Exhibit 10.2

APPROACH RESOURCES INC.
2007 STOCK INCENTIVE PLAN

20[_] CASH-SETTLED PERFORMANCE SHARE UNIT AWARD AGREEMENT

PERFORMANCE VESTING AND TIME VESTING REQUIREMENTS

THIS 20[__] CASH-SETTLED PERFORMANCE SHARE UNIT AWARD AGREEMENT (the
“Agreement”) is 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, as amended (the “Plan”), has
the authority to grant Performance Awards denominated in 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.Performance Share Unit 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 Performance Award (the
“Award”) of [__] ([__]) performance units (each a “Performance Unit”).  The
Award is made on [__], 20[__] (the “Grant Date”).  Each Performance Unit
represents a contractual right to receive an amount of cash equal to the 30-Day
Volume-Weighted Average Stock Price, subject to the terms and conditions of this
Agreement; provided that in no event shall the aggregate cash received in
settlement of Performance Units  granted under this Agreement exceed $5,000,000
in any fiscal year.  Participant’s right to receive a cash settlement in respect
of Performance Units is generally contingent, in whole or in part, upon, except
as otherwise provided in Section 2(c), (a) the achievement of the Performance
Vesting Requirement outlined in Section 2(a)(i) below, and (b) Participant’s
satisfaction of the Time Vesting Requirement outlined in Section 2(a)(ii)
below.  The Performance Units contemplated herein are described in the Plan as
Performance Awards payable in cash pursuant to Article XI of the Plan. For
purposes of this Agreement, the “30-Day Volume-Weighted Average Stock Price”
means, in respect of any vesting date, the volume-weighted average closing price
of a share of the Common Stock as reported on the NASDAQ Global Select Market
(or such other exchange on which the Common Stock is listed) for the 30
consecutive full trading days ending at the close of regular hours trading on
the NASDAQ Global Select Market on the full trading day immediately preceding
such vesting date.

2.Vesting and Forfeiture.  

(a)Vesting Restrictions.  The Performance Units shall be subject to a restricted
period that shall commence on the Grant Date and shall end on the time-based
vesting dates described in Section 2(a)(ii) below (the “Performance Period”),
subject to the satisfaction of the Performance Vesting Requirement described in
Section 2(a)(i) and the provisions of Section 2(c).  During the Performance
Period, the Performance Units shall be subject to being forfeited by Participant
to Approach as provided in this Agreement, and

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Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of any of the Performance Units (the “Restrictions”).

(i)Performance Vesting Requirement.  The “Performance Vesting Requirement” means
the performance-based vesting Restrictions for the Performance Units.  The
Performance Vesting Requirement shall be satisfied by the achievement of the
“Performance Goal,” which is performance criteria established by the Committee
pursuant to Article XI of the Plan and set forth in Appendix A attached
hereto.  Within 75 days after the end of the 20[__] calendar year, the Committee
will review and analyze Approach’s performance for the 20[__] calendar year and
determine whether the Performance Vesting Requirement has been satisfied.  If
the Committee determines that the Performance Vesting Requirement has been
satisfied, the Committee will certify the achievement of the Performance Goal
for the 20[__] calendar year and then the Time Vesting Requirement in Section
2(a)(ii) below will be the remaining Restriction applicable to the Performance
Units; for the avoidance of doubt, except as provided in Section 2(c), no
Performance Units shall become vested and no payments with respect to
Performance Units shall be made prior to satisfaction of the Time Vesting
Requirement applicable to such Performance Units.  If the Committee determines
that the Performance Vesting Requirement has not been satisfied, (i) the
Participant shall have no rights whatsoever in and to any cash settlement in
respect of any of the Performance Units, (ii) all of the Performance Units 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 thereto.  The
Committee’s certification of the achievement of the Performance Goal will be
effective as of [__], 20[__], regardless of any delay in the Committee’s
determination of whether the Performance Goal was satisfied for the 20[__]
calendar year.  The Committee shall have the sole discretion for determining
whether the Performance Vesting Requirement has been satisfied and any such
determination shall be conclusive.  

