[Form of Grant Notice for [Directors][Chairman] (Time-and-Performance Vesting)]

 

ECO-STIM ENERGY SOLUTIONS, INC.

2015 STOCK INCENTIVE PLAN

 

PHANTOM STOCK AWARD GRANT NOTICE

 

Pursuant to the terms and conditions of the Eco-Stim Energy Solutions, Inc. 2015
Stock Incentive Plan, as amended from time to time (the “Plan”), Eco-Stim Energy
Solutions, Inc. (the “Company”) hereby grants to the individual listed below
(“you” or the “Participant”) the number of shares of phantom stock (the “Phantom
Shares”) set forth below. This award of Phantom Shares (this “Award”) is subject
to the terms and conditions set forth in this Phantom Stock Award Grant Notice
(this “Grant Notice”) and in the Phantom Stock Award Agreement attached hereto
as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated
herein by reference. Capitalized terms used but not defined herein shall have
the meanings set forth in the Plan.

 

Participant:   [●]       Date of Grant:   [●], 2017       Performance Period:  
Date of Grant through the first anniversary of Date of Grant       Total Number
of Phantom Shares:   [●]      

Vesting Schedule:

 

  Subject to the Agreement, the Plan and the other terms and conditions set
forth herein, so long as you continuously serve as Chairman of the Board through
the last day of the Performance Period, the Phantom Shares shall vest in
accordance with the following schedule:

 

  ●  One-third of the Phantom Shares shall vest on the first business day
following the end of the Performance Period if the First Share Price Trigger (as
defined below) has been satisfied;         ● One-third of the Phantom Shares
shall vest on the first business day following the end of the Performance Period
if the Second Share Price Trigger (as defined below) has been satisfied; and    
    ● One-third of the Phantom Shares shall vest on the first business day
following the end of the Performance Period if the Third Share Price Trigger (as
defined below) has been satisfied.

 

    Notwithstanding the schedule set forth immediately above, so long as you
continuously serve as Chairman of the Board through such applicable date, the
Phantom Shares granted hereunder are eligible to become fully vested as set
forth in Section 3(b) of the Agreement.

 

  

 

 

Share Price Triggers:  

The “First Share Price Trigger” shall be satisfied if the closing price of the
Common Stock on a national stock exchange registered under section 6(a) of the
Exchange Act, as reported on the stock exchange composite tape (or such other
reporting service approved by the Committee), has equaled or exceeded $2.00 per
share over any period of twenty (20) consecutive trading days during the
Performance Period.

 

The “Second Share Price Trigger” shall be satisfied if the closing price of the
Common Stock on a national stock exchange registered under section 6(a) of the
Exchange Act, as reported on the stock exchange composite tape (or such other
reporting service approved by the Committee), has equaled or exceeded $2.50 per
share over any period of twenty (20) consecutive trading days during the
Performance Period.

 

The “Third Share Price Trigger” shall be satisfied if the closing price of the
Common Stock on a national stock exchange registered under section 6(a) of the
Exchange Act, as reported on the stock exchange composite tape (or such other
reporting service approved by the Committee), has equaled or exceeded $3.00 per
share over any period of twenty (20) consecutive trading days during the
Performance Period.

 

The First Share Price Trigger, the Second Share Price Trigger and the Third
Share Price Trigger are collectively referred to as the “Share Price Triggers.”

 

By your signature below, you represent, warrant and covenant to the Company
that:

 

(a) You have received the Agreement and the Plan, read the terms of the
Agreement and the Plan and have been given the opportunity to consult with
counsel, ask questions of or request additional information from the Company.

 

(b) You agree to be bound by the terms and conditions of the Plan and the
Agreement (including this Grant Notice).

 

(c) You agree to accept as binding, conclusive and final all decisions or
interpretations of the Committee regarding any questions or determinations that
arise under the Agreement (including this Grant Notice) or the Plan.

 

This Grant Notice may be executed in one or more counterparts (including
portable document format (.pdf) and facsimile counterparts), each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same agreement.

 

[Signature Page Follows]

 

 2 

 

 

IN WITNESS WHEREOF, the Company has caused this Grant Notice to be executed by
an officer thereunto duly authorized, and the Participant has executed this
Grant Notice, effective for all purposes as provided above.

