all other persons.  The Company shall pay all expenses incurred in connection with the administration of the Plan.  No Board or Committee member shall be liable for any action or determination made in good faith with respect to the Plan or any Option (as defined in Section 9) granted hereunder.

 

2. Eligibility.  All employees of the Company, including Directors who are employees, and all employees of any subsidiary of the Company (as defined in Section 424(f) of the Internal Revenue Code (the “Code”)) designated by the Board or a Committee from time to time (a “Designated Subsidiary”), are eligible to participate in the Plan provided that:

 

(a) they are customarily employed by the Company or a Designated Subsidiary for more than 20 hours a week and for more than five months in a calendar year; and

 

(b) they are employees of the Company or a Designated Subsidiary on the applicable Offering Commencement Date (as defined below).

 

  

  

 

For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or Designated Subsidiary; provided that where the period of leave exceeds ninety (90) days and the individual’s right to reemployment is not guaranteed by statute or by contract, the employment relationship will be deemed to have terminated on the ninety-first (91st) day of such leave.

 

No employee may be granted an Option hereunder if such employee, immediately after the Option is granted, owns 5% or more of the total combined voting power or value of the stock of the Company or any subsidiary.  For purposes of the preceding sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of an employee, and all stock which the employee has a contractual right to purchase shall be treated as stock owned by the employee.

 

Eligible employees who elect to participate in the Plan are referred to herein as “participants”.

 

3.           Offering Periods.  Each offering period under the Plan will be two weeks beginning on the second Saturday preceding each of the Company’s regular pay dates (the “Offering Commencement Date”) and ending on each of the Company’s regular pay dates (the “Offering Period”); provided, that if the regular pay date of a particular Offering Period falls on a day that is a Company holiday, that Offering Period shall be deemed to end as of the pay date on which regular Compensation (as defined below) is disbursed or paid to employees by the Company during the Offering Period (generally the last business day prior to the regular pay date) (such pay date or the regular pay date during the Offering Period, as applicable, the “Exercise Date”) and the applicable Offering Period will be shortened accordingly.  Any such shortening of an Offering Period shall have no effect on the Offering Commencement Date or the duration of previous or subsequent Offering Periods.  For purposes hereof, the term “pay date” shall mean the date as of which Compensation is disbursed or paid by the Company to its employees, not the date as of which Compensation is earned; and the term “regular pay date” shall mean every other Friday on which the Company typically disburses or pays Compensation to its employees.  During each Offering Period, payroll deductions will be made on behalf of a participant from one or more paychecks paid by the Company to such participant during the Offering Period.  Such payroll deductions will be held for the purchase of Common Stock at the end of the Offering Period.  The Administrator may, at any time and at its discretion, change the frequency and/or duration of Offering Periods with respect to future Offering Periods.

 

4.           Participation.  An eligible employee may participate in the Plan by completing and forwarding a payroll deduction authorization form to the Company’s benefits office or by any other method which the Administrator specifies no later than 5:00 p.m., Eastern Time, on the last business day prior to the applicable Offering Commencement Date.  The payroll deduction authorization form will authorize a regular payroll deduction from the Compensation received by the participant during the Offering Period.  Unless a participant files a new form or withdraws from the Plan, his or her deductions and purchases will continue at the same rate for future Offering Periods under the Plan as long as the Plan remains in effect (subject to Section 11 below).  As used herein, the term “Compensation” means total compensation subject to federal income tax and paid to the participant by the Company, excluding reimbursements or other expense allowances, fringe benefits, relocation expenses, stock-based compensation and severance benefits.  For purposes of the Plan, (a) salary deferrals in connection with participation in the Plan or any other plan or arrangement (such as Section 401(k), Section 125 or qualified transportation fringe benefit) shall be included as Compensation, and (b) compensation shall be recognized only for the period in which a person is actually an eligible participant of the Plan.  Further, for purposes of the Plan, references to Compensation disbursed or paid by the Company shall include compensation disbursed or paid by a Designated Subsidiary, as the case may be, and the term “Company” in such context shall include any Designated Subsidiary.

 

5. Deductions.  The Company will maintain payroll deduction accounts for all participants.  With respect to the Plan, a participant may authorize a payroll deduction in any dollar amount up to a maximum of 15% of the Compensation he or she receives during the Offering Period or such shorter period during which deductions from payroll are made.  Payroll deductions may be made in 1% increments of Compensation, between 1% and 15%, with any change in compensation paid during the Offering Period to result in an automatic corresponding change in the dollar amount withheld as soon as administratively practical.

