Exhibit 10.1

APPROACH RESOURCES INC.

2007 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

TSR VESTING REQUIREMENTS

THIS AGREEMENT, made and entered into as of the          day of
                    , 20        , by and between Approach Resources Inc., a
Delaware corporation (“Approach”), and                     , an employee,
outside director or other individual providing services to Approach or one of
its Affiliates (“Participant”).

WHEREAS, the Compensation Committee of Approach’s Board of Directors or such
other committee designated by Approach’s Board of Directors (the “Committee”),
acting under Approach’s 2007 Stock Incentive Plan (the “Plan”), has the
authority to award restricted shares (including the Target Restricted Shares and
Maximum Restricted Shares each as defined herein, the “Restricted Shares”) of
Approach’s common stock, $0.01 par value per share (the “Common Stock”), to
employees, outside directors or other individuals providing services to Approach
or an Affiliate;

WHEREAS, pursuant to the Plan, the Committee has determined to make such an
award to Participant on the terms and conditions and subject to the restrictions
set forth in the Plan and this Agreement, and Participant desires to accept such
award; and

WHEREAS, a copy of the Plan has been made available to Participant and shall be
deemed a part of this Agreement as if fully set forth herein and the terms
capitalized but not defined herein shall have the meanings set forth in the
Plan.

NOW, THERFORE, in consideration of the premises and mutual covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

1. TSR Restricted Stock Award. On the terms and conditions and subject to the
restrictions, including forfeiture, hereinafter set forth, Approach hereby
awards to Participant, and Participant hereby accepts, a restricted stock award
(the “Award”) with respect to a target number of          shares [100% OF
TARGET] (the “Target Restricted Shares”) of Common Stock; provided, that, based
on the relative achievement of the TSR Vesting Objective (as defined in this
Agreement) and the other terms and conditions herein, the number of Restricted
Shares that may ultimately become free of restrictions hereunder may range from
0% to 150% of the Target Restricted Shares (such number of Restricted Shares
that equal 150% of the Target Restricted Shares, or          [150% OF TARGET]
Restricted Shares, shall hereinafter be referred to as the “Maximum Restricted
Shares”). The Award is made on the          day of                     ,
20         (the “Grant Date”). On the Grant Date, a number of Restricted Shares
equal to the Maximum Restricted Shares shall be issued to Participant. A
certificate representing the Maximum Restricted Shares shall be issued in the
name of Participant (or, at the option of Approach, in the name of a nominee of
Approach) as of the Grant Date and delivered to Participant on the Grant Date or
as soon thereafter as is practicable. Participant shall cause the certificate
representing the Maximum Restricted Shares, upon receipt thereof by Participant,
to be deposited, together with stock powers and any other instrument of transfer
reasonably requested by Approach duly endorsed in blank, with Approach, to be
held by Approach in escrow for Participant’s benefit until such time as the
Maximum Restricted Shares represented by such certificate are either forfeited
by Participant to Approach or the restrictions thereon terminate as set forth in
this Agreement.

2. Vesting and Forfeiture. The Restricted Shares shall be subject to a
performance period that shall commence on January 1,          and shall end on
December 31,          [TWO YEARS AFTER YEAR OF GRANT DATE] (the “Performance
Period”), subject to (i) the level of achievement of the TSR Vesting Objective
outlined in Section 2(a) below, and (ii) except as otherwise provided in
Section 2(b) or 2(c),

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Participant’s continuous active service with Approach or an Affiliate through
the end of the Performance Period (the “Continuous Service Requirement”). During
the Performance Period, the Maximum Restricted Shares shall be subject to being
forfeited by Participant to Approach as provided in this Agreement, and
Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of any of the Maximum Restricted Shares (the “Restrictions”).

