APPROACH RESOURCES INC. RESTRICTED STOCK AWARD AGREEMENT
Exhibit 10.13
This Restricted Stock Award Agreement (the “Agreement”) is made this 14th day of March 2007,
between APPROACH RESOURCES INC., a Delaware corporation (the “Company”), and J. Xxxxxx Xxxxxxxxx,
an employee of the Company or one of its affiliates (“Employee”).
WHEREAS, the Company desires to afford Employee the opportunity to obtain shares of the
Company’s common stock, $0.01 par value per share (the “Shares”).
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties hereto agree as follows:
1. Grant of Award. The Company hereby grants to Employee as of the date set forth
above (the “Date of Grant”) an aggregate of 21,250 Shares, such number of Shares being subject to
adjustment as provided in paragraph 7 hereof, and on the terms and conditions herein set forth.
The Shares granted pursuant to this Agreement are granted as restricted stock (the “Restricted
Shares”).
2. Restricted Period; Other. (a) Except as otherwise provided in Paragraph 6, this
award of Restricted Shares shall be subject to the following vesting periods: (i) One third (1/3)
shall vest upon the closing of the first underwritten public offering (the “IPO”) of the Common
Stock of the Company that is pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission under the Securities Act of 1933, as amended
(the “Securities Act”), covering the offer and sale of any Common Stock to the public for the
Company’s account, or on February 21, 2008, whichever occurs earlier (the “Initial Vesting Date”);
(ii) one third (1/3) shall vest one year following the Initial Vesting Date; and (iii) one third
(1/3) shall vest two years following the Initial Vesting Date; provided Employee remains employed
by the Company through each vesting date. Notwithstanding the foregoing, if Employee is terminated
by the Company for reasons other than Cause or if events giving rise to Good Reason occur, the
Employee shall vest as of the date of such termination by the Company or the date the event giving
rise to Good Reason occurs, as applicable, in all unvested Restricted Shares.
(b) For purposes of this Agreement, “Cause” shall be defined as follows:
(i) the willful and continued failure by Employee to substantially perform his duties
as an officer of the Company (other than any such failure resulting from Employee becoming
Disabled);
(ii) the willful engaging by Employee in misconduct that is materially injurious to the
Company;
(iii) any misconduct in the course and scope of Employee’s employment, including but
not limited to dishonesty, disloyalty, disorderly conduct, insubordination, harassment of
other employees or third parties, abuse of alcohol or controlled substances, or other
violations of the Company’s rules;
(iv) Employee’s conviction of a felony or other crime involving moral turpitude; or
(v) any material violation of any agreement between Employee and the Company, including
without limitation the Stockholders’ Agreement (defined below).
For purposes of this paragraph, no act, or failure to act, on Employee’s part shall be
considered “willful” unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best interest of the
Company.
If the Company believes Cause exists for terminating Employee’s employment and
forfeiting all unvested Restricted Shares, it shall give Employee written notice of the acts
or omissions constituting Cause, and no termination of employment and related forfeiture of
unvested Restricted Shares shall be effective unless and until Employee fails to cure such
acts or omissions within 10 days after receiving such notice.
(c) For purposes of this Agreement, “Good Reason” shall mean:
(i) a material adverse change in the nature or scope of Employee’s authorities, powers,
functions, duties, or responsibilities (it being recognized that neither the IPO nor the
purchase or sale of oil and gas properties by the Company, regardless of the location of
such properties, will constitute a material adverse change for this purpose);
(ii) any demotion of Employee to a non-officer position or an officer position junior
to Employee’s position on the date of this Agreement, except for Cause; or
(iii) any material adverse change in the Employee’s salary.
Employee shall give the Company written notice of any actions alleged to constitute
Good Reason and the Company shall have 10 days to cure any such alleged Good Reason.