 

  

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6.           Deduction Changes.  A participant may increase, decrease or discontinue his or her payroll deduction for a subsequent Offering Period by filing a new payroll deduction authorization form, or indicating a change by any other method which the Administrator specifies, no later than 5:00 p.m., Eastern Time, on the last business day prior to the applicable Offering Commencement Date.  If a participant elects to discontinue his or her payroll deductions, but does not elect to withdraw his or her funds pursuant to Section 8 below, funds deducted prior to such participant’s election to discontinue will be applied to the purchase of Common Stock on the Exercise Date.  The Administrator may (i) establish rules limiting the frequency with which participants may change, discontinue and resume payroll deductions under the Plan and may impose a waiting period on participants wishing to resume payroll deductions following discontinuance, and (ii) change the rules regarding discontinuance of participation or changes in participation in the Plan.  Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code, the Administrator may reduce a participant’s payroll deductions to zero percent (0%) at any time during an Offering Period scheduled to end during the current calendar year.  Payroll deductions shall re-commence at the rate provided in such participant’s enrollment form at the beginning of the first Offering Period that is scheduled to end in the following calendar year, unless participation in the Plan is discontinued by the participant.

 

If a participant has not followed the procedures prescribed by the Administrator to change the rate of payroll deductions or to discontinue the payroll deductions, the rate of payroll deductions shall continue at the properly elected rate in effect until such rate is changed in accordance with Plan procedures.

 

7. Interest.  All payroll withholdings hereunder shall be held in the corporate general account.  Interest will not be paid on any participant accounts, except to the extent that the Administrator, in its sole discretion, elects to credit participant accounts with interest at such per annum rate as it may from time to time determine.

 

8. Withdrawal of Funds.  Except as otherwise provided by the Administrator pursuant to Section 6 hereof, a participant may at any time prior to 5:00 p.m., Eastern time, on the fifth business day prior to the Exercise Date and for any reason permanently draw out the balance accumulated in the participant’s account and thereby withdraw from participation in an Offering Period by notifying the Company by whatever method specified by the Administrator.  Partial withdrawals are not permitted.  The participant may not begin participation again during the remainder of the Offering Period.  The participant may participate in any subsequent Offering Period in accordance with terms and conditions established by the Administrator.

 

9. Purchase of Shares.  On the Offering Commencement Date of each Offering Period, the Company will grant to each eligible employee who is then a participant in the Plan an option (the “Option”) to purchase whole shares of Common Stock of the Company on the Exercise Date at the Option Price hereinafter provided for.

 

  

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Notwithstanding the above, no participant may be granted an Option which permits his or her rights to purchase Common Stock under this Plan and any other employee stock purchase plan (as defined in Section 423(b) of the Code) of the Company and its subsidiaries, to exceed the lesser of (a) $25,000 of the fair market value of such Common Stock (determined as of each Offering Commencement Date) for each calendar year in which the Option is outstanding at any time or (b) 100,000 shares of Common Stock (determined as of each Offering Commencement Date) in any Offering Period.

 

The price for each share purchased under the Plan will be 90% of the closing price of the Common Stock on the Exercise Date, rounded to the nearest $0.01 (the “Option Price”).  Such closing price shall be (a) the closing price on any national securities exchange on which the Common Stock is listed, (b) the closing price of the Common Stock on the Nasdaq Global or Global Select Market or (c) the average of the closing bid and asked prices in the over-the-counter-market, whichever is applicable, as published in The Wall Street Journal.  If no sales of Common Stock were made on such day, the price of the Common Stock for purposes of clauses (a) and (b) above shall be the reported price for the next preceding day on which sales were made.

 

Unless an employee withdraws from participation prior to the Exercise Date pursuant to the terms hereof, each such employee who is a participant in the Plan on the Offering Commencement Date shall be deemed to have exercised his or her Option at the Option Price on the Exercise Date and shall be deemed to have purchased from the Company the number of full shares of Common Stock reserved for the purpose of the Plan that his or her accumulated payroll deductions as of the Exercise Date will pay for, but not in excess of the maximum number determined in the manner set forth above.