(a) TSR Vesting Objective. The “TSR Vesting Objective” means Approach’s relative
ranking in respect of the Performance Period with regard to Total Shareholder
Return (as defined in Appendix A attached hereto) as compared to Total
Shareholder Return of the Peer Companies (as defined in Appendix A), and the
level of achievement of the TSR Vesting Objective shall be determined in
accordance with Appendix A. After the end of the Performance Period, the
Committee will determine Approach’s Total Shareholder Return as compared to
Total Shareholder Return of the Peer Companies and will certify the level of
achievement with respect to the TSR Vesting Objective and what percentage of the
Target Restricted Shares has been earned in accordance with the table set forth
in Appendix A (such number of Restricted Shares that become earned shall
hereinafter be called the “Earned Restricted Shares”), subject to Participant’s
satisfaction of the Continuous Service Requirement; provided, that, if
Approach’s absolute Total Shareholder Return for the Performance Period is
negative, the number of Earned Restricted Shares shall not exceed the Target
Restricted Shares. Any fractional Earned Restricted Shares shall be rounded up
to the nearest whole share of Common Stock. The Committee’s certification of the
level of achievement of the TSR Vesting Objective will be effective as of
December 31,          [TWO YEARS AFTER YEAR OF GRANT DATE], regardless of any
delay in the Committee’s determination. The Committee shall have the sole
discretion for determining the level of achievement with respect to the TSR
Vesting Objective and the number of Earned Restricted Shares, and any such
determinations shall be conclusive. If the Committee determines that less than
the total number of Maximum Restricted Shares has become Earned Restricted
Shares, (i) the Participant shall have no rights whatsoever in and to any of the
Maximum Restricted Shares that have not become Earned Restricted Shares,
(ii) all of the Maximum Restricted Shares that have not become Earned Restricted
Shares shall automatically revert to Approach at no cost and (iii) neither the
Participant nor any of his or her heirs, beneficiaries, executors,
administrators or other personal representatives shall have any rights with
respect to any Maximum Restricted Shares that have not become Earned Restricted
Shares. Following the removal of the Restrictions on any Earned Restricted
Shares, Approach shall, as soon as administratively feasible, deliver to
Participant from escrow a certificate representing such shares of Common Stock
and Participant shall be free to sell, transfer, pledge, exchange, hypothecate
or otherwise dispose of such shares of Common Stock, subject to applicable
securities laws and the policies of Approach then in effect.

(b) Termination of Employment.

(i) Termination Generally. Subject to Section 2(b)(ii) and Section 2(c), upon
termination of Participant’s employment or service with Approach or an Affiliate
prior to the end of the Performance Period, (A) the Participant shall have no
rights whatsoever in and to any of the Maximum Restricted Shares, (B) all of the
Maximum Restricted Shares shall automatically revert to Approach at no cost, and
(C) neither Participant nor any of his or her heirs, beneficiaries, executors,
administrators or other personal representatives shall have any rights with
respect thereto.

(ii) Termination for Death or Disability. If Participant’s employment or service
with Approach or an Affiliate is terminated prior to the end of the Performance
Period as a result of the Participant’s death or Disability (as defined in the
Plan), then the Restrictions on a number of Restricted Shares equal to the
Target Restricted Shares shall automatically lapse at the time of such
termination of employment or service and such number of Target Restricted Shares
shall be deemed to be Earned Restricted Shares. Following the removal of the
Restrictions on the Earned Restricted Shares as of the time of termination,
Approach shall, as soon as administratively feasible, deliver to Participant
from escrow a certificate representing such shares of Common Stock and
Participant shall be free to sell, transfer, pledge, exchange, hypothecate or
otherwise dispose of such shares of Common Stock, subject to applicable
securities laws and the policies of Approach then in effect.

 

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(c) Change of Control. Notwithstanding the Change of Control provisions in
Article XIII of the Plan or any provision hereof to the contrary, if a Change of
Control (as defined in the Plan) occurs prior to the end of the Performance
Period (the date of such occurrence, the “Change of Control Date”) and
Participant has remained in continuous service with Approach or an Affiliate
through the Change of Control Date, then, upon the occurrence of such Change of
Control, Participant shall be deemed to have earned a number of the Restricted
Shares equal to the number of Earned Restricted Shares the Participant would
have earned in accordance with Section 2(a), but assuming that (i) the
Performance Period ended on the Change of Control Date, and (ii) the
determination of whether, and to what extent, the TSR Vesting Objective is
achieved shall be based on actual performance against the stated criteria
through the Change of Control Date. Following the removal of the Restrictions on
the Earned Restricted Shares as of the Change of Control Date, Approach shall,
as soon as administratively feasible, deliver to Participant from escrow a
certificate representing such shares of Common Stock and Participant shall be
free to sell, transfer, pledge, exchange, hypothecate or otherwise dispose of
such shares of Common Stock, subject to applicable securities laws and the
policies of Approach then in effect.

