Document:

exv10w10

 

Exhibit 10.10

June 14, 2007

The Frost National Bank

777 Main Street, Suite 500

Fort Worth, Texas 76102

Attention: Mr. John S. Warren

	 	 	 	 	 
	 

	 	Re:
	 	Amendment to Amended and Restated Credit Agreement dated as of February 15,
2007 between Approach Resources I, LP, The Frost National Bank, as Administrative
Agent, and the Lenders parties thereto

Gentlemen:

     Reference is hereby made to that certain Amended and Restated Credit Agreement dated as of
February 15, 2007 between Approach Resources I, LP (“Borrower”), The Frost National Bank, as
Administrative Agent (“Agent”), and the Lenders parties thereto (as amended hereby, the “Loan
Agreement”). All capitalized terms herein shall have the meanings ascribed to them in the Loan
Agreement.

     Pursuant to this letter amendment (the “Amendment”), Agent, Lenders and Borrower agree,
effective as of June 14, 2007, to amend the Loan Agreement according to the terms and provisions
set forth below.

     1. Amendment to Definition of Maturity Date. The defined term “Maturity Date” as set
forth in Section 1.1 of the Loan Agreement is amended in its entirety to read as follows:

          “Maturity Date” shall mean July 31, 2010.

     2. Extension Fee. As consideration for, and as a condition precedent to, Lenders’
agreement to extend the Maturity Date according to this Amendment, Borrower agrees to pay to Agent
upon its execution of this Amendment, for the ratable benefit of Lenders, a fee in the amount of
$62,500.

     3. Ratification by Guarantors. Each Guarantor hereby ratifies and reaffirms all of
its obligations under its Guaranty Agreement (the “Guaranty”) of Borrower’s obligations under the
Loan Agreement, as amended hereby. Each Guarantor also hereby agrees that nothing in this
Amendment shall adversely affect any right or remedy of Bank under the Guaranty and that the
execution and delivery of this Amendment shall in no way change or modify its obligations as
guarantor under the Guaranty. Although each Guarantor has been informed by Borrower of the matters
set forth in this Amendment and such Guarantor has acknowledged and agreed to the same, such
Guarantor understands that Bank has no duty to notify such Guarantor or to seek such Guarantor’s
acknowledgment or agreement, and nothing contained herein shall create such a duty as to any
transaction hereafter.

     4. Confirmation and Ratification. Except as affected by the provisions set forth
herein, the Loan Agreement shall remain in full force and effect and is hereby ratified and

 

 

confirmed by Borrower. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right, power or remedy of
the Bank under the Loan Agreement or the other Loan Documents.

     5. Reference to Loan Agreement. Each of the Loan Agreement and the Loan Documents,
and any and all other agreements, documents or instruments now or hereafter executed and delivered
pursuant to the terms hereof or pursuant to the terms of the Loan Agreement, as amended hereby, are
hereby amended so that any reference in the Loan Agreement, the Loan Documents and such other
documents to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby.

     6. Final Agreement. THE LOAN AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND ALL
PROMISSORY NOTES AND OTHER LOAN DOCUMENTS EXECUTED PURSUANT THERETO OR HERETO, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

     Please signify your acceptance to the foregoing terms and provisions by executing a copy of
this Amendment at the space provided below.

[SIGNATURE PAGES TO FOLLOW]

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	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	APPROACH RESOURCES I, LP,

a Texas limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Approach Operating LLC.,

a Delaware limited liability

company, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Approach Resources, Inc.,

a Delaware corporation,

its sole member	 	 
	 
	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Ross Craft	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	J. Ross Craft, President	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	GUARANTORS:	 	 
	 
	 	 	 	 	 	 
	 	 	APPROACH OPERATING, LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Approach Resources, Inc., a Delaware

corporation, its sole member	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Ross Craft	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	J. Ross Craft, President	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	APPROACH DELAWARE, LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Approach Resources, Inc., a
Delaware
corporation, its sole member	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Ross Craft	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	J. Ross Craft, President	 	 