 

Any balance remaining in a participant’s payroll deduction account at the end of an Offering Period will be automatically refunded to the participant, except that any balance which is less than the purchase price of one share of Common Stock will be carried forward into the participant’s payroll deduction account for the Plan, except that if the participant requests a refund of the residual, in accordance with procedures established by the Administrator, or if the participant terminates his or her employment, the balance shall then be refunded.

 

10. Issuance of Shares.  Shares of Common Stock purchased under the Plan may be issued only in the name of the participant, in the name of the participant and another person of legal age as joint tenants with rights of survivorship, or (in the Company’s sole discretion) in the name of a brokerage firm, bank or other nominee holder designated by the participant.  The Company may, in its sole discretion and in compliance with applicable laws, authorize the use of book entry registration of shares.

 

11. Rights on Retirement, Death or Termination of Employment.  In the event of a participant’s termination of employment for any reason (including death), the participant’s participation in the Plan shall terminate effective as of the Offering Commencement Date immediately following such termination, and after the Exercise Date of the Offering Period during which such participant’s employment was terminated no payroll deduction shall be taken from any pay due and owing to such participant and the balance in the participant’s account shall be paid to the participant or, in the event of the participant’s death, (a) to a beneficiary previously designated in a revocable notice signed by the participant (with any spousal consent required under state law) or (b) in the absence of such a designated beneficiary, to the executor or administrator of the participant’s estate or (c) if no such executor or administrator has been

 

  

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appointed to the knowledge of the Company, to such other person(s) as the Company may, in its discretion or as may be required under applicable law, designate.  In the event that the Designated Subsidiary by which a participant is employed shall cease to be a subsidiary of the Company or the participant is transferred to a subsidiary of the Company that is not a Designated Subsidiary, the participant shall be deemed to have terminated employment as of the date of such action, and, as set forth above, the participant’s participation in the Plan shall terminate effective as of the Offering Commencement Date immediately following such termination.

 

12. Optionees Not Stockholders; No Enlargement of Employee Rights.  Neither the granting of an Option to a participant nor the deductions from his or her pay shall constitute such participant a stockholder of the shares of Common Stock covered by an Option under this Plan until such shares have been purchased by and issued to him or her.  In addition, nothing contained in this Plan shall be deemed to give any participant the right to be retained in the employ of the Company or of the Designated Subsidiary or to interfere with the right of the Company or the Designated Subsidiary to discharge any participant at any time.

 

13. Rights Not Transferable.  Rights under this Plan and Options granted under this Plan are not transferable by a participant other than by will or the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant.  If a participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interests under the Plan, other than as permitted by the Code, such act shall be treated as an election by the Participant to discontinue participation in the Plan.

 

14. Use of Funds.  All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

 

15. Adjustment in Case of Changes Affecting Common Stock.  If the outstanding shares of Common Stock are increased or decreased, or are changed into or are exchanged for a different number or kind of shares, as a result of one or more reorganizations, restructurings, recapitalizations, reclassifications, stock splits, reverse stock splits, stock dividends or the like, upon authorization of the Board or the Committee, the Board may make appropriate adjustments in the number and/or kind of shares, and the per-share exercise price thereof, which may be issued in the aggregate and to any participant upon exercise of Options granted under the Plan.  The Board’s determinations under this Section 15 shall be conclusive and binding on all parties.

 

16. Merger.  If the Company shall at any time merge or consolidate with another corporation and the holders of the capital stock of the Company immediately prior to such merger or consolidation continue to hold at least 51% by voting power of the capital stock of the surviving corporation (“Continuity of Control”), the holder of each Option then outstanding will thereafter be entitled to receive at the next Exercise Date upon the exercise of such Option for each share as to which such Option shall be exercised the same securities or property to which a holder of one share of the Common Stock was entitled upon and at the time of such merger or consolidation, and the Administrator shall take such steps in connection with such merger or consolidation as the Administrator shall deem necessary to assure that the provisions of Section 15 shall thereafter be applicable, as nearly as reasonably may be, in relation to the said securities or property as to which such holder of such Option might thereafter be entitled to receive thereunder.