3. Rights as Stockholder. Subject to the provisions of this Agreement, upon the
issuance of a certificate or certificates representing the Maximum Restricted
Shares to Participant, Participant shall become the record and beneficial owner
thereof for all purposes and shall have all rights as a stockholder, including
without limitation voting rights and the right to receive dividends and
distributions (provided that any such dividend or distribution shall be paid no
later than the 15th day of the third month of the calendar year following the
calendar year in which the dividend or distribution is declared by Approach),
with respect to the Maximum Restricted Shares. If and to the extent Approach
shall effect a stock split, stock dividend or similar distribution with respect
to the Common Stock, (a) the stock distributed pursuant thereto shall be held by
Approach with respect to those Maximum Restricted Shares as to which the
Restrictions have not yet been removed pursuant to Section 2; (b) such
additional stock shall enjoy the privileges and be subject to the Restrictions
applicable to the Maximum Restricted Shares; and (c) Participant shall be
entitled to sell, transfer, pledge, exchange, hypothecate or otherwise dispose
of such additional stock when and to the extent the Restrictions on the Maximum
Restricted Shares to which the distribution relates have been removed pursuant
to Section 2.

4. Optional Issuance in Book-Entry Form. Notwithstanding the foregoing, at the
option of Approach, any shares of Common Stock that under the terms of this
Agreement are issuable in the form of a stock certificate may instead be issued
in book-entry form.

5. Withholding Taxes.

(a) Participant may elect, within 30 days of the Grant Date and on notice to
Approach and the Internal Revenue Service in accordance with Section 83(b) of
the Internal Revenue Code of 1986, as amended, and the regulations and other
guidance thereunder, to realize income for federal income tax purposes equal to
the fair market value of the Maximum Restricted Shares on the Grant Date. In
such event, Participant shall make arrangements satisfactory to Approach or the
appropriate Affiliate to pay in the calendar year that includes the Grant Date
any federal, state or local taxes required to be withheld with respect to such
shares.

(b) If no election is made by Participant pursuant to Section 5(a) hereof, then
upon the termination of the Restrictions applicable hereunder to all or any
portion of the Restricted Shares, Participant (or in the event of Participant’s
death, the administrator or executor of Participant’s estate) will pay to
Approach or the appropriate Affiliate, or make arrangements satisfactory to
Approach or such Affiliate regarding payment of, any federal, state or local
taxes of any kind required by law to be withheld with respect to the Earned
Restricted Shares with respect to which such Restrictions have terminated.
Approach may allow the Participant to pay the

 

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amount of such taxes required by law to be withheld with respect to the Earned
Restricted Shares by (i) withholding shares of Common Stock from any issuance of
Common Stock due as a result of the removal of the Restrictions on any
Restricted Shares, or (ii) permitting the Participant to deliver to Approach
previously acquired shares of Common Stock, in each case having an aggregate
Fair Market Value on the date of calculation equal to the amount of such
required withholding taxes.

(c) Any provision of this Agreement to the contrary notwithstanding, if
Participant does not satisfy his or her obligations under paragraphs (a) or
(b) of this Section 5, Approach shall, to the extent permitted by law, have the
right to deduct from any payments made under the Plan, regardless of the form of
such payment, or from any other compensation payable to Participant, whether or
not pursuant to this Agreement or the Plan and regardless of the form of
payment, any federal, state or local taxes of any kind required by law to be
withheld with respect to the Restricted Shares.

6. Reclassification of Shares. In the event of any reorganization,
recapitalization, stock split, stock dividend, merger, consolidation,
combination of shares or other change affecting the Common Stock, the Committee
shall make adjustments in accordance with the Plan. Any such adjustments made by
the Committee shall be conclusive.