 

  COMPANY       Eco-Stim Energy Solutions, Inc.         By:     Name: J. Chris
Boswell   Its: President and Chief Executive Officer         PARTICIPANT        
Name:     Address:        

 

SIGNATURE PAGE TO
PHANTOM STOCK AWARD GRANT NOTICE

 

  

 

 

EXHIBIT A

 

PHANTOM STOCK AWARD AGREEMENT

 

This Phantom Stock Award Agreement (together with the Grant Notice to which this
Agreement is attached, this “Agreement”) is made as of the Date of Grant set
forth in the Grant Notice to which this Agreement is attached by and between
Eco-Stim Energy Solutions, Inc., a Nevada corporation (the “Company”), and [●]
(the “Participant”). Capitalized terms used but not specifically defined herein
shall have the meanings specified in the Plan or the Grant Notice.

 

1. Award. In consideration of the Participant’s past and/or continued service as
Chairman of the Board and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, effective as of the Date of
Grant set forth in the Grant Notice (the “Date of Grant”), the Company hereby
grants to the Participant the number of Phantom Shares set forth in the Grant
Notice on the terms and conditions set forth in the Grant Notice, this Agreement
and the Plan, which is incorporated herein by reference as a part of this
Agreement. In the event of any inconsistency between the Plan and this
Agreement, the terms of the Plan shall control; provided, however, that this
Agreement may impose greater restrictions or grant lesser rights than the Plan.
To the extent vested, each Phantom Share represents the right to receive one
share of Common Stock, subject to the terms and conditions set forth in the
Grant Notice, this Agreement and the Plan. Unless and until the Phantom Shares
have become vested in the manner set forth in the Grant Notice, the Participant
will have no right to receive any Common Stock or other payments in respect of
the Phantom Shares. Prior to settlement of this Award, the Phantom Shares and
this Award represent an unsecured obligation of the Company, payable only from
the general assets of the Company.

 

2. Definitions

 

(a) “Change of Control” shall mean the occurrence of any of the following
events:

 

(i) a merger of the Company with another entity, a consolidation involving the
Company, or the sale of all or substantially all of the assets of the Company to
another entity if, in any such case, the holders of equity securities of the
Company immediately prior to such transaction or event do not beneficially own
immediately after such transaction or event equity securities of the resulting
entity entitled to 50% or more of the votes then eligible to be cast in the
election of directors generally (or comparable governing body) of the resulting
entity in substantially the same proportions that they owned the equity
securities of the Company immediately prior to such transaction or event;

 

(ii) the dissolution or liquidation of the Company; or

 

(iii) the acquisition by any person or entity, including a “group” as
contemplated by Section 13(d)(3) of the Exchange Act, of ownership or control
(including, without limitation, power to vote) of more than 50% of the combined
voting power of the outstanding securities of the Company.

 

 Exhibit A-1 

 

 

For purposes of the preceding sentence, (1) “resulting entity” in the context of
a transaction or event that is a merger, consolidation or sale of all or
substantially all assets shall mean the surviving entity (or acquiring entity in
the case of an asset sale) unless the surviving entity (or acquiring entity in
the case of an asset sale) is a subsidiary of another entity and the holders of
Common Stock of the Company receive capital stock of such other entity in such
transaction or event, in which event the resulting entity shall be such other
entity, and (2) subsequent to the consummation of a merger or consolidation that
does not constitute a Change of Control, the term “Company” shall refer to the
resulting entity and the term “Board” shall refer to the board of directors (or
comparable governing body) of the resulting entity.

 

[Include if applicable:][Notwithstanding the foregoing, for purposes of this
Agreement, a Change of Control shall not include [that][those] certain strategic
transaction[s] referenced on Schedule A hereto.]

 

(b) “Disability” shall mean the inability of the Participant to perform the
essential duties and services of the Participant’s position (after accounting
for reasonable accommodation, if applicable) by reason of any physical or mental
impairment or other impairment that can be reasonably expected to result in
death or to last for a continuous period of not less than three (3) months. The
Participant shall be considered to have a Disability if the Participant is
determined to be totally disabled by the Social Security Administration.

 

3. Vesting of Phantom Shares.

 

(a) Except as otherwise set forth in Section 3(b), the Phantom Shares shall vest
in accordance with the vesting schedule set forth in the Grant Notice. In the
event that the Participant ceases to serve as Chairman of the Board prior to the
vesting of all of the Phantom Shares (but after giving effect to any accelerated
vesting pursuant to this Section 3), any unvested Phantom Shares (and all rights
arising from such Phantom Shares and from being a holder thereof) will terminate
automatically without any further action by the Company and will be forfeited
without further notice and at no cost to the Company.