 

  

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In the event of a merger or consolidation of the Company with or into another corporation which does not involve Continuity of Control, or of a sale of all or substantially all of the assets of the Company while unexercised Options remain outstanding under the Plan, (i) subject to the provisions of clauses (ii) and (iii), after the effective date of such transaction, each holder of an outstanding Option shall be entitled, upon exercise of such Option, to receive in lieu of shares of Common Stock, shares of such stock or other securities as the holders of shares of Common Stock received pursuant to the terms of such transaction; or (ii) all outstanding Options may be cancelled by the Administrator as of a date prior to the effective date of any such transaction and all payroll deductions shall be paid out to the participants; or (iii) all outstanding Options may be cancelled by the Administrator as of the effective date of any such transaction, provided that notice of such cancellation shall be given to each holder of an Option, and each holder of an Option shall have the right to exercise such Option in full based on payroll deductions then credited to his or her account as of a date determined by the Board or a Committee, which date shall not be less than three (3) business days preceding the effective date of such transaction.

 

17. Amendment of the Plan.  The Board may at any time, and from time to time, amend this Plan in any respect, except that (i) if the approval of any such amendment by the stockholders of the Company is required by Section 423 of the Code, such amendment shall not be effected without such approval, and (ii) in no event may any amendment be made which would cause the Plan to fail to comply with Section 423 of the Code.

 

18. Insufficient Shares.  In the event that the total number of shares of Common Stock specified in elections to be purchased during any Offering Period plus the number of shares purchased during previous Offering Periods under this Plan exceeds the maximum number of shares issuable or available under this Plan, the Administrator will allot the shares then available on a pro rata basis.

 

19. Termination of the Plan.  This Plan may be terminated at any time by the Board.  Upon termination of this Plan all amounts in the accounts of participants shall be promptly refunded.

 

20. Governmental Regulations.  The Company shall have no obligation to sell and deliver shares of Common Stock under this Plan unless and until (i) it has taken all actions required to register the shares of Common Stock under the Securities Act of 1933; (ii) any applicable listing requirement of any stock exchange or the Nasdaq Global or Global Select Market (to the extent the Common Stock is then so listed or quoted) for the Common Stock is met; and (iii) all other applicable provisions of state and federal law have been satisfied.

 

21. Governing Law.  The Plan shall be governed by Maryland law except to the extent that such law is preempted by federal law.

 

22. Available Shares.  Shares may be issued upon exercise of an Option from authorized but unissued Common Stock, from shares held in the treasury of the Company, or from any other proper source.  A maximum of 100,000 shares (subject to adjustment as set forth in Section 15) shall be available for issuance under the Plan.

 

  

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23. Notification Upon Sale of Shares.  Each participant agrees, by entering the Plan, to promptly give the Company notice of any disposition of shares purchased under the Plan where such disposition occurs within two years after the Exercise Date as of which such shares were purchased (the deemed date of grant pursuant to the Code).  As a condition to the exercise of an Option, the Company may require the participant exercising such Option to represent and warrant at the time of any such exercise that the shares of Common Stock are being purchased only for investment and without any present intention to sell or distribute such shares of Common Stock if such a representation is required by applicable law.

 

24. Withholding. Each participant shall, no later than the date of the event creating the tax liability, make provision satisfactory to the Administrator for payment of any taxes required by law to be withheld in connection with any transaction related to Options granted to or shares acquired by such participant pursuant to the Plan.  The Company may deduct, to the extent permitted by law, any such taxes from any payment of any kind otherwise due to a participant.

 

25. Effective Date and Approval of Shareholders.  The Plan shall be effective July 1, 2006, subject, however, to approval of the Plan by the stockholders of the Company as required by Section 423 of the Code, which stockholder approval must occur within twelve months of the adoption of the Plan by the Board.  No Option granted under this Plan may be exercised unless or until such stockholder approval has been obtained.

 

 

Adopted by the Board of Directors on

April 17, 2006

 

Approved by the stockholders on

June 8, 2006

 

Amended by the Board of Directors effective 

July 1, 2006

January 1, 2010

 

 

  

7exh10_1.htm

Exhibit 10.1

 

Quicksilver Resources Inc.

2011 Executive Bonus Plan

 

Section 1.   Eligibility:  This 2011 Executive Bonus Plan (the “Plan”) provides for awards of incentive bonuses to executive and other officers of Quicksilver Resources Inc. (the “Company”).  Only executive officers of the Company designated by the Compensation Committee (“Executive Officers”) or other officers of the Company designated by the Chief Executive Officer (“Non-Executive Officers” and, together with the Executive Officers, “Participants”) are eligible to participate in the Plan.