(d) For purposes of this Agreement, a “Disability” shall be deemed to have occurred when:
(i) Employee is determined to be eligible to receive long-term disability benefits
under either Social Security or the Company’s long-term disability plan, if any;
(ii) the Board of Directors of the Company, upon the written report of a qualified
physician designated by the Board or its insurers, shall have determined (after a complete
physical examination of Employee at any time after he has been absent from the Company for a
period of at least 120 calendar days since the date of this Agreement), that Employee has
become physically and/or mentally incapable of performing his essential job functions with
or without reasonable accommodation as required by law; or
(iii) Employee is otherwise unable for a continuous period of 180 calendar days to
perform his essential job functions with or without reasonable accommodation as required by
law due to injury, illness, or other incapacity (physical or mental).
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(e) Determination of Cause, Good Reason or Disability shall be made by the Board of Directors
in its good faith discretion.
3. Delivery of Shares. Certificate(s) representing the Restricted Shares shall be
issued in the name of Employee (or, at the option of the Company, in the name of a nominee of the
Company) as of the Date of Grant and delivered to Employee on the Date of Grant or as soon
thereafter as practicable. Employee shall cause the certificate(s) representing the Restricted
Shares, upon receipt thereof by Employee, to be deposited, together with stock powers and any other
instrument of transfer reasonably requested by the Company duly endorsed in blank, with the
Company, to be held by the Company in escrow for Employee’s benefit until such time as the
Restricted Shares represented by such certificate(s) are either forfeited by Employee to the
Company or the restrictions thereon terminate as set forth in this Agreement. If the restrictions
terminate as set forth in this Agreement, the certificate(s) representing the vested shares shall
be released from escrow to Employee. The Restricted Shares shall be subject in all respects to the
terms and conditions of that certain Voting and Stockholders’ Agreement dated as of January 1, 2003
by and among the Company and the other stockholders of the Company (the “Stockholders’ Agreement”),
which are incorporated by reference hereby.
4. Forfeiture. All Restricted Shares granted pursuant to this Agreement that have not
vested in accordance with Paragraph 2 or Paragraph 6, as the case may be, shall be forfeited to the
Company upon the date Employee is no longer employed by the Company or any of its affiliates.
5. Taxes. The Company will take any steps it deems necessary or desirable to satisfy
its withholding tax obligations, if any; provided that the Employee shall have the right (by
delivering written notice to the Secretary of the Company no less than 30 days nor more than 60
days prior to the date the restrictions are to be removed) to have Shares withheld from the
certificate(s) to be delivered to Employee upon removal of the restrictions or to tender other
Shares of Common Stock to meet such obligations.
6. Acceleration of Vesting and Delivery Dates.
(a) Notwithstanding the provisions of Paragraph 2 above relating to the vesting periods, the
Restricted Shares shall be 100% vested upon a Change of Control (as defined below).
(b) For purposes of this Agreement, a “Change of Control” shall mean any of the following
events: (a) the dissolution or liquidation of the Company; (b) a reorganization, merger or
consolidation (other than a merger or consolidation effecting a reincorporation of the Company in
another state or any other merger or consolidation in which the stockholders of the surviving
corporation and their proportionate interests therein immediately after the merger or consolidation
are substantially identical to the stockholders of the Company and their proportionate interests
therein immediately prior to the merger or consolidation) of the Company with one or more
corporations, following which the Company is not the surviving corporation (or survives only as a
subsidiary of another corporation in a transaction in which the stockholders of the parent of the
Company and their proportionate interests therein immediately after the transaction are not
substantially identical to the stockholders of the Company and their proportionate interests
therein immediately prior to the transaction); (c) the sale of all or substantially all the assets
of the Company; or (d) any person or group of persons (as defined in Rule 13d-5 under the
Securities
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Exchange Act of 1934, as amended) together with such person or its affiliates, becomes
the owner, directly or indirectly, of 50% or more of the total fair market value or total voting
power of the Company; provided that if one or more persons acting as a group currently owns more
than 50% of the Company, the acquisition of additional stock by the same person or persons is not
considered to cause a Change in Control.
