Document:

Exhibit 10.6

Exhibit 10.6

This Subscription Agreement is made by and between ViewCast.com, Inc. dba ViewCast Corporation, a
Delaware corporation (“Corporation”), and David W. Brandenburg (“Undersigned”), with respect to
shares of common stock (“Common Stock”) of the Corporation (each, a “Share” and collectively, the
“Shares”).

NOW THEREFORE, IT IS AGREED AS FOLLOWS:

1. Subscription. The Undersigned applies to purchase the Shares at a value per share based
on the weighted average closing price of the Common Stock for the ten (10) trading days immediately
prior to the date this Subscription Agreement is executed which is $0.25247 (the “Stock Value”).
The number of shares of Common Stock issued will be the next higher whole number of shares
determined by dividing the Subscription Amount by the Stock Value. The Corporation may reject such
subscription for any reason. The Corporation need not specify a reason for its rejection of any
Subscription Agreement.

7. General Representations. The Undersigned represents and warrants as follows:

A. The Undersigned is purchasing the Shares without having been furnished any offering
literature; has received all documents, records and books pertaining to investment in the
Corporation requested by and deemed sufficient by him to make an investment in the Corporation; and
has been furnished with or has acquired copies of all reports filed by the Corporation pursuant to
the Securities Exchange Act of 1934, as amended (the “1934 Act”) prior to the date of this
Subscription Agreement and copies of all press releases issued by the Corporation prior to the date
of this Subscription Agreement;

B. The Undersigned understands that he is purchasing the Shares without being furnished any
offering materials and that such purchase has not been scrutinized by the U.S. Securities and
Exchange Commission (the “Commission”) or any state securities regulatory body;

C. The Undersigned understands that the Shares of the Corporation have not been registered
under the Securities Act of 1933, as amended, (the “1933 Act”) nor any state securities law. The
Undersigned understands that he has no right to require registration under the 1933 Act or any
state securities law;

D. The Undersigned understands that the Shares are being purchased for his own account for
investment, not for the interest of any other person, and not for resale to others;

E. The Undersigned is an accredited investor as defined in Regulation D, Rule 501(a) (17
C.F.R.230.501(a)), by reason of one of the following:

	 	(a)	 	he is a director or executive officer of the
Corporation;

	 	(b)	 	his net worth (including that of his spouse)
exceeds $1,000,000 (“net worth” means the excess of total assets over
total liabilities and for the purposes of determining “net worth,” the
value of an individual’s primary residence and any amount of
indebtedness secured by the primary residence up to the fair market
value thereof should be excluded, and indebtedness secured by the
primary residence in excess of the value of the home should be
considered a liability);

	 	(c)	 	he had income in excess of $200,000 for each of
2008 and 2009 or income (including that of his spouse) in excess of
$300,000 in each of those years and reasonably expects to reach the
same level in 2010;

 

 

 

	 	(d)	 	the Undersigned is an organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, a corporation,
a Massachusetts or similar business trust, or a partnership, not formed
for the purpose of acquiring the Shares, with total assets in excess of
$5,000,000;

	 	(e)	 	the Undersigned is a trust, with total assets
in excess of $5,000,000, not formed for the purpose of acquiring the
Shares, whose purchase is directed by a person who has such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of the prospective investment; or

	 	(f)	 	the Undersigned is an entity in which all of
the equity owners are accredited investors.

F. The Undersigned is sufficiently experienced in financial and business matters to be capable
of evaluating the merits and risks of his investments, including an investment in the Corporation,
and to make an informed decision relating thereto and to protect his own interests in connection
with the purchase of the Shares;

G. The Undersigned, in making the decision to subscribe for the Shares, has relied upon an
independent investigation made by him and, prior to entering into this Subscription Agreement, has
been given access and the opportunity to ask questions of and to receive answers from officers of
the Corporation concerning the terms and conditions of subscribing for the Shares and has received
complete and satisfactory answers to such inquiries;

H. Based upon the Undersigned’s independent investigation, the Undersigned has made his own
independent determination to subscribe for the Shares;

I. The Undersigned is, in relation to his total investment status and net worth, making only a
reasonable commitment to the Corporation and is able to bear the economic risk of the investment,
including the possible loss of his entire investment;

J. The Undersigned is making an investment in the Corporation without the expectation or
desire for a resale or distribution with respect thereto;

K. The Undersigned has no need for liquidity with respect to the Undersigned’s investment in
the Corporation;

L. The Undersigned recognizes that an investment in the Shares involves special risks,
including, but not limited to, those set forth in all of the Corporation’s reports filed pursuant
to the 1934 Act filed with the Commission prior to the date of this Subscription Agreement;

M. The Undersigned is aware of the restrictions on transfer of the Shares imposed by the 1933
Act and applicable state securities laws and hereby consents to the placement of the following
restrictive legends on the certificate representing the Shares subscribed for herein:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED SOLELY
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1993, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH SALE, OFFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION REQUIREMENT OF THE ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS.

 

2

 

N. The Undersigned further understands that the certificates representing Shares held by
officers, directors, or other affiliates of the Corporation may contain additional restrictive
legends required by law;

O. The Undersigned acknowledges that he is not subscribing for the Shares as a result of or
pursuant to any of the following: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media outlet or broadcast over television or radio;
or (ii) any seminar or meeting whose attendees, including the Undersigned, had been invited as a
result of, or pursuant to, any of the foregoing; and

P. The Undersigned understands that all information which the Undersigned has provided to the
Corporation concerning himself and his financial position, and his knowledge of financial and
business matters is correct and complete as of the date set forth herein and, if there should be
any material change in such information prior to the Undersigned having paid his subscription in
full, that the Undersigned must immediately provide the Corporation with such information.