(ii)Time Vesting Requirement.  The “Time Vesting Requirement” means the
time-based vesting Restrictions for the Performance Units during the Performance
Period. Provided the Committee certifies that the Performance Vesting
Requirement has been satisfied, the time-based Restrictions on the Performance
Units shall lapse and the Performance Units shall become vested as to:

(A)33.33% of the Performance Units (if a fractional number, then the next lower
whole number) on [__], provided Participant is in the continuous active service
of Approach or an Affiliate until such date;

(B)33.33% of the Performance Units (if a fractional number, then the next lower
whole number) on [__], provided Participant is in the continuous active service
of Approach or an Affiliate until such date; and

(C)the remaining Performance Units on [__], provided Participant is in the
continuous active service of Approach or an Affiliate until such date.

(b)Termination Generally.  Subject to Section 2(c), upon termination of
Participant’s employment or service with Approach or an Affiliate, (i)
Participant shall have no rights whatsoever in and to any cash settlement in
respect of any of the Performance Units as to which the Restrictions have not
lapsed pursuant to Section 2(a) as of the date of the Participant’s termination
of employment or service, (ii) all of the Performance Units as to which the
Restrictions have not lapsed pursuant to Section 2(a) as of the date of the
Participant’s termination of employment or service shall automatically revert to
Approach at no cost and (iii) neither Participant nor any of his or her heirs,
beneficiaries, executors, administrators or other personal representatives shall
have any rights with respect thereto.

(c)Change of Control and Termination of Employment or Service for Death or
Disability.  

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(i)Change of Control. In the event Participant is in the continuous active
service of Approach or an Affiliate from the Grant Date until the occurrence of
a Change of Control, then, upon the occurrence of such Change of Control, any
remaining Restrictions on the Performance Units shall automatically lapse in
full as to any outstanding Performance Units the Participant may hold at the
time of such Change of Control, with any remaining Restrictions imposed upon the
Performance Units as a result of the Performance Vesting Requirement deemed
satisfied at the “maximum” levels necessary to satisfy the Performance Vesting
Requirement at the time of the Change of Control.  

(ii)Termination of Employment or Service for Death or Disability.  If
Participant’s employment or service relationship with Approach or an Affiliate
is terminated as a result of the Participant’s death or Disability, then, upon
such termination, any remaining Restrictions on the Performance Units shall
automatically lapse in full as to any outstanding Performance Units the
Participant may hold at the time of such a termination of employment or service,
with any remaining Restrictions imposed upon the Performance Units as a result
of the Performance Vesting Requirement deemed satisfied at the “maximum” levels
necessary to satisfy the Performance Vesting Requirement at the time of the
Participant’s termination of employment or service as a result of the
Participant’s death or Disability.

3.Payment in Settlement of Vested Performance Units.  Following the lapse of the
Restrictions on any Performance Units pursuant to both the Performance Vesting
Requirement and the Time Vesting Requirement in accordance with Section 2(a) or
2(c), as applicable, Approach shall, as soon as administratively feasible, but
not later than 15 days following the date such Restrictions lapse and the
Performance Units become vested, pay to Participant a cash payment equal to the
30-Day Volume-Weighted Average Stock Price, multiplied by the number of
Performance Units becoming vested; provided that in no event shall the aggregate
cash received in settlement of Performance Units  granted under this Agreement
exceed $5,000,000 in any fiscal year.  Upon settlement of vested Performance
Units in cash, such Performance Units shall be canceled and terminated.

4.No Rights as Stockholder; Dividend Equivalents.  Participant shall have no
rights as a stockholder of the Company with respect to the Performance Units;
provided that, (a) Participant shall have cash dividend equivalent rights with
respect to a number of shares of Common Stock equal to the number of outstanding
Performance Units then held by Participant (the “Underlying Shares”), with any
cash dividends attributable thereto paid to Participant at the time cash
dividends are paid to Approach’s stockholders generally, but in any event no
later than the 15th day of the third month of the calendar year following the
calendar year in which the dividend is declared by Approach; and (b) if and to
the extent Approach shall effect a stock split, stock dividend or similar
distribution with respect to the Common Stock, the number of Performance Units
subject to this Award  shall be increased or decreased by a number equal to the
number of shares of Common Stock that would be distributed in connection with
such stock split, stock dividend or similar distribution with respect to the
Underlying Shares if they were actual shares of Common Stock.      