 

The criteria for determining bonuses under the Plan, including performance measures and target incentive amounts, will be established by the Compensation Committee for Participants who are Executive Officers and by the Chief Executive Officer for Participants who are Non-Executive Officers.  A Participant may be granted a Cash Bonus Award, an Equity Bonus Award, or a combination thereof.

 

The portion of an incentive bonus awarded pursuant to the Plan to an Executive Officer who is designated as a “Covered Employee” by the Compensation Committee that exceeds 50% of the Executive Officer’s Target Incentive (i.e., the portion awarded for Quantitative Performance Levels meeting or exceeding 80% of Budget) is intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and is granted pursuant to the Company’s Third Amended and Restated 2006 Equity Plan, as may be amended (the “Equity Plan”), and is subject to the terms and conditions thereof.  The portion of any bonus awarded to a Covered Employee that does not exceed 50% of the Covered Employee’s Target Incentive (i.e., the portion that would be awarded if Quantitative Performance Levels did not meet 80% of Budget) and all bonuses awarded to other Participants under the Plan are not intended to qualify as performance-based compensation and are not made pursuant to Section 11 of the Equity Plan.

 

Except as provided below, in order to receive a bonus under the Plan, a Participant must be an active, full-time employee on the date bonuses are paid hereunder.  The incentive bonus of a newly hired or promoted Participant will be pro-rated based on the number of calendar days in the Plan Year that he or she participates in the Plan.

 

If an eligible Participant dies or becomes disabled and unable to work during the Plan Year, a pro-rated award based on the number of calendar days in the Plan Year that he or she participated in the Plan before his or her death or disability and determined at the actual level of achievement of the Quantitative Performance Levels will be paid to the Participant or his or her beneficiary at the same time and in the same manner as awards for the Plan Year are paid to other Participants; provided, however, that notwithstanding any provision of the Plan to the contrary, an Equity Bonus Award will be paid in the form of a lump sum cash payment rather than in the form of Restricted Shares or Restricted Stock Units.  The Participant’s beneficiary under the Plan will be the beneficiary designated under the Company’s group life insurance plan.  If no such beneficiary has been designated, the award will be paid to the Participant’s estate.

 

Section 2.   Definitions:

 

Board:  The Board of Directors of the Company.

 

Budget:  The performance levels for Quantitative Performance Measures, as set forth in Table 1, against which the Quantitative Performance Levels achieved for the Plan Year are measured.

 

Cash Bonus Awards:  An incentive bonus award granted to an eligible Participant pursuant to the Plan that is paid in a lump sum cash payment.

 

Cash Flow from Operations:  The Company’s Cash Flow from Operations for the Plan Year, as determined in accordance with generally accepted accounting principles.

 

Change in Control:  The occurrence of any of the following events:

 

(i)       any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) is or becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the then-outstanding Voting Stock of the Company; provided, however, that the following acquisitions will not constitute a Change in Control:  (A) any acquisition of Voting Stock of the Company directly from the Company that is approved by a majority of the Incumbent Directors; (B) any acquisition of Voting Stock of the Company by the Company or any subsidiary of the Company; (C) any acquisition of Voting Stock of the Company by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; and (D) any acquisition of Voting Stock of the Company by Mercury Exploration Company, Quicksilver Energy, L.P., The Discovery Fund, Pennsylvania Avenue Limited Partnership, Pennsylvania Management Company, the estate of Frank Darden, Lucy Darden, Anne Darden Self, Glenn Darden or Thomas Darden, or their respective successors, assigns, designees, heirs, beneficiaries, trusts, estates or controlled affiliates;

 

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

 

(iii)     the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the consolidated assets of the Company (each, a “Business Combination Transaction”) immediately after which the Voting Stock of the Company outstanding immediately prior to such Business Combination Transaction does not continue to represent (either by remaining outstanding or by being converted into Voting Stock of the entity surviving, resulting from, or succeeding to all or substantially all of the Company’s consolidated assets as a result of such Business Combination Transaction or any parent of such entity) at least 50% of the combined voting power of the then outstanding shares of Voting Stock of (A) the entity surviving, resulting from, or succeeding to all or substantially all of the Company’s consolidated assets as a result of, such Business Combination Transaction or (B) any parent of any such entity (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries).