3. Subscription Amount. The Undersigned hereby subscribes for Shares of ViewCast.com, Inc.,
a Delaware corporation, for the total price of $135,000.00 (“Subscription Amount”), and tenders a
check, money order or wire transfer in the sum of $135,000.00, payable to ViewCast.com, Inc. The
number of shares of Common Stock issued will be the next higher whole number of shares determined
by dividing Subscription Amount by the Stock Value.

4. Binding Effect and Irrevocability. The Undersigned understands that this Subscription
Agreement is not binding on the Corporation unless and until it is accepted by the Corporation as
evidenced by the counter-execution below.

5. Indemnification. The Undersigned understands the meaning and legal consequences of the
representations and warranties contained in this Subscription Agreement and agrees to indemnify and
hold harmless the Corporation and the organizers, incorporators, directors and executive officers
of the Corporation from and against any and all loss, damage or liability due to or arising out of
a breach of any representation or warranty of the Undersigned contained in this Subscription
Agreement.

6. Notices. All notices and other communications required or permitted under this
Subscription Agreement shall be in writing, and shall be deemed to have been given if delivered
personally, or mailed, postage prepaid, by first class mail, to the parties at the addresses set
forth in this Subscription Agreement or such other address as a party may specify to the other by
notice.

 

3

 

7. Succession and Assignment. This Subscription Agreement shall be binding upon and shall
inure to the benefit of the executors, administrators, heirs, legatees, devisees, assigns, legal
representatives, and successors of the parties hereto, and may not be assigned or transferred by
either party without the consent of the other party.

8. Amendments and Waivers. This Subscription Agreement may be amended or modified only by
an instrument signed by the parties hereto. A waiver of any provision of this Subscription
Agreement must be in writing, designated as such, and signed by the party against whom enforcement
of that waiver is sought. The waiver by a party of a breach of any provision of this Subscription
Agreement shall not operate or be construed as a waiver of any subsequent or other breach thereof.

9. Governing Law. This Subscription Agreement shall be enforced, governed and construed in
accordance with the laws of the State of Delaware.

*****

 

4

 

EXECUTED AND SUBMITTED BY THE UNDERSIGNED:

Date: December 30, 2010

	 	 	 	 	 	 	 
	/s/ David W. Brandenburg	/	 	 	/s/ Charles Roark	 	 
	 
	 	 	 	 	 	 
	Signature of Subscriber

	 	 	 	Signature of Raymond James & Assoc. Inc.	 	 
	 
	 	 	 	 	 	 
	David W. Brandenburg	/	 	 	Charles Roark, Supervisor — Investments	 	 
	 
	 	 	 	 	 	 
	(Type or print name of Subscriber as it appears above
	 	 	 	Type or print name as it appears above)	 	 
	 
	 	 	 	 	 	 
	 	/	 	 	 	 	 
	Federal Tax Identification No. of Subscriber	 	 	 	Federal Tax Identification No. of Subscriber’s Spouse	 	 

	 
	401 North Point Rd., #1002
	Street Address

	 	 	 	 	 	 	 
	Osprey, FL 34229

	City

	 	State
	 	Zip

			
	**IMPORTANT**	 	Please print below exactly how you want your name(s) listed
on your securities certificate:

Raymond James & Assoc. Inc. Custodian FBO: David W. Brandenburg RIRA, Acct.

P.O. Box 12749

St. Petersburg, FL 33733-2749

ACCEPTED BY

	 	 	 	 	 
	 

	 	ViewCast.com, Inc., a Delaware corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ Laurie L. Latham
 

	 	 
	 

	 	Laurie L. Latham, Senior Vice President and Chief Financial Officer	 	 
	 
	 	 	 	 
	Date:

	 	December 30, 2010exv10w1

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (the “Agreement”) is entered into as of
January 1, 2011 (the “Effective Date”), by and between APPROACH RESOURCES INC., a Delaware
corporation (the “Company”), and J. ROSS CRAFT, an individual residing in the State of
Texas (“Employee”).

RECITALS

     WHEREAS, Employee has been employed by the Company pursuant to an Employment Agreement between
the parties effective as of January 1, 2003 and amended by the First Amendment to the Employment
Agreement between the parties effective as of December 31, 2008 (together, the “Original
Employment Agreement”).

     WHEREAS, the parties desire to enter into this Agreement to amend, supersede, and fully
restate and replace the Original Employment Agreement.

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree to the following terms:

TERMS

	1.	 	Employment and Position. The Company shall continue to employ Employee as its
President and Chief Executive Officer, and Employee shall continue to serve in such
capacities, subject to the terms of this Agreement, and Employee shall report directly to the
Company’s Board of Directors (the “Board”).
	 
	2.	 	Duties. Employee shall perform in the capacities described in paragraph 1 and shall
have such duties, responsibilities, and authorities as may be reasonably assigned by the
Board, in its sole discretion, including without limitation duties, responsibilities, and
authorities for the Company’s Affiliates (as defined below). Employee shall devote his full
time, best efforts, abilities, knowledge, and experience to the Company’s business and affairs
as necessary to faithfully perform his duties, responsibilities, and authorities under this
Agreement.
	 