 

(b) Notwithstanding anything in the Grant Notice, this Agreement or the Plan to
the contrary and subject to the Participant’s execution of a wavier and release
of claims of the Company, its affiliates and related persons within the time
frame provided by the Company and in the form provided by the Company:

 

(i) if the Participant ceases to serve as Chairman of the Board by reason of the
Participant’s death or Disability, (A) any unvested Phantom Shares for which the
applicable Share Price Trigger has been satisfied as of the date of such
cessation shall immediately become fully vested effective as of the date of such
cessation and (B) any unvested Phantom Shares for which the applicable Share
Price Trigger has not been satisfied as of the date of such cessation will
terminate automatically without any further action by the Company and will be
forfeited without further notice and at no cost to the Company; and

 

(ii) if a Change of Control occurs on or before the date that the Participant
ceases to serve as Chairman of the Board, (A) any unvested Phantom Shares for
which the applicable Share Price Trigger has been satisfied as of the date of
such Change of Control shall immediately become fully vested effective as of the
date upon which the Change of Control occurs and (B) any unvested Phantom Shares
for which the applicable Share Price Trigger has not been satisfied as of the
date of such Change of Control will terminate automatically without any further
action by the Company and will be forfeited without further notice and at no
cost to the Company.

 

 A-2 

 

 

4. Settlement of Phantom Shares. As soon as administratively practicable
following the vesting of Phantom Shares pursuant to Section 3, but in no event
later than 30 days after such vesting date, the Company shall deliver to the
Participant a number of shares of Common Stock equal to the number of Phantom
Shares subject to this Award. All shares of Common Stock issued hereunder shall
be delivered either by delivering one or more certificates for such shares to
the Participant or by entering such shares in book-entry form, as determined by
the Committee in its sole discretion. The value of shares of Common Stock shall
not bear any interest owing to the passage of time. Neither this Section 4 nor
any action taken pursuant to or in accordance with this Agreement shall be
construed to create a trust or a funded or secured obligation of any kind.

 

5. Dividend Equivalents. Each Phantom Share subject to this Award is hereby
granted in tandem with a corresponding dividend equivalent (“DER”), which DER
shall remain outstanding from the Date of Grant until the earlier of the
settlement or forfeiture of the Phantom Share to which the DER corresponds. Each
vested DER entitles the Participant to receive payments, subject to and in
accordance with this Agreement, in an amount equal to any dividends paid by the
Company in respect of the share of Common Stock underlying the Phantom Share to
which such DER relates. The Company shall establish, with respect to each
Phantom Share, a separate DER bookkeeping account for such Phantom Share (a “DER
Account”), which shall be credited (without interest) on the applicable dividend
payment dates with an amount equal to any dividends paid during the period that
such Phantom Share remains outstanding with respect to the share of Common Stock
underlying the Phantom Share to which such DER relates. Upon the vesting of a
Phantom Share, the DER (and the DER Account) with respect to such vested Phantom
Share shall also become vested. Similarly, upon the forfeiture of a Phantom
Share, the DER (and the DER Account) with respect to such forfeited Phantom
Share shall also be forfeited. DERs shall not entitled the Participant to any
payments relating to dividends paid after the earlier to occur of the applicable
Phantom Share settlement date or the forfeiture of the Phantom Share underlying
such DER. Payments with respect to vested DERs shall be made as soon as
practicable, and within 60 days, after the date that such DER vests.

 

6. Tax Withholding. The Participant is responsible for all tax obligations that
arise in connection with this Award. To the extent that the Company is required
to withhold any taxes in connection with the receipt, vesting or settlement of
this Award, the Participant shall make arrangements satisfactory to the Company
for the satisfaction of obligations for the payment of withholding taxes and
other tax obligations relating to this Award, which arrangements include the
delivery of cash or cash equivalents, Common Stock (including previously owned
Common Stock, net settlement, a broker-assisted sale, or other cashless
withholding or reduction of the shares of Common Stock otherwise issuable or
delivered pursuant to this Award), other property, or any other legal
consideration the Committee deems appropriate. If such tax obligations are
satisfied through net settlement or the surrender of previously owned Common
Stock, the number of shares of Common Stock that may be so withheld (or
surrendered) shall be the number of shares of Common Stock that have an
aggregate Fair Market Value on the date of withholding or surrender equal to the
aggregate amount of such tax liabilities determined based on the minimum
withholding rates for federal, state, local and/or foreign tax purposes,
including payroll taxes, that may be utilized without creating adverse
accounting, tax or other consequences for the Company with respect to this
Award, as determined by the Committee. The Participant acknowledges that there
may be adverse tax consequences upon the receipt, vesting or settlement of this
Award or disposition of the underlying shares and that the Participant has been
advised, and hereby is advised, to consult a tax advisor. The Participant
represents that he is in no manner relying on the Board, the Committee, the
Company or any of its Affiliates or any of their respective managers, directors,
officers, employees or authorized representatives (including, without
limitation, attorneys, accountants, consultants, bankers, lenders, prospective
lenders and financial representatives) for tax advice or an assessment of such
tax consequences.