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ACCEPTED AND AGREED TO

effective as of the date and year

first above written:

AGENT:

THE FROST NATIONAL BANK

	 	 	 	 	 
	By:

	 	/s/ John S. Warren
	 	 
	 

	 	 	 	 
	 

	 	John S. Warren, Senior Vice President	 	 

LENDERS:

THE FROST NATIONAL BANK

	 	 	 	 	 
	 

	 	 	 	 
	By:

	 	/s/ John S. Warren	 	 
	 

	 	 	 	 
	 

	 	John S. Warren, Senior Vice President	 	 

JPMORGAN CHASE BANK, NA

	 	 	 	 	 
	 

	 	 	 	 
	By:

	 	/s/ Wm. Mark Cranmer	 	 
	 

	 	 	 	 
	 

	 	Wm. Mark Cranmer, Senior Vice President	 	 

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Exhibit 10.12

OPTION AGREEMENT

     This Option Agreement (“Agreement”), made and entered into as of                      (the “Date of
Grant”), is by and between Approach Resources Inc., a Delaware corporation (the “Company”), and
                     (the “Optionee”).

WITNESSETH:

     WHEREAS, the Company has adopted that certain 2003 Stock Option Plan (the “Plan”) effective as
of January 1, 2003 (the “Plan Date”) for certain employees of the Company; and

     WHEREAS, the Optionee is an employee of the Company eligible to participate in the Plan and
the Board of Directors of the Company, as administrator of the Plan, has determined that the
Company should recognize the potential contributions that the Optionee may make to the success of
the Company by granting him an option to purchase shares of Common Stock in the Company pursuant to
the Plan and upon the terms set forth herein;

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
hereinafter set forth, the Company and Optionee hereby agree as follows:

     1. Certain Definitions. Terms used in this Agreement and not otherwise defined shall
have the respective meanings assigned to such terms in the Plan.

     2. The Plan. The terms and provisions of the Plan are hereby incorporated into this
Agreement as if set forth herein in their entirety. In the event of a conflict between any
provision of this Agreement and the Plan, the provisions of the Plan shall control. A copy of the
Plan may be obtained from the Company by the Optionee upon request. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed thereto in the Plan.

     3. Grant of Option. Subject to the terms and conditions hereinafter set forth, the
Company hereby irrevocably grants to the Optionee the right and option (the “Option”) to purchase
                    shares (“Option Shares”) of Common Stock.

     4. Option Price. The price to be paid by Optionee to the Company for each Option
Share purchased pursuant to the exercise of this Option (“Option Price”) shall be $                    .

     5. Vesting of Right to Exercise Option. Subject to earlier vesting of the Option
Shares pursuant to the Plan, 331/3% of the Option Shares shall vest immediately, 331/3% of the Option
Shares shall vest on                      and the remaining 331/3% of the Option Shares shall vest on                     .

     6. Restrictions on Exercise. The right to exercise the Option shall be subject to the
following restrictions:

     (a) Vesting. Optionee shall have no right to exercise this Option to purchase any
Option Shares for which Optionee’s rights have not yet vested in accordance with Section 5.

 

 

     (b) No Fractional Option Shares. The Option may be exercised only with respect to
full Option Shares.

     (c) Compliance with Law. The Option may not be exercised in whole or in part, and no
Option Shares shall be issued nor certificates representing such Option Shares delivered pursuant
to any exercise of the Option, if any requisite approval or consent of any governmental authority
of any kind having jurisdiction over the exercise of options or the issuance and sale of Option
Shares shall not have been obtained or if such exercise or issuance would violate any applicable
law.

     (d) Exercise by Optionee. The Option shall be exercisable only by the Optionee, any
representative of the Optionee, and by any transferee who has received such Option in accordance
with the Plan.

     7. Exercise of Option.

     (a) Subject to the other terms and provisions of this Agreement, the Option shall be
exercisable by written notice timely given to the Company by the Optionee, which notice (i) shall
state the number of Option Shares that the Optionee then desires to purchase, and (ii) shall be
accompanied by payment in full of the Option Price for each of such Option Shares, which such
payment shall be made in cash or certified check.