	3.	 	Place of Performance. Although Employee shall be expected to work at all Company
locations from time to time and travel as necessary to perform his duties, responsibilities,
and authorities under this Agreement, Employee’s primary work location shall be at the
Company’s corporate headquarters or within 25 miles from the Company’s corporate headquarters.
The Company shall provide without cost to Employee such office space, secretarial, and
administrative services, equipment, furniture, and furnishings as are suitable and appropriate
to Employee’s titles and positions.
	 
	4.	 	Term of Agreement.

	 	(a)	 	Initial Term. This Agreement shall continue in full force and effect
for the initial term described in this subparagraph 4(a) (the “Initial Term”),
commencing on the Effective Date and expiring on January 1, 2013 (the “Expiration
Date”), unless

 

 

	 	 	 	terminated before the Expiration Date in accordance with paragraph 6.

	 	(b)	 	Renewal Term. Notwithstanding subparagraph 4(a), the effectiveness of
this Agreement shall automatically be extended for an additional one-year term on the
Expiration Date and on each successive anniversary of the Expiration Date (each, a
“Renewal Date”), unless and until (i) either party gives written notice of
non-renewal at least 120 days prior to the Expiration Date or any Renewal Date; or (ii)
the Agreement is terminated earlier in accordance with paragraph 6 (each, a
“Renewal Term”).

	 	(c)	 	Term. The Initial Term and any Renewal Terms shall be referred to
below collectively as the “Term” of this Agreement.

	5.	 	Compensation and Employment Benefits. In consideration for the performance of
Employee’s duties, responsibilities, and authorities under this Agreement, the Company shall
provide Employee with the following compensation and employment benefits:

	 	(a)	 	Base Salary. From the Effective Date until changed as provided in this
subparagraph, the Company shall pay Employee an annual base salary of $410,000.00 (the
“Base Salary”), prorated for any partial period of employment. The Base Salary
shall be payable semi-monthly in accordance with the Company’s ordinary payroll
policies and procedures for employee compensation. During the Term, Employee’s Base
Salary shall be subject to an annual review and adjustment by the Board in its sole
discretion; provided, however, that once established at an increased specified
rate, at no time thereafter during the Term shall the Base Salary be reduced below the
increased amount set forth in this subparagraph.

	 	(b)	 	Bonus.

	 	(i)	 	Performance Plan. In addition to the Base Salary,
Employee shall be eligible to participate in the Company Performance Incentive
Plan or another bonus plan or program maintained by the Company or an Affiliate
(“Performance Plan”) to be determined annually by the Compensation
Committee of the Board in its sole discretion. For purposes of this Agreement,
“Bonus” means any annual bonus payable pursuant to the Performance Plan
to Employee.

	 	(ii)	 	Payout Option. The Bonus may be paid in cash, common
stock of the Company, or a combination thereof, as determined by the
Compensation Committee in its sole discretion; provided, however, that
the Compensation Committee may offer Employee the option to elect to receive
the value of any Bonus in cash, common stock, or a combination thereof, subject
to applicable law and such terms, conditions, and limitations as the
Compensation Committee may establish from time to time.

	 	(iii)	 	Discretionary Participation Level. The Compensation
Committee, in its sole

Amended and Restated Employment Agreement — Page 2

 

 

	 	 	 	discretion, shall determine Employee’s participation in
the Performance Plan and amount or range of the Bonus available to Employee
based on achievement of performance goals during the fiscal year or other
performance period.

	 	(iv)	 	Payment. Any Bonus or other discretionary compensation
payments due under this Agreement shall be paid to Employee at the time
specified by the Compensation Committee at the time any such Bonus or other
discretionary compensation payment is awarded, but in no event later than 21/2
months after the end of the taxable year in which any substantial risk of
forfeiture with respect to such Bonus or other payment lapses. Unless
otherwise specifically provided for in this Agreement or a plan, policy or
program of the Company, Employee must be employed by the Company or an
Affiliate on the date the Bonus or other payment is made to be entitled to
receive the Bonus or other payment.

	 	(c)	 	Employment Benefits. The Company shall provide Employee with the
employment benefits that the Company ordinarily provides to its executive-level
employees. Such employment benefits shall be governed by the applicable plan
documents, insurance policies, and/or employment policies, and may be modified,
suspended, revoked, or terminated in accordance with the terms of the applicable
documents or policies without violating this Agreement. In addition to those benefits,
the Company shall provide or cause to provide the following benefits upon satisfaction
by Employee of any eligibility requirements, subject to the following limitations:

	 	(i)	 	Sick-Leave Benefits and Supplemental Long-Term Disability
Insurance Premiums. To the extent made available to other employees of the
Company, and unless this Agreement is terminated pursuant to paragraph 6 in
which case no sick-leave benefits shall be payable, Employee shall be paid sick
leave benefits at his then prevailing Base Salary rate during his absence due
to illness or other incapacity up to a maximum of 180 days in any one-year
period. The Company shall also continue paying $350.00 per month for the
Company-provided supplemental long-term disability insurance policy covering
Employee on the Effective Date.