 

Chief Executive Officer:  The Chief Executive Officer of the Company.

 

Compensation Committee:  The Compensation Committee of the Board of Directors of the Company.

 

Earnings Per Share or EPS:  The Company’s fully diluted Earnings Per Share as set forth in the Company’s Consolidated Statement of Earnings for the Plan Year, as determined in accordance with generally accepted accounting principles.

 

Equity Bonus Awards:  An incentive bonus award granted to an eligible Participant pursuant to the Plan that is denominated in a dollar amount but that is paid by a grant of Restricted Shares or Restricted Stock Units, vesting in installments of 33 1/3% on each of the first three anniversaries of the date of grant of such Restricted Shares or Restricted Stock Units.  The number of Restricted Shares or Restricted Stock Units granted will be equal to the dollar amount of the award earned under the Plan divided by the Market Value per Share (within the meaning of the Equity Plan) on the date of grant.

 

Exchange Act:  The Securities Exchange Act of 1934, as amended.

 

F&D Cost:  The Company’s finding and development cost for the Plan Year, determined by dividing (i) drilling capital related to reserve additions for the Plan Year, as reflected in the Company’s general ledger for the Plan Year, by (ii) reserve additions, for which capital was incurred, for the Plan Year, as reflected in the Company’s reserve engineering database for the Plan Year.

 

Incumbent Directors:  The individuals who, as of the date the Plan is adopted, are directors of the Company and any individual becoming a director subsequent to the date hereof whose election, nomination for election by the Company’s stockholders, or appointment, was approved by a vote of a majority of the then-Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination).

 

Participant:  An Executive Officer designated by the Compensation Committee or a Non-Executive Officer designated by the Chief Executive Officer as eligible to participate in the Plan.

 

Plan Year:  January 1, 2011 through December 31, 2011.

 

Production:  The Company’s net production for the Plan Year as set forth in the Company’s audited financial statements.

 

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

 

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

 

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

 

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

 

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

 

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

 

Target Incentive:  The unadjusted bonus a Participant would earn under an award if each Quantitative Performance Measure is achieved at a Quantitative Performance Level equal to 100% of Budget.  A Target Incentive is calculated by multiplying the Participant’s base salary earned during the Plan Year by the Participant’s Target Percent of Base Pay with respect to such award.

 

Target Percent of Base Pay:  A percentage of base salary assigned to each eligible Participant by the Compensation Committee or the Chief Executive Officer, as applicable, with respect to each award granted under the Plan.

 

Voting Stock:  The securities entitled to vote generally in the election of directors or persons who serve similar functions.

 

Weighting Factor:  The weighting percentage assigned to each Quantitative Performance Measure, as set forth in Table 1.

 

Section 3.   Calculation of Awards:  With respect to each Quantitative Performance Measure, a Participant’s Target Incentive for each award is multiplied by the applicable “Percent Target Awarded” value corresponding to the Quantitative Performance Level set forth in Table 1 for that Quantitative Performance Measure and further multiplied by the Weighting Factor applicable to that Quantitative Performance Measure.  The resulting products for each Quantitative Performance Measure are then summed to obtain a Participant’s potential award or awards.  The Compensation Committee (with respect to Executive Officers) or the Chief Executive Officer (with respect to Non-Executive Officers) may, in their discretion, adjust a Participant’s potential award or awards based on consideration of Qualitative Performance Measures; provided, however, that with respect to an award to a Covered Employee, the Compensation Committee may exercise such discretion only to reduce or eliminate such award.  In no event will the reduction of any Participant’s potential award have the effect of increasing an award payable to a Covered Employee under the Plan.  The Compensation Committee’s exercise of discretion to make adjustments in awards and performance measures with respect to Covered Employees is limited as specifically provided in the Equity Plan.

 

If the Compensation Committee (with respect to Executive Officers) or the Chief Executive Officer (with respect to Non-Executive Officers) determines that, as a result of a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which the Company conducts its business, or any other events or circumstances, the Quantitative Performance Measures or corresponding Percent Target Awarded values are no longer suitable, the Compensation Committee or the Chief Executive Officer, as applicable, may in their discretion modify such Quantitative Performance Measures or percentages or the related minimum acceptable level of achievement, in whole or in part, with respect to the Plan Year as they or he deem appropriate and equitable.