     (b) The Company shall be entitled to require the Optionee to deliver to the Company
such documents as the Company in its discretion shall deem necessary to confirm that (i) such
exercise and the Company’s issuance and sale of such Option Shares are in compliance with the
requirements of any applicable laws (including, but not limited to, the Securities Act of 1933, as
amended (the “Securities Act”) all applicable state securities or “blue sky” laws (“State Law”)),
and (ii) the Optionee shall be bound by and comply with all of the terms and provisions of the
Stockholders Agreement.

     (c) Unless the Company and Optionee shall make mutually acceptable alternative arrangements,
at the time of exercise of the Option, Optionee shall pay to the Company, in cash, any federal,
state and local taxes required by law to be paid or withheld in connection with such exercise.

     8. Recapitalization or Reorganization. The existence of this Option shall not affect
in any way the right or power of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company’s capital structure or its business, any merger or
consolidation of, or share exchange involving, the Company, any issuance of additional Company
securities with priority over the Common Stock or otherwise affecting the Common Stock or the
rights thereof, the dissolution or liquidation of the Company’s Common Stock or any sale, lease,
exchange or other disposition of all or any part of its assets or business or any other corporate
act or proceeding.

     9. Termination of Option. The Option shall terminate at such time as set forth in the
Plan.

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     10. Restriction on Transfer of Option. The Option may not be sold, assigned,
hypothecated or transferred, except by will or by the laws of descent and distribution or to a
trust of which the Optionee is the sole trustee who retains all rights regarding the exercise and
disposition of the Option. Any attempted transfer of the Option in violation of this provision or
the other provisions of the Plan shall be void and of no effect whatsoever.

     11. Certain Rights Incident to Divorce. If an interest in the Option is
required by law to be transferred to a spouse of Optionee pursuant to an order of a court in a
divorce proceeding (notwithstanding the provisions of Section 10 hereof), Optionee shall
nevertheless retain all rights with respect to the exercise of the Option and any interest of such
spouse shall be subject to such rights of Optionee. In addition, if it is determined that Optionee
will be required to pay any taxes attributable to the interest of the spouse in the Option, any tax
liability of Optionee which is attributable to such spouse’s interest shall be taken into
account, and shall reduce such spouse’s interest in this Option.

     12. Rights as a Stockholder. Optionee shall have no rights as a stockholder of the
Company with respect to any Option Shares covered by the Option until the exercise of the Option.

     13. Additional Documents. The Company and the Optionee will, upon request of the
other party, promptly execute and deliver all additional documents, and take all such further
action, reasonably deemed by such party to be necessary, appropriate or desirable to complete and
evidence the sale, assignment and transfer of the Option Shares pursuant to this Agreement,
including without limitation and if required by the Board, a counterpart signature page to the
Stockholders Agreement.

     14. Representations, Warranties and Covenants of Optionee.

     (a) The Optionee acknowledges that neither the Option nor the Option Shares covered thereby
have been registered under the Securities Act or State Law on the grounds that the issuance of the
Option is, and the sale of any Option Shares pursuant to the exercise of the Option will be, exempt
from registration under one or more provisions of each of such acts. The Optionee further
understands that in determining the availability and applicability of such exemptions and in
executing and delivering this Agreement and issuing and delivering any Option Shares upon exercise
of the Option, the Company has relied and will rely upon the representations, warranties and
covenants made by the Optionee herein and in any other documents which he may hereafter deliver to
the Company. Accordingly, the Optionee represents and warrants to and covenants and agrees with
the Company as follows:

     (i) the Optionee is acquiring and will hold the Option, and will acquire and hold all
securities which he acquires upon exercise of the Option, for his own account for investment
and not with a view to or in connection with any sale or distribution of all or any part
thereof; and

     (ii) the Optionee will hold all securities acquired by him upon exercise of the Option,
as well as any and all other securities issued in respect thereof, subject to all applicable
provisions of the Stockholders’ Agreement, the 1933 Act and State Law, and
will not at any time make any sale, transfer, pledge or other disposition or
encumbrance

3

 

of any of such securities in violation
of the Stockholders’ Agreement or
in the absence of an effective registration statement for such securities under the 1933 Act
and State Law or an applicable exemption from the registration requirements therefrom.