	 	(ii)	 	Vacations. The Company shall provide Employee with a
minimum of five weeks of paid vacation per calendar year during the Term,
prorated for the first calendar year of the Term. Unless the Company has
adopted a plan or policy pursuant to which some or all of such vacation may be
rolled over to the next succeeding year in which case only a maximum of five
weeks of paid vacation may be carried over, such vacation may not be carried
over from calendar year to calendar year and accrued unused vacation shall be
forfeited if not used by the end of the calendar year in which it was granted.
The Company shall provide Employee with all paid holidays ordinarily given by
the Company to its employees. Employee shall be paid for any accrued

Amended and Restated Employment Agreement — Page 3

 

 

	 	 	 	unused vacation should this Agreement terminate pursuant to paragraph 6.

	 	(d)	 	Reimbursement of Business Expenses. Employee may incur ordinary,
necessary, and reasonable business expenses in connection with the performance of his
duties, responsibilities, and authorities under this Agreement and for the promotion of
the Company’s business and activities during the Term, including but not limited to
expenses for necessary travel and entertainment and other items of expenses required in
the normal and routine course of Employee’s employment. The Company shall promptly
reimburse Employee from time to time for all such business expenses incurred pursuant
to and in conformity with this subparagraph and the policies and practices of the
Company relative to the reimbursement of business expenses. Notwithstanding the
foregoing, (i) the amount of expenses eligible for reimbursement during a calendar year
may not affect the expenses eligible for reimbursement in any other calendar year, (ii)
the reimbursement must be made on or before the last day of the calendar year following
the calendar year in which the expense was incurred, and (iii) the right to
reimbursement shall not be subject to liquidation or exchange for any other benefit.

	6.	 	Termination of Agreement. This Agreement may be terminated as follows; provided,
however, that any termination of this Agreement shall also constitute a termination of
Employee’s employment with the Company:

	 	(a)	 	Death. This Agreement shall terminate immediately upon Employee’s
death.

	 	(b)	 	Permanent Disability. This Agreement shall immediately terminate in
the event that Employee becomes Permanently Disabled. For purposes of this Agreement,
Employee shall be deemed to have become “Permanently Disabled” when (i) he
receives disability benefits under either Social Security or the Company’s long-term
disability plan, if any, (ii) the Board, 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 total period of 180 or more calendar days in any 12-month period) 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 120 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).

	 	(c)	 	With Cause. The Company shall be entitled to terminate this Agreement
immediately for any Cause.

	 	(i)	 	Definition of Cause. For purposes of this Agreement,
“Cause” shall be defined as follows:

Amended and Restated Employment Agreement — Page 4

 

 

	 	(A)	 	the willful and continued failure by Employee
substantially to perform his duties, responsibilities, or authorities
hereunder (other than any such failure resulting from Employee becoming
Permanently Disabled);

	 	(B)	 	the willful engaging by Employee in misconduct
that is materially injurious to the Company;

	 	(C)	 	any misconduct by Employee in the course and
scope of Employee’s employment under this Agreement, 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 personnel
policies, rules, or Code of Conduct;

	 	(D)	 	any material violation by Employee of this
Agreement; or

	 	(E)	 	any violation by Employee of any fiduciary duty
owed by Employee to the Company or its Affiliates.

	 	 	 	For purposes of this subparagraph, 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.

	 	(ii)	 	Limited Notice and Opportunity to Cure. If the Company
determines in its reasonable, good faith discretion that a cure is possible and
appropriate, the Company will give Employee written notice of the acts or
omissions constituting Cause and no termination of this Agreement shall be for
Cause unless and until Employee fails to cure such acts or omissions within 10
days following receipt of such written notice. If the Company determines in
its reasonable, good faith discretion that a cure is not possible and
appropriate, Employee shall have no notice or cure rights before this Agreement
is terminated for Cause.

	 	(d)	 	Without Cause. The Company shall be entitled to terminate this
Agreement for any reason other than death, Employee becoming Permanently Disabled, or
Cause, at any time by providing 90 days written notice to Employee that the Company is
terminating the Agreement without Cause.

	 	(e)	 	With Good Reason. Employee shall be permitted to terminate this
Agreement for any Good Reason.

	 	(i)	 	Definition of Good Reason. For purposes of this
Agreement, “Good Reason” shall exist in the event any of the following
actions are taken without Employee’s consent:

Amended and Restated Employment Agreement — Page 5

 

 

	 	(A)	 	a material diminution in Employee’s Base
Salary, duties, responsibilities, or authorities;

	 	(B)	 	a requirement that Employee report to an
officer or employee other than the Board (or similar governing body);

	 	(C)	 	a material relocation of Employee’s primary
work location more than 25 miles away from the Company’s corporate
headquarters; or

	 	(D)	 	any other action or inaction by the Company
that constitutes a material breach by the Company of its obligations
under this Agreement.

	 	(ii)	 	Notice and Opportunity to Cure. To exercise his right
to terminate for Good Reason, Employee must provide written notice to the
Company of his belief that Good Reason exists within 90 days of the initial
existence of the condition(s) giving rise to Good Reason, and that notice shall
describe the condition(s) believed to constitute Good Reason. The Company
shall have 30 days to remedy the Good Reason condition(s). If not remedied
within that 30-day period, Employee may terminate this Agreement; provided,
however, that such termination must occur no later than 180 days after the
date of the initial existence of the condition(s) giving rise to the Good
Reason; otherwise, Employee is deemed to have accepted the condition(s), or the
Company’s correction of such condition(s), that may have given rise to the
existence of Good Reason.

	 	(f)	 	Without Good Reason. Employee shall be entitled to terminate this
Agreement without Good Reason at any time by providing 120 days written notice to
Company that Employee is terminating the Agreement without Good Reason.