7. Effect on Employment. Nothing contained in this Agreement shall confer upon
Participant the right to continue in the employment of Approach or any
Affiliate, or affect any right which Approach or any Affiliate may have to
terminate the employment of Participant. This shall not be construed as any
agreement or understanding, express or implied, that Approach or any Affiliate
will retain Participant as an employee for any period of time or at any
particular rate of compensation or other terms and conditions of employment
unrelated to Restricted Shares.

8. Investment Representations.

(a) The shares are being received for Participant’s own account with the intent
of holding them and without the intent of participating, directly or indirectly,
in a distribution of such shares and not with a view to distribute, or for
resale in connection with any distribution of, such shares or any portion
thereof.

(b) A legend may be placed on any certificate(s) or other document(s) delivered
to Participant or substitute therefore indicating restrictions on
transferability of the shares pursuant to this Agreement or referring to any
stop transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Securities and
Exchange Commission, NASDAQ or any other stock exchange or association upon
which the Common Stock of Approach is then listed or quoted, any applicable
federal or state securities laws, and any applicable corporate law, and any
transfer agent of Approach shall be instructed to require compliance therewith.

9. Assignment. Approach may assign all or any portion of its rights and
obligations under this Agreement. The Award, the Restricted Shares and the
rights and obligations of Participant under this Agreement may not be assigned,
sold, transferred, pledged, exchanged, hypothecated or otherwise disposed of by
Participant other than by will or the applicable laws of descent and
distribution.

10. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of (a) Approach and its successors and assigns, and (b) Participant and
his or her heirs, devisees, executors, administrators and personal
representatives.

 

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11. Notices. All notices between the parties hereto shall be in writing and
given in the manner provided in Section 15.7 of the Plan. Notices to Participant
shall be given to Participant’s address as contained in Approach’s records.
Notices to Approach shall be addressed to the Corporate Secretary at the
principal executive offices of Approach as set forth in Section 15.7 of the
Plan.

12. Governing Law; Exclusive Forum; Consent to Jurisdiction. This Agreement
shall be governed by the laws of the State of Delaware except for its laws with
respect to conflict of laws. The exclusive forum for any lawsuit arising from or
related to this Agreement shall be a state or federal court in Tarrant County,
Texas. This provision does not prevent Approach from removing to an appropriate
federal court any action brought in state court. NOTHING IN THIS AGREEMENT SHALL
BE CONSTRUED AS PROHIBITING REMOVAL TO FEDERAL COURT BY APPROACH OF ANY ACTION
BROUGHT AGAINST IT BY PARTICIPANT.

13. Execution of Receipts and Releases. Any issuance or transfer of the
Restricted Shares to Participant or Participant’s legal representative, heir,
legatee or distributee, in accordance with the provisions of this Agreement,
shall be in full satisfaction of all claims of such persons hereunder related to
the Award. Approach may require Participant or Participant’s legal
representative, heir, legatee or distributee, as a condition precedent to such
issuance, to execute such a release and receipt therefore in such form as
Approach may determine.

14. Severability. If any provision of this Agreement is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions hereof, but such provision shall be fully severable and
this Agreement shall be construed and enforced as if the illegal or invalid
provision had never been included herein.

15. Headings. The titles and headings of Sections are included for convenience
of reference only and are not to be considered in construction of the provisions
hereof.

16. Amendment. The Committee may amend the terms of this Award and this
Agreement at any time, although no such amendment shall adversely affect, in any
material way, the Participant’s (or a Participant’s Permitted Transferee’s)
rights under an outstanding Award without the prior consent of the Participant
(or the Participant’s Permitted Transferee) then holding the Award.

17. Entire Agreement. This Agreement constitutes the entire agreement between
the parties concerning its subject matter and supersedes all prior agreements,
understandings, and statements, both written and oral, between the parties with
respect to such subject matter. In signing this Agreement, the Participant is
not relying on any written or oral statement, promise, or representation from
Approach or its Affiliates concerning this Agreement other than as set above in
this Agreement.