     (b) The Optionee agrees (i) that the certificates representing the Option Shares or
other securities purchased under this Option may bear such legend or legends as the Company deems
appropriate in order to assure compliance with applicable securities laws, (ii) that the Company
may refuse to register the transfer of the Option Shares or other securities purchased under this
Option on the transfer records of the Company if such proposed transfer would in the opinion of
counsel satisfactory to the Company constitute a violation of any applicable securities laws, (iii)
that the Company may give related instructions to its transfer agent, if any, to stop registration
of the transfer of the Option Shares or other securities purchased under this Option, (iv) that the
Option Shares or other securities acquired upon exercise of this Option shall be subject, in all
respects, to the Stockholders’ Agreement and (v) Optionee shall become party to the Stockholders’
Agreement prior to issuance of any certificate representing the Option Shares.

     (c) Optionee acknowledges that the value of the Option over its life will be speculative and
uncertain, that there is no market for the Option or the Option Shares or other securities that may
be acquired upon exercise of the Option and it is unlikely that any market will develop, and
consequently, the Optionee may ultimately realize no value from the Option.

     15. Tax Withholding. Whenever under the Plan securities are to be delivered by an
Optionee upon exercise of an Option, the Company shall be entitled to require as a condition of
delivery that the Optionee remit or, in appropriate cases, agree to remit when due, an amount
sufficient to satisfy all current or estimated future federal, state and local withholding tax and
employment tax requirements relating thereto.

     16. Optionee’s Employment. Nothing contained in the Plan or in this Agreement shall
confer upon the Optionee any right with respect to the continuation of his employment by or service
with the Company or interfere in any way with the right of the Company (subject to the terms of any
separate agreement to the contrary) at any time to terminate such employment or service or to
increase or decrease the compensation of the Optionee from the rate in existence at the date of
this Agreement.

     17. Notices. All notices required or permitted to be given hereunder shall be in
writing and shall be deemed to have been given on the earlier of the date of receipt by the party
to whom the notice is given or five days after being mailed by certified or registered United
States mail, postage prepaid, addressed to the appropriate party at the address shown beside such
party’s signature below or at such other address as such party shall have theretofore
designated by written notice given to the other party.

     18. Entirety and Modification. This Agreement contains the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes any and all prior
agreements, whether written or oral, between such parties relating to such subject matter. No
modification, alteration, amendment or supplement to this Agreement shall be valid or
effective unless the same is in writing and signed by the party against whom it is sought to
be enforced.

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     19. Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible, and such provision shall be deemed
inoperative to the extent it is unenforceable, and in all other respects this Agreement shall
remain in full force and effect; provided, however, that if any such provision may be made
enforceable by limitation thereof, then such provision shall be deemed to be so limited and shall
be enforceable to the maximum extent permitted by applicable law.

     20. Gender. Words used in this Agreement that refer to Optionee and denote the male
gender shall also be deemed to include the female gender or the neuter gender when appropriate.

     21. Headings. The headings of the various sections and subsections of this Agreement
have been inserted for convenient reference only and shall not be construed to enlarge, diminish or
otherwise change the express provisions hereof.

     22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE DELAWARE PRINCIPLES OF CONFLICTS OF LAW).

     23. Counterparts. This Agreement may be signed in counterparts, each of which shall
be deemed an original and all of which shall constitute one and the same agreement.

* * * * * * * * * *

[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set
forth above.

Addresses:

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	THE COMPANY:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	6300 Ridglea 

Fort Worth, Texas 76116	 	 	 	APPROACH RESOURCES INC.	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	OPTIONEE:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	[Name]

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