	 	(g)	 	Expiration of Term. Either party may terminate this Agreement by
providing a proper notice of non-renewal in accordance with subparagraph 4(b).

	 	(h)	 	Change in Control. This Agreement shall terminate immediately upon a
Change in Control in accordance with subparagraph 8(b).

Amended and Restated Employment Agreement — Page 6

 

 

	7.	 	Payments and Benefits Due Upon Termination.

	 	(a)	 	Accrued Obligations. Upon any termination of this Agreement, the
Company shall have no further obligation to Employee under this Agreement or otherwise,
except as expressly provided in this Agreement and except for (i) payment to Employee
of all earned but unpaid Base Salary through the Date of Termination, prorated as
provided in subparagraph 5(a), (ii) payment to Employee, in accordance with the terms
of the applicable benefit plan of the Company or to the extent required by law, of any
benefits to which Employee has a vested entitlement as of the Date of Termination
(other than any entitlement to severance or separation pay, if any), (iii) payment to
Employee of any accrued unused vacation; and (iv) payment to Employee of any approved
but un-reimbursed business expenses incurred in accordance with applicable Company
policy and the terms of this Agreement. The payments and benefits described in
(i)-(iv) shall be referred to in this Agreement as the “Accrued Obligations”
and shall be paid in accordance with the Company’s plans and policies and applicable
law.

	 	(b)	 	Termination by the Company Due to Death or Permanent Disability. If
this Agreement is terminated due to death or Employee becoming Permanently Disabled,
then the Company shall have no further obligations to Employee under this Agreement or
otherwise, except the Company shall provide the Accrued Obligations to Employee in
accordance with subparagraph 7(a) in addition to the following severance payments and
benefits payable to Employee or the personal representative of Employee’s estate, as
applicable:

	 	(i)	 	on the earliest date between 20 and 60 days following
Employee’s Separation from Service when the Release described in subparagraph
10(a) has become fully enforceable and irrevocable, a lump sum in cash equal to
100% of his Base Salary in effect as of such Separation from Service; and

	 	(ii)	 	on or before the 60th day following Employee’s Separation from
Service, a lump sum in cash equal to 100% of the average of any Bonuses
received by Employee from the Company in the two years immediately before the
Separation from Service.

	 	(c)	 	Termination by the Company for Cause or by Employee Without Good
Reason. Upon termination of this Agreement by (i) the Company for Cause in
accordance with subparagraph 6(c) or (ii) Employee without Good Reason in accordance
with subparagraph 6(f), the Company shall have no further obligations to Employee under
this Agreement or otherwise, except the Company shall provide the Accrued Obligations
to Employee in accordance with subparagraph 7(a).

	 	(d)	 	Termination by the Company without Cause or by Employee for Good
Reason. If this Agreement is terminated by (i) the Company without Cause in
accordance with subparagraph 6(d) or (ii) Employee for Good Reason in accordance with

Amended and Restated Employment Agreement — Page 7

 

 

	 	 	 	subparagraph 6(e), then the Company shall have no further obligations to Employee under
this Agreement or otherwise, except the Company shall provide the Accrued Obligations
to Employee in accordance with subparagraph 7(a) in addition to the following severance
payments and benefits:

	 	(i)	 	on the earliest date between 20 and 60 days following
Employee’s Separation from Service when the Release described in subparagraph
10(a) has become fully enforceable and irrevocable, a lump sum in cash equal to
200% of the greater of (A) the then-current Base Salary, and (B) the Base
Salary at any time within two years immediately before the Separation from
Service; and

	 	(ii)	 	on the date that annual bonuses are paid to other executive
employees of the Company, but in no event later than 21/2 months after the end of
the taxable year in which any substantial risk of forfeiture with respect to
such bonuses lapses, the Bonus that Employee would have received based on
achievement of performance goals under subparagraph 5(b) had this Agreement not
terminated for the year containing the Date of Termination; and

	 	(iii)	 	commencing on the date of Employee’s Separation from Service
and continuing for a period of 24 months (or 12 months if Employee terminates
with Good Reason) or, if less, the period ending on the date Employee is no
longer entitled to continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), or similar state law,
the Company shall reimburse Employee on a monthly basis for the premium costs
of continuing all insurance benefits then applicable to Employee and his
immediate family under any employee welfare benefit plan maintained by the
Company as of the Effective Date and through the Separation from Service,
including without limitation health, dental, supplemental long-term disability,
and life insurance benefits; provided, however, that if such continued
coverage after the Separation from Service is not permitted under such Company
plans or applicable law, then the Company shall either (A) provide Employee
with substantially similar benefits through an insurance policy or policies or
(B) if it is not commercially reasonable to provide such an insurance policy or
policies and permitted under applicable law, provide Employee within 60 days
following his Separation from Service with a lump sum in cash equal to the
premiums paid by the Company in the 24 months before the Separation from
Service to provide Employee with such insurance benefits.

