[Form of Grant Notice for Officers/Employees (Employment Agreement)]

 

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 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 remain continuously employed by the Company or its
Affiliates, as applicable, from the Date of Grant through each applicable
vesting date, the Phantom Shares shall vest in accordance with the following
schedule: 

 

Number of Full Months From Date of Grant  Cumulative Percentage of Phantom
Shares Vested  Less than 6 months   0% 6 to 11 months   25% 12 to 17 months 
 50% 18 to 23 months   75% 24 months or more   100%

 

   

Notwithstanding the schedule set forth immediately above, the Phantom Shares
granted hereunder shall immediately become fully vested as set forth in Section
3(b) of the Agreement.

 

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]

 

 

 

 

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
employment with, or service to, the Company or its Affiliates 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)       “Cause” shall mean:

 

(i)       the Participant’s failure without proper legal reason to perform his
or her duties and responsibilities to the Company or any Affiliate faithfully
and to the best of his or her abilities;

 

(ii)       the Participant engages in gross negligence, gross incompetence or
willful misconduct in the performance of his or her duties with respect to the
Company or any Affiliate

 

(iii)       any act by the Participant involving fraud, misrepresentation,
theft, embezzlement, or dishonesty on a material matter in connection with the
Participant’s employment with, or performance of the his or her duties for, the
Company or any Affiliate;

 

(iv)       conviction of the Participant, or a plea by the Participant of guilty
or nolo contendere to, an offense that is a (A) felony (or a crime of similar
import in a foreign jurisdiction) or (B) crime involving fraud, dishonesty or
moral turpitude;

 

Exhibit A-1

 

 

(v)       material breach by the Participant, of the Participant’s written
employment agreement with the Company or any of its Affiliates, or corporate
policy, or code of conduct established by the Company or any of its Affiliates;
or

 

(vi)       the Participant breaches Section 7 of this Agreement.

 

(b)       “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.

 

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.

 

(c)        “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
(i) the Participant is determined to be totally disabled by the Social Security
Administration or (ii) the Participant is determined to be disabled under the
Company’s long-term disability plan in which the Participant participates so
long as such plan defines “disability” in a manner that is consistent with the
immediately preceding sentence.

 

(d)       “Good Reason” shall mean the occurrence of any of the following
without the Participant’s express written consent:

 

A-2

 

 

(i)       A material diminution in the Participant’s annualized base salary;

 

(ii)       A change in the location where the Participant is expected or
required to perform the majority of the Participant’s job duties at the time the
Participant executes this Agreement (“Base Location”) to a location that is more
than twenty (20) miles from the Base Location, except for travel reasonably
required of the Participant on the Company’s business;

 

(iii)       A substantial and adverse diminution in the Participant’s duties,
authority, responsibility and position with the Company; or

 

(iv)       Any breach by the Company of any material provision of the
Participant’s written employment agreement.

 

The Participant’s resignation for Good Reason shall be effective only if all of
the following conditions are satisfied: (1) the Participant provides written
notice to the Company of the fact, event, condition or circumstance set forth in
clause (i), (ii), (iii) or (iv) above within thirty (30) days following the
initial existence of such fact, event, condition or circumstance, (2) the fact,
event, condition or circumstance specified in such notice must remain
uncorrected for thirty (30) days following the Company’s receipt of such written
notice and (3) the date of the Participant’s termination of employment must
occur within sixty (60) days following the Company’s receipt of such notice. If
the Company timely cures the fact, event, condition or circumstance giving rise
to Good Reason for the Participant’s resignation, the notice of resignation for
Good Reason shall become null and void.

 

(e)       “Involuntary Termination” shall mean any termination of the
Participant’s employment with the Company (i) by the Participant for Good
Reason, or (ii) by the Company without Cause. For the avoidance of doubt, the
term “Involuntary Termination” shall not include a termination of the
Participant’s employment by the Company for Cause or as a result of the
Participant’s death or Disability.

 

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 of the termination of the Participant’s employment 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’s employment or other service relationship with the
Company or its Affiliates is terminated by reason of the Participant’s death or
Disability, any unvested Phantom Shares shall immediately become fully vested
effective as of the date of such termination;

 

A-3

 

 

(ii)       if the Participant’s employment or other service relationship with
the Company or its Affiliates is terminated by reason of the Participant’s
Involuntary Termination, the Participant shall vest as to a number of unvested
Phantom Shares that the Participant would have become vested in within the three
(3) month period following such date of termination, if any, had the Participant
remained employed; and

 

(iii)       if a Change of Control occurs on or before the date of termination
of the Participant’s employment or other service relationship with the Company
or its Affiliates, any unvested Phantom Shares shall immediately become fully
vested effective as of the date upon which the Change of Control occurs.

 

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.

 

A-4

 

 

6.       Tax Withholding. To the extent that the receipt, vesting or settlement
of this Award results in compensation income or wages to the Participant for
federal, state, local and/or foreign tax purposes, 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.

 

7.       FPCA. The Participant shall perform all duties as an employee,
consultant, or other service provider 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 and
PowerPoint presentation concerning the terms and provisions of the FCPA in
effect as of the date of this Agreement and the purposes of the FPCA. 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.

 

A-5

 

 

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.

 

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.

 

A-6

 

 

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.

 

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 Employment, 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 employment by, or a continued service relationship with, the
Company or any of its Affiliate, or any other entity, or affect in any way the
right of the Company or any such Affiliate, or any other entity to terminate
such employment or other service relationship at any time. 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.

 

A-7

 

 

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 14 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):

 

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: Craig Murrin

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.

 

A-8

 

 

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 employment, consulting and/or severance
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.

 

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.

 

A-9

 

 

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. Nevertheless, to the extent that the
Committee determines that the Phantom Shares may not be exempt from the
Nonqualified Deferred Compensation Rules, then, if the Participant is deemed to
be a “specified employee” within the meaning of the Nonqualified Deferred
Compensation Rules, as determined by the Committee, at a time when the
Participant becomes eligible for settlement of the Phantom Shares upon his or
her “separation from service” within the meaning of the Nonqualified Deferred
Compensation Rules, then to the extent necessary to prevent any accelerated or
additional tax under the Nonqualified Deferred Compensation Rules, such
settlement will be delayed until the earlier of: (a) the date that is six months
following the Participant’s separation from service and (b) the Participant’s
death. 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.

 

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