 

 A-3 

 

 

7. FCPA. The Participant shall perform all duties on behalf of the Company in
strict compliance with the laws of the State of Texas and the United States of
America in effect from time to time, including without limitation, the Foreign
Corrupt Practices Act of 1977 and amendments thereto (“FCPA”) and the export
control and anti-boycott laws and regulations of the United States in effect
from time to time while this Agreement is in effect. The Participant
acknowledges having received and reviewed a copy of the Company’s FCPA
compliance policy in effect as of the date of this Agreement. The Participant
acknowledges that the FCPA in general makes it a crime under United States law
for a U.S. firm such as the Company knowingly to make payments to a foreign
governmental official, or political party or candidate, directly or indirectly,
in order to receive or retain business. Accordingly, the Participant shall not
make on behalf of the Company any payments, loans or gifts or promises or offers
of payments, loans or gifts of any money or anything of value, directly or
indirectly,

 

(a) to or for the use or benefit of any official or employee of any United
States or foreign government or the agency or instrumentalities of any such
government

 

(b) to any political party or official or candidate thereof

 

(c) to any other person if the Participant knows or has reason to suspect that
any part of such payment, loan or gift will be directly or indirectly given or
paid to any such governmental official or political party or candidate or
official thereof, or

 

(d) to any other person or entity, the payment of which would violate either the
laws or policies of United States any foreign country.

 

The Participant represents and warrants that on the date of this Agreement
neither the Participant nor any family member living in the Participant’s
household is an official or employee of (i) any foreign government or an
international organization covered by the FCPA or similar laws, or any
department, agency, or instrumentality thereof, (ii) a political party in any
foreign country or an official thereof, (iii) a candidate for political office
in any foreign country, or (iv) a person acting in an official capacity for or
on behalf of any foreign government or any international organization covered by
the FCPA or similar laws, or any department, agency, or instrumentality thereof.

 

 A-4 

 

 

8. Non-Transferability. During the lifetime of the Participant, the Phantom
Shares may not be sold, pledged, assigned or transferred in any manner other
than by will or the laws of descent and distribution, unless and until the
shares of Common Stock underlying the Phantom Shares have been issued, and all
restrictions applicable to such shares have lapsed. Neither the Phantom Shares
nor any interest or right therein shall be liable for the debts, contracts or
engagements of the Participant or his or her successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means, whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the preceding
sentence.

 

9. Compliance with Applicable Law. Notwithstanding any provision of this
Agreement to the contrary, the issuance of shares of Common Stock hereunder will
be subject to compliance with all applicable requirements of applicable law with
respect to such securities and with the requirements of any stock exchange or
market system upon which the Common Stock may then be listed. No shares of
Common Stock will be issued hereunder if such issuance would constitute a
violation of any applicable law or regulation or the requirements of any stock
exchange or market system upon which the Common Stock may then be listed. In
addition, shares of Common Stock will not be issued hereunder unless (a) a
registration statement under the Securities Act is in effect at the time of such
issuance with respect to the shares to be issued or (b) in the opinion of legal
counsel to the Company, the shares to be issued are permitted to be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act. The inability of the Company to obtain from
any regulatory body having jurisdiction the authority, if any, deemed by the
Company’s legal counsel to be necessary for the lawful issuance and sale of any
shares of Common Stock hereunder will relieve the Company of any liability in
respect of the failure to issue such shares as to which such requisite authority
has not been obtained. As a condition to any issuance of Common Stock hereunder,
the Company may require the Participant to satisfy any requirements that may be
necessary or appropriate to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect to such
compliance as may be requested by the Company.

 

10. Legends. If a stock certificate is issued with respect to shares of Common
Stock delivered hereunder, such certificate shall bear such legend or legends as
the Committee deems appropriate in order to reflect the restrictions set forth
in this Agreement and to ensure compliance with the terms and provisions of this
Agreement, the rules, regulations and other requirements of the Securities and
Exchange Commission, any applicable laws or the requirements of any stock
exchange on which the Common Stock is then listed. If the shares of Common Stock
issued hereunder are held in book-entry form, then such entry will reflect that
the shares are subject to the restrictions set forth in this Agreement.