	 	(e)	 	Expiration of the Term. If this Agreement is terminated by Employee
providing a proper notice of non-renewal in accordance with subparagraph 4(b), the
Company shall have no further obligations to Employee under this Agreement or
otherwise, except the Company shall provide the Accrued Obligations to Employee in
accordance with subparagraph 7(a). If this Agreement is terminated by the Company
providing a proper notice of non-renewal in accordance with subparagraph 4(b), then

Amended and Restated Employment Agreement — Page 8

 

 

	 	 	 	the
Company shall have no further obligations to Employee under this Agreement or
otherwise, except the Company shall provide the Accrued Obligations to Employee in
accordance with subparagraph 7(a) in addition to the following severance payments and
benefits:

	 	(i)	 	on the earliest date between 20 and 60 days following
Employee’s Separation from Service when the Release described in subparagraph
10(a) has become fully enforceable and irrevocable, a lump sum in cash equal to
200% of the greater of (A) the then-current Base Salary, and (B) the Base
Salary at any time within two years immediately before the Separation from
Service; and

	 	(ii)	 	on the date that annual bonuses are paid to other executive
employees of the Company, but in no event later than 21/2 months after the end of
the taxable year in which any substantial risk of forfeiture with respect to
such bonuses lapses, the Bonus that Employee would have received based on
achievement of performance goals under subparagraph 5(b) had this Agreement not
terminated for the year containing the Date of Termination multiplied by a
fraction, the numerator of which is the number of days during the period
beginning the first day of the performance period containing the Date of
Termination and ending on the Date of Termination, and the denominator of which
is the number of days in the applicable performance period; and

	 	(iii)	 	commencing on the date of Employee’s Separation from Service
and continuing for a period of 24 months or, if less, the period ending on the
date Employee is no longer entitled to continuation coverage under COBRA or
similar state law, the Company shall reimburse Employee on a monthly basis for
the premium costs of continuing all insurance benefits then applicable to
Employee and his immediate family under any employee welfare benefit plan
maintained by the Company as of the Effective Date and through the Separation
from Service, including without limitation health, dental, supplemental
long-term disability, and life insurance benefits; provided, however,
that if such continued coverage after the Separation from Service is not
permitted under such Company plans or applicable law, then the Company shall
either (A) provide Employee with substantially similar benefits through an
insurance policy or policies or (B) if it is not commercially reasonable to
provide such an insurance policy or policies and permitted under applicable
law, provide Employee within 60 days following his Separation from Service with
a lump sum in cash equal to the premiums paid by the Company in the 24 months
before the Separation from Service to provide Employee with such insurance
benefits.

	8.	 	Change in Control. The parties acknowledge that Employee has entered into this
Agreement based on his confidence in the current stockholders of the Company and the support
of the Board. Accordingly, if the Company should undergo a Change in Control the parties
agree as follows:

Amended and Restated Employment Agreement — Page 9

 

 

	 	(a)	 	Definitions.

	 	(i)	 	Affiliate: except as otherwise provided in this
Agreement, for purposes of this Agreement, Affiliate means, with respect to the
Company, any person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
the Company; provided, however, that a natural person shall not be
considered an Affiliate.

	 	(ii)	 	Change in Control: a Change in Control means (a) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the
Company’s common stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company’s common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, (b) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all, of the assets of the Company and the its subsidiaries to any
other person or entity (other than an Affiliate of the Company), (c) the
stockholders of the Company approve any plan or proposal for liquidation or
dissolution of the Company, (d) any person or entity (other than Yorktown
Energy Partners V, L.P., or any of its affiliated funds), including a
“group” as contemplated by Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended, acquires or gains ownership or control (including,
without limitation, power to vote) of more than 50% of the outstanding shares
of the Company’s voting stock (based upon voting power) or (e) as a result of
or in connection with a contested election of directors, the persons who were
directors of the Company before such election shall cease to constitute a
majority of the Board. Notwithstanding the foregoing, a Change of Control
shall not include a public offering of the Company’s common stock or a
transaction with its sole purpose to change the state of the Company’s
incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction.

	 	(iii)	 	CIC Effective Date: means the date upon which a
Change of Control occurs.

	 	(iv)	 	Code: means Internal Revenue Code of 1986, as amended
from time to time.

	 	(b)	 	Change in Control Benefits and Payments. If there is a Change in
Control and Employee is employed by the Company or an Affiliate on the CIC Effective
Date, then this Agreement shall terminate, regardless of whether Employee experiences a
Separation from Service, and the Company shall have no further obligation to Employee
under this Agreement or otherwise, except the Company shall provide

Amended and Restated Employment Agreement — Page 10

 

 

	 	 	 	Employee with the
Accrued Obligations in accordance with subparagraph 7(a) plus the following Change in
Control payments and benefits in lieu of any severance payments or benefits that may
otherwise be due under subparagraph 7(d):

	 	(i)	 	on the earliest date between 20 and 60 days following the CIC
Effective Date when the Release described in subparagraph 10(a) has become
fully enforceable and irrevocable, a lump sum in cash equal to 200% of the
greater of (A) the then-current Base Salary, and (B) the Base Salary at any
time within two years immediately before the CIC Effective Date; and

	 	(ii)	 	on or before the 60th day following the CIC Effective Date, a
lump sum in cash equal to 200% of the average of any Bonuses received by
Employee from the Company in the two years before the CIC Effective Date; and

	 	(iii)	 	commencing on the date of Employee’s Separation from Service
and continuing for a period of 24 months or, if less, the period ending on the
date Employee is no longer entitled to continuation coverage under COBRA or
similar state law, the Company shall reimburse Employee on a monthly basis for
the premium costs of continuing all insurance benefits then applicable to
Employee and his immediate family under any employee welfare benefit plan
maintained by the Company as of the Effective Date and through the Separation
from Service, including without limitation health, dental, supplemental
long-term disability, and life insurance benefits; provided, however,
that if such continued coverage after the Separation from Service is not
permitted under such Company plans or applicable law, then the Company shall
either (A) provide Employee with substantially similar benefits through an
insurance policy or policies or (B) if it is not commercially reasonable to
provide such an insurance policy or policies and permitted under applicable
law, provide Employee within 60 days following his Separation from Service with
a lump sum in cash equal to the premiums paid by the Company in the 24 months
before the Separation from Service to provide Employee with such insurance
benefits.