 

Section 4.   Approval and Payment of Awards:  Upon completion of the annual audit by the Company’s independent auditors of the results of the Company’s operations for the Plan Year, the Compensation Committee (with respect to Executive Officers) and the Chief Executive Officer (with respect to Non-Executive Officers) will certify in writing the extent to which the Quantitative Performance Levels for the Plan Year were achieved and determine the award or awards payable to each eligible Participant.  Payment of each Cash Bonus Award will be made in a lump sum payment in cash, and will be made no later than March 15 following the end of the Plan Year.  Restricted Shares or Restricted Stock Units granted in payment of Equity Bonus Awards will be granted no later than March 15 following the end of the Plan Year.  The Company may deduct from any award such amounts as may be required to be withheld under any federal, state or local tax laws.  It is the Company’s intention that any bonus awarded under the Plan will not constitute a deferral of compensation within the meaning of Section 409A of the Code.

 

Section 5.   Change in Control:  If a Change in Control occurs during the Plan Year, the award payable to each eligible Participant for the Plan Year will be determined at the highest level of achievement of the Quantitative Performance Levels, without regard to actual performance and without proration for less than a full Plan Year.  The awards will be paid following the Change in Control and in no event later than 30 days after the date of an event which results in a Change in Control.  Notwithstanding any provision of the Plan to the contrary, if a Change in Control occurs during the Plan Year, each Equity Bonus Award will be paid in the form of a lump sum cash payment rather than in the form of Restricted Shares or Restricted Stock Units.

 

Section 6.   No Contract:  The Plan is not and will not be construed as an employment contract or as a promise or contract to pay awards to eligible Participants or their beneficiaries.  The Plan does not confer upon any eligible Participant any right with respect to continuance of employment or other service with the Company or any subsidiary, nor will it interfere in any way with any right the Company or any subsidiary would otherwise have to terminate such person’s employment or other service at any time.  The Plan will be approved by the Compensation Committee and the Chief Executive Officer and may be amended from time to time by the Compensation Committee without notice; provided that the Chief Executive Officer may modify the Weighting Factors, Quantitative Performance Measures, and Percent Target Awarded criteria set forth in Table 1 with respect to Participants who are Non-Executive Officers.  No eligible Participant or beneficiary may sell, assign, transfer, discount or pledge as collateral for a loan, or otherwise anticipate any right to payment of an award under the Plan.

 

Section 7.   Administration of the Plan:  The Compensation Committee or, with respect to an award to a Non-Executive Officer, the Chief Executive Officer, has the full authority and discretion to administer the Plan and to take any action that is necessary or advisable in connection with the administration of the Plan, including without limitation the authority and discretion to interpret and construe any provision of the Plan or of any agreement, notification or document evidencing an award of an incentive bonus.  A majority of the Compensation Committee will constitute a quorum, and the action of the members of the Compensation Committee present at any meeting at which a quorum is present, or acts unanimously approved in writing, will be the acts of the Compensation Committee.  The interpretation and construction by the Compensation Committee or the Chief Executive Officer of any such provision and any determination by the Compensation Committee or the Chief Executive Officer pursuant to any provision of the Plan or of any such agreement, notification or document will be final and conclusive.  Neither the Chief Executive Officer nor any member of the Compensation Committee will be liable for any such action or determination.

 

Section 8.   Governing Law:  The Plan, all awards and all actions taken under the Plan will be governed in all respects in accordance with the laws of the State of Texas, including without limitation, the Texas statute of limitations, but without giving effect to the principles of conflicts of laws of such State; provided, however, that to the extent an award is made pursuant to the Equity Plan, it will be governed in all respects in accordance with the laws of the State of Delaware.