18. Miscellaneous. Notwithstanding anything to the contrary in this Agreement,
Approach will not be required to comply with any term, covenant or condition of
this Agreement if and to the extent prohibited by applicable law. Participant
shall reimburse Approach for incentive-based or equity-based compensation and
profits realized from the sale of the Restricted Shares covered by this
Agreement as required by applicable law, including, but not limited to,
Section 304 of the Sarbanes-Oxley Act of 2002 and Section 954 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010, and agrees that Approach
need not comply with any term, covenant or condition of this Agreement to the
extent that doing so would require that Participant reimburse Approach for such
amounts pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 and/or
Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010.

 

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IN WITNESS WHEREOF, Approach and Participant have executed this Agreement as of
the date first written above.

 

APPROACH RESOURCES INC.   By:       Name:       Title:     PARTICIPANT  

 

Participant Signature

 

 

Participant Printed Name

 

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STOCK POWER AND ASSIGNMENT

SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED and pursuant to that certain Approach Resources Inc. 2007
Stock Incentive Plan and the Restricted Stock Award Agreement dated
            , 20     (the “Agreement”), the undersigned Participant hereby
sells, assigns and transfers unto             ,              shares of Common
Stock, $0.01 par value per share, of Approach Resources Inc., a Delaware
corporation (“Approach”), standing in the undersigned’s name on the books of
Approach and does hereby irrevocably constitute and appoint the Corporate
Secretary of Approach as the undersigned’s attorney-in-fact, with full power of
substitution, to transfer said stock on the books of Approach. THIS ASSIGNMENT
MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.

Dated:                     

PARTICIPANT  

 

Participant Signature

 

 

Participant Printed Name

 

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APPENDIX A

TO RESTRICTED STOCK AWARD AGREEMENT

Total Shareholder Return Vesting Objective

The TSR Vesting Objective for the Restricted Shares is outlined in this Appendix
A below. The “TSR Vesting Objective” means Approach’s relative ranking in
respect of the Performance Period with regard to Total Shareholder Return as
compared to Total Shareholder Return of the Peer Companies. The Committee shall
have the sole discretion for determining the level of achievement with respect
to the TSR Vesting Objective and the number of Earned Restricted Shares, and any
such determinations shall be conclusive.

 

  1. Defined Terms.

(a) “Total Shareholder Return” means, as to Approach and each of the Peer
Companies, the annualized rate of return shareholders receive through stock
price changes and the assumed reinvestment of dividends paid over the
Performance Period. Dividends per share paid other than in the form of cash
shall have a value equal to the amount of such dividends reported by the issuer
to its shareholders for purposes of Federal income taxation. For purposes of
determining the Total Shareholder Return for Approach and each of the Peer
Companies (except as provided below for Laredo Petroleum Holdings, Inc.), the
change in the price of Approach’s Common Stock and of the common stock of each
Peer Company, as the case may be, shall be based upon the average of the closing
stock prices of Approach and each such Peer Company on each trading day in the
30-day period preceding each of the start (“Initial Value”) and the end
(“Closing Value”) of the Performance Period. The Initial Value of the Common
Stock to be used to determine Total Shareholder Return over the Performance
Period is $30.06.

(b) “Peer Company” means a company that (i) has a class of common equity
securities listed to trade under Section 12(g) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), during each day of the Performance
Period, and (ii) is one of the following companies:

 

Abraxas Petroleum Corporation

   Oasis Petroleum Inc.

Carrizo Oil & Gas, Inc.

   Petroleum Development Corporation

Comstock Resources Inc.

   Petroquest Energy, Inc.

GMX Resources Inc.

   Resolute Energy Corporation

Goodrich Petroleum Corporation

   Rex Energy Corporation

Gulfport Energy Corporation

   Rosetta Resources Inc.

Kodiak Oil & Gas Corp.

   Stone Energy Corporation

In addition, if and solely to the extent that at the end of the Performance
Period one or more of the 14 companies listed above fails to qualify as a “Peer
Company,” then such number of the following alternate companies (selected in the
order presented below) as is necessary to have 14 Peer Companies shall be
treated as Peer Companies for the entire Performance Period, provided that each
such alternate company satisfies the requirement of having a class of common
equity securities listed to trade under Section 12(g) of the Exchange Act during
each day of the Performance Period. For purposes of determining the Total
Shareholder Return of Laredo Petroleum Holdings, Inc. (“LPI”) the Initial Value
of LPI’s common stock shall be based upon the average of LPI’s closing stock
price on each trading day in the 17-day period preceding the start of the
Performance Period.