	 	(c)	 	Effect of a Change in Control Following Date of Termination.
Notwithstanding any contrary provision in this Agreement, if this Agreement is
terminated by the Company without Cause in accordance with subparagraph 6(d) or by
Employee for Good Reason in accordance with subparagraph 6(e), and a CIC Effective Date
occurs within 120 days following the Date of Termination, then, in addition to the
severance payments and benefits provided to Employee in accordance with subparagraph
7(d), the Company shall provide Employee (or to Employee’s estate in the event of his
death following the Date of Termination) with the following Change in Control payments:

	 	(i)	 	on or before the 60th day following the CIC Effective Date, a
lump sum in cash equal to the excess, if any, of (A) the Change of Control
payment that

Amended and Restated Employment Agreement — Page 11

 

 

	 	 	 	Employee would have been entitled to receive under subparagraph
8(b)(i) if he was employed by the Company or an Affiliate on the CIC Effective
Date, over (B) the severance payment payable to Employee in accordance with
subparagraph 7(d)(i); and

	 	(ii)	 	on or before the 60th day following the CIC Effective Date, a
lump sum in cash equal to the excess, if any, of (A) the Change of Control
payment that Employee would have been entitled to receive under subparagraph
8(b)(ii) if he was employed by the Company or an Affiliate on the CIC Effective
Date, over (B) the severance payment payable to Employee in accordance with
subparagraph 7(d)(ii).

	9.	 	Parachute Payment Limitation. Notwithstanding any contrary provision in this
Agreement, if Employee is a “disqualified individual” (as defined in Section 280G of
the Code), and the Change in Control payments and benefits described in paragraph 8, together
with any other payments which Employee has the right to receive from the Company, would
constitute a “parachute payment” (as defined in Section 280G of the Code), the
payments and benefits provided hereunder shall be either (a) reduced (but not below zero) so
that the aggregate present value of such payments and benefits received by Employee from the
Company shall be $1.00 less than three times Employee’s “base amount” (as defined in
Section 280G of the Code) and so that no portion of such payments received by Employee shall
be subject to the excise tax imposed by Section 4999 of the Code, or (b) paid in full,
whichever produces the better net after-tax result for Employee (taking into account any
applicable excise tax under Section 4999 of the Code and any applicable income tax). The
determination as to whether any such reduction in the amount of the payments and benefits is
necessary shall be made by the Company in good faith and such determination shall be
conclusive and binding on Employee. If a reduced payment is made to Employee pursuant to
clause (a) above and through error or otherwise that payment, when aggregated with other
payments from the Company (or its affiliates) used in determining if a parachute payment
exists, exceeds $1.00 less than three times Employee’s base amount, Employee shall immediately
repay such excess to the Company upon notification that an overpayment has been made.

	10.	 	Conditions on Receipt of Severance and Change in Control Benefits.

	 	(a)	 	Compliance with Post-Termination Obligations and Execution and
Non-Revocation of General Release Agreement. Notwithstanding any other provision
in this Agreement, the Company’s payment to Employee of the severance payments and
benefits described in subparagraphs 7(b)(i), 7(d)(i)-(ii), and 7(e)(i) or the Change in
Control payments and benefits described in subparagraphs 8(b)(i)-(ii) and 8(c)(i)-(ii)
is subject to the condition that he complies with all applicable covenants under
paragraphs 12, 13, 14, and 15 of this Agreement. The Company shall have the right to
cease payment of any such payments or benefits, as well as to seek restitution of any
such payments or benefits already paid, if such covenants have been breached by
Employee but all other provisions of this Agreement shall remain in full force and
effect. The Company’s payment of such payments or benefits to Employee is also

Amended and Restated Employment Agreement — Page 12

 

 

	 	 	 	subject to the condition that, within 55 days after the Date of Termination, he
execute, deliver to the Company, and not revoke as permitted by applicable law a
General Release Agreement in a form reasonably acceptable to the Company that fully and
finally releases and waives any and all claims, demands, actions, and suits whatsoever
which he has or may have against the Company and its Affiliates, whether under this
Agreement or otherwise, that arose before the General Release Agreement was executed
(the “Release”). For purposes of this Agreement, the Release shall not become
fully enforceable and irrevocable until Employee has timely executed the Release and
not revoked his acceptance of the Release within seven days after its execution.