 

11. Rights as a Stockholder; Stockholder Rights Agreement. The Participant shall
have no rights as a stockholder of the Company with respect to any shares of
Common Stock that may become deliverable hereunder unless and until the
Participant has become the holder of record of such shares of Common Stock, and,
if required by the Company, being subject to and bound by, the Company’s Amended
and Restated Stockholder Rights Agreement (as amended from time to time), among
the Company and its stockholders (the “Stockholder Rights Agreement”), and no
adjustments shall be made for dividends in cash or other property, distributions
or other rights in respect of any such shares of Common Stock, except as
otherwise specifically provided for in the Plan or this Agreement. The
Participant acknowledges that the shares of Common Stock delivered hereunder
shall be subject to the terms of the Stockholder Rights Agreement.

 

 A-5 

 

 

12. Execution of Receipts and Releases. Any issuance or transfer of shares of
Common Stock or other property to the Participant or the Participant’s legal
representative, heir, legatee or distributee, in accordance with this Agreement
shall be in full satisfaction of all claims of such person hereunder. As a
condition precedent to such payment or issuance, the Company may require the
Participant or the Participant’s legal representative, heir, legatee or
distributee to execute (and not revoke within any time provided to do so) a
release and receipt therefor in such form as it shall determine appropriate;
provided, however, that any review period under such release will not modify the
date of settlement with respect to vested Phantom Shares.

 

13. No Right to Continued Service or Awards. Nothing in the adoption of the
Plan, nor the award of the Phantom Shares thereunder pursuant to the Grant
Notice and this Agreement, shall confer upon the Participant the right to
continued service as Chairman of the Board. The grant of the Phantom Shares is a
one-time benefit and does not create any contractual or other right to receive a
grant of Awards or benefits in lieu of Awards in the future. Any future Awards
will be granted at the sole discretion of the Company.

 

14. Lock-Up Period. If so requested by the Company or any representative of the
underwriters in connection with an underwritten public offering of the Company’s
securities (a “Public Offering”), the Participant (or other holder) shall not
sell or otherwise transfer or distribute any Common Stock or other securities of
the Company (or any securities convertible or exchangeable or exercisable for
Common Stock or engage in any hedging transactions relating to Common Stock)
during the period beginning 14 days prior to the expected date of the “pricing”
of such Public Offering and continuing for the 180-day period (or such other
period as may be requested in writing by such underwriters and agreed to in
writing by the Company) following the effective date of such Public Offering.
The Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such period.

 

15. Legal and Equitable Remedies. The Participant acknowledges that a violation
or attempted breach of any of the Participant’s covenants and agreements in this
Agreement will cause such damage as will be irreparable, the exact amount of
which would be difficult to ascertain and for which there will be no adequate
remedy at law, and accordingly, the parties hereto agree that the Company and
its Affiliates shall be entitled as a matter of right to an injunction issued by
any court of competent jurisdiction, restraining the Participant or the
affiliates, partners or agents of the Participant from such breach or attempted
violation of such covenants and agreements, as well as to recover from the
Participant any and all costs and expenses sustained or incurred by the Company
or any of its Affiliates in obtaining such an injunction, including, without
limitation, reasonable attorneys’ fees. The parties to this Agreement agree that
no bond or other security shall be required in connection with such injunction.
Any exercise by either of the parties to this Agreement of its rights pursuant
to this Section 15 shall be cumulative and in addition to any other remedies to
which such party may be entitled.

 

16. Notices. All notices and other communications under this Agreement shall be
in writing and shall be delivered to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):

 

 A-6 

 

 

If to the Company, unless otherwise designated by the Company in a written
notice to the Participant (or other holder):

 

Eco-Stim Energy Solutions, Inc.

Attn: General Counsel

2930 W. Sam Houston Pkwy N., Suite 275

Houston, TX 77043

 

If to the Participant, to the address for the Participant indicated on the
signature page to this Agreement (as such address may be updated by the
Participant providing written notice to such effect to the Company).

 

Any notice that is delivered personally or by overnight courier or telecopier in
the manner provided herein shall be deemed to have been duly given to the
Participant when it is mailed by the Company or, if such notice is not mailed to
the Participant, upon receipt by the Participant. Any notice that is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth day after the day it is so placed in the
mail.