 

Alternate Peer Companies:   Laredo Petroleum Holdings, Inc.   Forest Oil
Corporation

If, after adding all eligible alternate companies, the number of companies
qualifying as Peer Companies for the Performance Period is less than 14, the
Committee shall, in good faith, determine the percentage of the Target
Restricted Shares earned in a manner consistent with (a) the requirements to
qualify the Restricted Shares as performance-based compensation exempt from the
limitations imposed by Section 162(m) of the Internal Revenue Code of 1986, as
amended, to the extent the Committee determines that such qualification is in
Approach’s best interest, and (b) the following general guidelines for
determining the number of Earned Restricted Shares:

(i) If the Company’s Total Shareholder Return ranks in the 90th percentile or
above as compared to the Total Shareholder Return of the qualifying Peer
Companies, the number of Earned Restricted Shares shall equal the Maximum
Restricted Shares;

(ii) If the Company’s Total Shareholder Return ranks in the 55th percentile as
compared to the Total Shareholder Return of the qualifying Peer Companies (or,
the next percentile above 55 that applies if the actual determination of the
Total Shareholder Return rankings for the Performance Period does not include
the 55th percentile (e.g., the 57th percentile ranking in the table in Section 2
below)), the number of Earned Restricted Shares shall equal the Target
Restricted Shares;

 

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(iii) If the Company’s Total Shareholder Return ranks in the 40th percentile as
compared to the Total Shareholder Return of the qualifying Peer Companies (or,
the next percentile above 40 that applies if the actual determination of the
Total Shareholder Return rankings for the Performance Period does not include
the 40th percentile (e.g., the 43rd percentile ranking in the table in Section 2
below), the number of Earned Restricted Shares shall equal 50% of the Target
Restricted Shares (such percentage of the Target Restricted Shares, the
“Threshold Restricted Shares”);

(iv) If the Company’s Total Shareholder Return ranks below the 40th percentile
as compared to the Total Shareholder Return of the qualifying Peer Companies, no
Restricted Shares will become Earned Restricted Shares; and

(v) If the Company’s Total Shareholder Return ranking falls in between the
levels specified above for earning the Maximum Restricted Shares, the Target
Restricted Shares and the Threshold Restricted Shares, the Committee shall have
the discretion to determine the percentage of the Target Restricted Shares that
become Earned Restricted Shares within the levels specified above.

 

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(c) “Performance Period” means the three year period commencing on January 1,
         and ending on December 31,          [TWO YEARS AFTER YEAR OF GRANT
DATE].

2. Calculation of Ranking; Earned Restricted Shares. After the end of the
Performance Period, the Committee will determine Approach’s Total Shareholder
Return as compared to Total Shareholder Return of the Peer Companies and will
certify the level of achievement with respect to the TSR Vesting Objective and
the number of Earned Restricted Shares in accordance with the following table:

 

TSR Company Ranking

 

Percentile Ranking

 

Percentage of Target
Restricted Shares Earned

Company 1

  100%   150%

Company 2

  93%   150%

Company 3

  86%   140%

Company 4

  79%   130%

Company 5

  71%   120%

Company 6

  64%   110%

Company 7

  57%   100%

Company 8

  50%   75%

Company 9

  43%   50%

Company 10

  36%   0%

Company 11

  29%   0%

Company 12

  21%   0%

Company 13

  14%   0%

Company 14

  7%   0%

Company 15

  0%   0%

Notwithstanding the foregoing, (a) if Approach’s absolute Total Shareholder
Return for the Performance Period is negative, the number of Earned Restricted
Shares shall not exceed the Target Restricted Shares, and (b) no Restricted
Shares will become Earned Restricted Shares unless Participant also satisfies
the Continuous Service Requirement in accordance with the terms of the
Agreement.

 

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