 

Section 9.   Limitation on Payment of Benefits:  Notwithstanding any provision of the Plan to the contrary, if a Participant participates in the Company’s Amended and Restated Executive Change in Control Retention Incentive Plan, as amended from time to time (the “Executive Retention Plan”) and any amount to be paid or provided under the Plan to such Participant would be an “Excess Parachute Payment,” within the meaning of Section 280G of the Code, then the payments to be paid or provided under the Plan will be treated in accordance with such Executive Retention Plan.  If any Participant does not participate in the Executive Retention Plan and any amount to be paid or provided under the Plan to such Participant would be an Excess Parachute Payment but for the application of this sentence, then the payments to be paid or provided under the Plan will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payment to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes).  Whether requested by an eligible Participant or the Company, the determination of whether any reduction in such payments to be provided under the Plan or otherwise is required pursuant to the preceding sentence will be made at the expense of the Company by the Company’s independent accountants in effect prior to the Change in Control.  The fact that the Participant’s right to payments may be reduced by reason of the limitations contained in this Section 9 will not of itself limit or otherwise affect any other rights of the Participant other than pursuant to the Plan.

 

 

 

 

Table 1

QUICKSILVER RESOURCES INC.

2011 EXECUTIVE BONUS PLAN

 

I.           Quantitative Performance Measures and Weighting Factors

 

	
Quantitative Performance Measure

	 	
Weighting Factor

	  	 	  
	
Cash Flow from Operations

	 	
15%

	
Earnings Per Share (EPS)

	 	
15%

	
F&D Cost

	 	
20%

	
Production

	 	
25%

	
Reserves

	 	
25%

 

 

II.           Performance Levels Attained and Determination of Awards

 

	
Quantitative Performance Levels1

	 	
Percent Target Awarded

	
120% of Budget or greater

	 	
200.00%

	
119% of Budget

	 	
175.00%

	
118% of Budget

	 	
175.00%

	
117% of Budget

	 	
175.00%

	
116% of Budget

	 	
175.00%

	
115% of Budget

	 	
175.00%

	
114% of Budget

	 	
150.00%

	
113% of Budget

	 	
150.00%

	
112% of Budget

	 	
150.00%

	
111% of Budget

	 	
150.00%

	
110% of Budget

	 	
150.00%

	
109% of Budget

	 	
125.00%

	
108% of Budget

	 	
125.00%

	
107% of Budget

	 	
125.00%

	
106% of Budget

	 	
125.00%

	
105% of Budget

	 	
125.00%

	
104% of Budget

	 	
100.00%

	
103% of Budget

	 	
100.00%

	
102% of Budget

	 	
100.00%

	
101% of Budget

	 	
100.00%

	
100% of Budget

	 	
100.00%

	
99% of Budget

	 	
90.00%

	
98% of Budget

	 	
90.00%

	
97% of Budget

	 	
90.00%

	
96% of Budget

	 	
90.00%

	
95% of Budget

	 	
90.00%

	
94% of Budget

	 	
80.00%

	
93% of Budget

	 	
80.00%

	
92% of Budget

	 	
80.00%

	
91% of Budget

	 	
80.00%

	
90% of Budget

	 	
80.00%

	
89% of Budget

	 	
70.00%

	
88% of Budget

	 	
70.00%

	
87% of Budget

	 	
70.00%

	
86% of Budget

	 	
70.00%

	
85% of Budget

	 	
70.00%

	
84% of Budget

	 	
60.00%

	
83% of Budget

	 	
60.00%

	
82% of Budget

	 	
60.00%

	
81% of Budget

	 	
60.00%

	
80% of Budget

	 	
60.00%

	
Less than 80% but more than 50% of Budget

	 	

50.00%2

	
50% of Budget or below

	 	

25.00%3

 

“Budget” represents (i) with respect to Cash Flow from Operations, Earnings per Share and Production, the applicable performance measure budgeted for the Plan Year in the Company’s 2011 Budget approved by the Board on December 2, 2010, and (ii) with respect to F&D Cost and Reserves, the performance goals established by the Compensation Committee for purposes of the Plan on February 22, 2011.

 

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

 

The Quantitative Performance Levels for the Plan Year will be calculated so as to exclude the effects of any extraordinary or nonrecurring events (including any material restructuring charges, financial or otherwise), or any changes in accounting principles, acquisitions or divestitures, and may be adjusted as otherwise permitted by the Equity Plan; provided that, in the case of a Covered Employee, no such adjustment will be made if the effect of such adjustment would cause the related compensation to fail to qualify as “performance-based compensation.”

  

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

  

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

  

3 The Percent Target Awarded for a Quantitative Performance Level less than 50% of Budget may be any percent from 0 to 25%, at the discretion of the Compensation Committee with respect to Executive Officers and at the discretion of the Chief Executive Officer with respect to Non-Executive Officers.

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