 

17. Consent to Electronic Delivery; Electronic Signature. In lieu of receiving
documents in paper format, the Participant agrees, to the fullest extent
permitted by law, to accept electronic delivery of any documents that the
Company may be required to deliver (including, but not limited to, prospectuses,
prospectus supplements, grant or award notifications and agreements, account
statements, annual and quarterly reports and all other forms of communications)
in connection with this and any other Award made or offered by the Company.
Electronic delivery may be via a Company electronic mail system or by reference
to a location on a Company intranet to which the Participant has access. The
Participant hereby consents to any and all procedures the Company has
established or may establish for an electronic signature system for delivery and
acceptance of any such documents that the Company may be required to deliver,
and agrees that his or her electronic signature is the same as, and shall have
the same force and effect as, his or her manual signature.

 

18. Agreement to Furnish Information. The Participant agrees to furnish to the
Company all information requested by the Company to enable it to comply with any
reporting or other requirement imposed upon the Company by or under any
applicable statute or regulation.

 

19. Entire Agreement; Amendment. This Agreement constitutes the entire agreement
of the parties with regard to the subject matter hereof, and contains all the
covenants, promises, representations, warranties and agreements between the
parties with respect to the Phantom Shares granted hereby; provided¸ however,
that the terms of this Agreement shall not modify and shall be subject to the
terms and conditions of any service or consulting agreement between the Company
(or any of its Affiliate or other entity) and the Participant in effect as of
the date a determination is to be made under this Agreement. Without limiting
the scope of the preceding sentence, except as provided therein, all prior
understandings and agreements, if any, among the parties hereto relating to the
subject matter hereof are hereby null and void and of no further force and
effect. The Committee may, in its sole discretion, amend this Agreement from
time to time in any manner that is not inconsistent with the Plan; provided,
however, that except as otherwise provided in the Plan or this Agreement, any
such amendment that materially reduces the rights of the Participant shall be
effective only if it is in writing and signed by both the Participant and an
authorized officer of the Company.

 

 A-7 

 

 

20. Severability and Waiver. If a court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of such provision shall not affect the validity
or enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect. Waiver by any party of any
breach of this Agreement or failure to exercise any right hereunder shall not be
deemed to be a waiver of any other breach or right. The failure of any party to
take action by reason of such breach or to exercise any such right shall not
deprive the party of the right to take action at any time while or after such
breach or condition giving rise to such rights continues.

 

21. Clawback. Notwithstanding any provision in the Grant Notice, this Agreement
or the Plan to the contrary, to the extent required by (a) applicable law,
including, without limitation, the requirements of the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010, any Securities and Exchange
Commission rule or any applicable securities exchange listing standards and/or
(b) any policy that may be adopted or amended by the Board from time to time,
all shares of Common Stock issued hereunder shall be subject to forfeiture,
repurchase, recoupment and/or cancellation to the extent necessary to comply
with such law(s) and/or policy.

 

22. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of TEXAS applicable to contracts made and
to be performed therein, exclusive of the conflict of laws provisions of TEXAS
LAW.

 

23. Successors and Assigns. The Company may assign any of its rights under this
Agreement without the Participant’s consent. This Agreement will be binding upon
and inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer set forth herein and in the Plan, this Agreement
will be binding upon the Participant and the Participant’s beneficiaries,
executors, administrators and the person(s) to whom the Phantom Shares may be
transferred by will or the laws of descent or distribution.

 

24. Headings. Headings are for convenience only and are not deemed to be part of
this Agreement.

 

25. Counterparts. The Grant Notice may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument. Delivery of an executed counterpart of the Grant
Notice by facsimile or portable document format (.pdf) attachment to electronic
mail shall be effective as delivery of a manually executed counterpart of the
Grant Notice.

 

26. Section 409A. Notwithstanding anything herein or in the Plan to the
contrary, the Phantom Shares granted pursuant to this Agreement are intended to
be exempt from the applicable requirements of Section 409A of the Code, as
amended from time to time, including the guidance and regulations promulgated
thereunder and successor provisions, guidance and regulations thereto (the
“Nonqualified Deferred Compensation Rules”), and shall be limited, construed and
interpreted in accordance with such intent. Notwithstanding the foregoing, the
Company and its Affiliates make no representations that the Phantom Shares
provided under this Agreement are exempt from or compliant with the Nonqualified
Deferred Compensation Rules and in no event shall the Company or any of its
Affiliates be liable for all or any portion of any taxes, penalties, interest or
other expenses that may be incurred by the Participant on account of
non-compliance with the Nonqualified Deferred Compensation Rules.

 

 A-8