5.Withholding Taxes.  

(a)Approach may from time to time require Participant to pay to Approach or the
appropriate Affiliate, or make arrangements satisfactory to Approach or such
Affiliate regarding payment of, the amount Approach deems necessary to satisfy
any federal, state or local taxes of any kind required by law to be withheld
with respect to the Performance Units.  Unless otherwise permitted by Approach,
the amount of such taxes required by law to be withheld with respect to the
settlement of Performance Units shall be satisfied by withholding the amount of
cash necessary to satisfy Approach’s obligation to withhold taxes from any cash
payments to be made under Sections 3 or 4.

(b)Any provision of this Agreement to the contrary notwithstanding, if
Participant does not satisfy his or her obligations under Section 5(a), Approach
shall, to the extent permitted by law, have the right to

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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 Performance Units.

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 Performance Units.

8.Assignment.  Approach may assign all or any portion of its rights and
obligations under this Agreement.  The Award, the Performance Units 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.

9.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.

10.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.

11.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.

12.Execution of Receipts and Releases.  Any payment 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 payment, to execute such a release and receipt
therefore in such form as Approach may determine.

13.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.

14.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.

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15.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.  The
Committee may amend the terms of this Award and this Agreement at any time
following the Grant Date to provide for the settlement of vested Performance
Units in the form of shares of Common Stock instead of (or in combination with)
cash and, for purposes of clarity, any such amendment will be deemed not to
adversely affect the Participant’s (or a Participant’s Permitted Transferee’s)
rights in any material way and therefore may be made without Participant’s (or a
Participant’s Permitted Transferee’s) prior consent.

16.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.

17.Section 409A Compliance.  The parties hereto intend that any amounts payable
hereunder comply with or, to the maximum extent possible, are exempt from
Section 409A of the Code and the applicable Treasury regulations and
administrative guidance issued thereunder (collectively, “Section 409A”), and
this Agreement shall be construed and administered in accordance with such
intent.  Neither this Section 17 nor any other provision of the Agreement or the
Plan, however, is or contains a representation to the Participant regarding the
tax consequences of the grant, vesting, or settlement of the Performance Units
granted hereunder, and should not be interpreted as such.  In no event shall
Approach 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 Section 409A.  Approach and the Participant agree to
negotiate in good faith to make such amendments to the Agreement as the parties
mutually agree are necessary or desirable to avoid the imposition of taxes,
penalties or interest under Section 409A.  For purposes of Section 409A, each of
the payments that may be made under this Agreement shall be deemed to be a
separate payment for purposes of Section 409A.  Any payments to be made under
this Agreement upon a termination of Participant’s employment or service shall
only be made if such termination of employment constitutes a “separation from
service” under Section 409A.  The applicable provisions of Section 409A are
hereby incorporated by reference and shall control over any Plan or Award
Agreement provision in conflict therewith.

 

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 Award 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

 

 

 

By:

 

 

Name:

 

[__]

 

 

 

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APPENDIX A

TO 20[__] CASH-SETTLED PERFORMANCE SHARE UNIT AWARD AGREEMENT

 

Performance Goal for Performance Vesting Requirement

 

The Performance Goal for the Performance Units shall be comprised of the company
performance goal set forth in Section 1 of this Appendix A.  The Performance
Goal must be met or exceeded for the Performance Vesting Requirement for the
Performance Units to be satisfied.  The Committee shall have the sole discretion
for determining whether the Performance Vesting Requirement has been satisfied
and any such determination shall be conclusive.  

 

1.

Performance Goal.  The following Performance Goal shall apply with respect to
the Performance Units and relate to the calendar year ending [__], 20[_] (the
“20[__]calendar year”):

[“Performance Goal” to be based on “finding and development cost per unit” (as
described in the Plan) in the form of cash operating expenses per Boe.]