7. Adjustments of Shares Subject to Award. If any Shares shall at any time be changed
or exchanged by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split, combination of shares or a dividend payable in stock, then the
aggregate number of Restricted Shares subject to this Agreement shall be automatically adjusted
such that Employee’s proportionate interest shall be maintained as before the occurrence of such
event. The determination of any such adjustment by the Company shall be final, binding and
conclusive. Shares distributed in connection with or resulting from any such adjustment with
respect to Restricted Shares that have not yet vested shall enjoy the same privileges and be
subject to the same restrictions pursuant to this Agreement that are applicable to the related
Restricted Shares.
8. No Contract for Employment. Notwithstanding anything to the contrary contained
herein, this Agreement does not constitute a contract for employment and shall not affect the right
of the Company to terminate Employee’s employment for any reason whatsoever or for no reason.
9. Restrictions on Transfer; Rights as Shareholder. None of the Restricted Shares may
be sold, transferred, assigned, pledged or otherwise encumbered or disposed of prior to vesting.
The Restricted Shares are also be subject to such other restrictions on transfer as set forth in
the Stockholders’ Agreement. Subject to the restrictions referenced in the preceding sentences,
and except as otherwise provided in this Agreement, Employee shall for all purposes be the record
and beneficial owner of the Restricted Shares. Employee shall be entitled to vote the Shares at all
meetings of stockholders and be entitled to receive and retain all cash dividends that may be paid
with respect to the Shares.
10. Restriction on Issuance of Shares. The Company shall not be required to issue or
deliver any certificates for Shares covered by this Agreement prior to the obtaining of any
approval from any governmental agency that the Company shall, in its sole discretion, determine to
be necessary or advisable, and the completion of any registration or other qualification of such
Shares or their offering or sale under any state or federal law or ruling or regulations of any
governmental body that the Company shall, in its sole discretion, determine to be necessary or
advisable. In addition, if the offering and sale of Shares reserved for issuance pursuant to this
Agreement shall not then be registered under the Securities Act of 1933, as amended, the Company
may, upon Employee’s receipt of Shares issued pursuant to this Agreement, require Employee or his
permitted transferee to represent in writing that the Shares being acquired are for investment and
not with a view to distribution, and may xxxx the certificate(s) for the Shares with a legend
restricting transfer and may issue stop transfer orders relating to such certificate(s) to the
transfer agent.
11. Acknowledgment. Employee acknowledges that Xxxxxxxx & Knight LLP has not
represented such Employee in connection with the preparation and negotiation of this Agreement, and
such counsel shall owe no duties directly to Employee. Employee confirms that Employee has been
advised to consult with Employee’s own attorney regarding legal matters concerning the
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Company and
to consult with independent tax advisors regarding the tax consequences of receiving the Restricted
Shares.
12. Binding Effect. This Agreement shall be binding upon the heirs, executors,
administrators, and successors of the parties hereto.
13. Modification. No change or modification of this Agreement shall be valid or
binding upon the parties unless the change or modification is in writing and signed by the parties;
provided, however, that the Company may change or modify this Agreement without Employee’s consent
or signature if the Company determines, in its sole discretion, that such change or modification is
necessary for purposes of compliance with or exemption from the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended, or any regulations or other guidance issued thereunder.
14. Governing Instrument and Law. This Agreement shall be governed by the laws of the
State of Delaware, without regard to its conflict of laws principles.
[Signature Page Follows]
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| APPROACH RESOURCES INC. | ||||||
| By: | /s/ X. Xxxx Craft | |||||
| X. Xxxx Craft, President | ||||||
Accepted and Agreed: |
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| /s/ J. Xxxxxx Xxxxxxxxx | Date: March 14, 2007 | |||||
J. Xxxxxx Xxxxxxxxx |
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