Exhibit 10.1
RESTRICTED STOCK
AGREEMENT
THIS RESTRICTED STOCK
AGREEMENT (this “Agreement”) is made as of
the 7th day of August, 2007, between PARTICLE DRILLING
TECHNOLOGIES, INC. , a Nevada corporation (the
“Company”), and JIM B. TERRY
(“Employee”).
1.
Award . Pursuant to
the PARTICLE DRILLING TECHNOLOGIES, INC. 2005 STOCK INCENTIVE
PLAN , as amended (the “Plan”), as of the date of
this Agreement, 329,250 shares (the “Restricted
Shares”) of the Company’s common stock shall be issued
as hereinafter provided in Employee’s name subject to certain
restrictions thereon. The Restricted Shares shall be issued
upon acceptance hereof by Employee and upon satisfaction of the
conditions of this Agreement. Employee acknowledges receipt
of a copy of the Plan, and agrees that this award of Restricted
Shares shall be subject to all of the terms and provisions of the
Plan, including future amendments thereto, if any, pursuant to the
terms thereof. In the event of any conflict between the terms
of this Agreement and the Plan, the Plan shall control.
Capitalized terms used but not defined in this Agreement shall have
the meaning attributed to such terms under the Plan, unless the
context requires otherwise.
2
.
Restricted Shares .
Employee hereby accepts the Restricted Shares when issued and
agrees with respect thereto as follows:
(a)
Forfeiture Restrictions .
The Restricted Shares may not be sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, encumbered or
disposed of to the extent then subject to the Forfeiture
Restrictions (as hereinafter defined), and in the event of
termination of Employee’s employment with the Company, except
as otherwise provided in Section 2(b) hereof, Employee shall, for
no consideration, forfeit to the Company all Restricted Shares to
the extent then subject to the Forfeiture Restrictions. The
prohibition against transfer and the obligation to forfeit and
surrender Restricted Shares to the Company upon termination of
employment are herein referred to as the “Forfeiture
Restrictions.” The Forfeiture Restrictions shall be
binding upon and enforceable against any transferee of Restricted
Shares.
(b)
Lapse of Forfeiture
Restrictions .
The Forfeiture
Restrictions shall lapse as to 129,250 of the Restricted Shares
upon achievement of the following performance target, provided that
Employee has been continuously employed by the Company from the
date of this Agreement through the date of such lapse:
1
The
date the Company files its first quarterly or annual report with
the U.S. Securities and Exchange Commission in which the Company
reports Adjusted EBITDA for a fiscal quarter that is greater than
$0. For this purpose, “Adjusted EBITDA” for a
particular fiscal quarter shall be calculated as the
Company’s net income (or net loss), increased by the reported
amount of (i) interest expense net of interest income, (ii) income
tax expense, (iii) depreciation expense, (iv) amortization expense
and (v) non-cash, stock-based compensation expense, with each such
item to be determined in accordance with generally accepted
accounting principles.
The Forfeiture
Restrictions shall lapse as to 200,000 of the Restricted Shares
upon achievement of the following performance target, provided that
Employee has been continuously employed by the Company from the
date of this Agreement through the date of such lapse:
The
date the Company consummates a strategic transaction with a third
party that the Committee, in its sole discretion, determines
satisfies the following criteria:
(i)
the transaction is supported by the holders of a majority of the
Company’s securities entitled to vote in the election of
directors generally if the approval of such stockholders is
required by applicable law (including the rules and regulations of
any exchange or other self regulatory organization applicable to
the Company);
(ii) the transaction is approved by a majority
of the members of the Board;
(iii) the transaction does not expose the
Company to a significant risk of litigation due to either the type
of transaction or the method of consummating the
transaction;
(iv) the transaction creates additional
liquidity for the Company;
(v)
the transaction results in a relationship with a third party that
provides strategic advantages; and
(vi) the transaction creates significant
additional value for the Company’s stockholders.
Notwithstanding the
foregoing, the Forfeiture Restrictions shall lapse as to all of the
Restricted Shares then subject to the Forfeiture Restrictions (i)
in accordance with the provisions of that certain Employment
Agreement between Employee and the Company effective as of January
23, 2006, as the same may be amended from time to time, or (ii) on
the date Employee’s employment with the Company is terminated
by reason of death or disability (within the meaning of section
22(e)(3) of the Code).
(c)
Certificates . A
certificate evidencing the Restricted Shares shall be issued by the
Company in Employee’s name, pursuant to which Employee shall
have all
2
of the rights of a
stockholder of the Company with respect to the Restricted Shares,
including, without limitation, voting rights and the right to
receive dividends (provided, however, that dividends paid in shares
of the Company’s stock shall be subject to the Forfeiture
Restrictions and further provided that dividends that are paid
other than in shares of the Company’s stock shall be paid no
later than the end of the calendar year in which the dividend for
such class of stock is paid to stockholders of such class or, if
later, the 15th day of the third month following the date the
dividend is paid to stockholders of such class of stock). Employee
may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of the stock until the Forfeit