	 	(b)	 	Separation from Service Requirement. Notwithstanding any other
provision of this Agreement, Employee shall be entitled to the severance benefits and
payments in subparagraphs 7(b), 7(d), or 7(e) only if Employee’s termination of
employment constitutes a Separation from Service. For purposes of this Agreement,
“Separation from Service” means separation from service (within the meaning of
Code Section 409A and the regulations and other guidance promulgated thereunder
(“Section 409A”)) with the group of employers that includes the Company and
each of its Affiliates. For this purpose, “Affiliate” means any incorporated
or unincorporated trade or business or other entity or person, other than the Company,
that along with the Company is considered a single employer under Code Section 414(b)
or Code Section 414(c), but (i) in applying Code Section 1563(a)(1), (2), and (3) for
the purposes of determining a controlled group of corporations under Code Section
414(b), the phrase “at least 50 percent” shall be used instead of the phrase “at least
80 percent” in each place the phrase “at least 80 percent” appears in Code Section
1563(a)(1), (2), and (3), and (ii) in applying Treasury Regulation Section 1.414(c)-2
for the purposes of determining trades or businesses (whether or not incorporated) that
are under common control for the purposes of Code Section 414(c), the phrase “at least
50 percent” shall be used instead of the phrase “at least 80 percent” in each place the
phrase “at least 80 percent” appears in Treasury Regulation Section 1.414(c)-2.

	11.	 	Other Provisions Relating to Termination.

	 	(a)	 	Notice of Termination. Any termination of this Agreement by the
Company or by Employee (other than termination because of death) shall be communicated
by written Notice of Termination to the other party thereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice that indicates the
specific termination provision in this Agreement relied upon and sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated; provided, however, that any
failure to provide such detail shall not delay the effectiveness of the termination.

	 	(b)	 	Date of Termination. For purposes of this Agreement, “Date of
Termination” shall mean (i) if Employee’s employment is terminated by death, the
date of death; (ii) if

Amended and Restated Employment Agreement — Page 13

 

 

	 	 	 	Employee’s employment is terminated because of Employee becoming Permanently
Disabled, then 60 days after Notice of Termination is given (provided that Employee
shall not have returned to the performance of his duties, responsibilities, and
authorities on a full-time basis during such 60-day period); (iii) if (A) Employee’s
employment is terminated by the Company with or without Cause or (B) Employee’s
employment is terminated by Employee with or without Good Reason, then in each case
the date specified in the Notice of Termination, which shall comply with the
applicable notice requirements in paragraph 6; and (iv) if this Agreement is not
renewed, the last date of the Initial Term or the Renewal Term as applicable.
	 
	 	(c)	 	Mitigation. Employee shall not be required to mitigate the amount of
any payment or benefits provided for in paragraphs 7 or 8 by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for therein be
reduced by any compensation earned by Employee as the result of employment by another
employer after the Date of Termination, or otherwise.
	 
	 	(d)	 	Interest. Until paid, all past due amounts required to be paid by the
Company under any provision of this Agreement shall bear interest at 8% per annum
compounded daily.

	12.	 	Business Opportunities and Intellectual Property.

	 	(a)	 	Prompt Disclosure Required. Employee shall promptly disclose to the
Board in writing all Business Opportunities and Intellectual Property.
	 
	 	(b)	 	Definition of Business Opportunities. For purposes of this Agreement,
“Business Opportunities” shall mean all business ideas, prospects, proposals or
other opportunities pertaining to the lease, acquisition, exploration, production,
gathering or marketing of hydrocarbons and related products and the exploration
potential of geographical areas on which hydrocarbon exploration prospects are located,
that are developed by Employee before or during the Term or originated by any third
party and brought to the attention of Employee before or during the Term, together with
information relating thereto (including, without limitation, geological and seismic
data and interpretations thereof, whether in the form of maps, charts, logs,
seismographs, calculations, summaries, memoranda, opinions, or other written or charted
means).
	 
	 	(c)	 	Definition of Intellectual Property. For purposes of this Agreement,
“Intellectual Property” shall mean all ideas, inventions, discoveries,
processes, designs, methods, substances, articles, computer programs, and improvements
(including, without limitation, enhancements to, or further interpretation or
processing of, information that was in the possession of Employee prior to the date of
this Agreement), whether or not patentable or copyrightable, that do not fall within
the definition of Business

Amended and Restated Employment Agreement — Page 14

 

 

	 	 	 	Opportunities, that Employee discovers, conceives, invents, creates, or
develops, alone or with others, before or during the Term, if such discovery,
conception, invention, creation, or development (i) occurs in the course of
Employee’s employment with the Company or its Affiliates or (ii) occurs with the use
of any time, materials, or facilities of the Company or its Affiliates.

	13.	 	Non-Compete Obligations During Term. During the Term and except as provided below or
as otherwise permitted by the Company (acting upon the instruction of the Board):

	 	(a)	 	Employee shall not, other than through the Company or its Affiliates, engage or
participate in any manner, whether directly or indirectly through any family member or
as an employee, employer, consultant, agent, principal, partner, more than one percent
shareholder, officer, director, licensor, lender, lessor, or in any other individual or
representative capacity, in any business or activity that is engaged in leasing,
acquiring, exploring, developing or producing hydrocarbons and related products; and
	 
	 	(b)	 	all investments made by Employee (whether in his own name or in the name of any
family members or made by Employee’s controlled affiliates), which relate to the lease,
acquisition, exploration, development or production of hydrocarbons and related
products shall be made solely through the Company or its Affiliates; and Employee shall
not (directly or indirectly through any family members), and shall not permit any of
his controlled affiliates to: (i) invest or otherwise participate alongside the Company
or its Affiliates in any Business Opportunities or (ii) invest or otherwise participate
in any business or activity relating to a Business Opportunity, regardless of whether
the Company or any of its Affiliates ultimately participates in such business or
activity;

	 	 	provided, however, that this paragraph shall not apply to (x) the existing personal
oil and gas investments owned by Employee, his family members, and his controlled affiliates
as of the Effective Date of the Original Employment Agreement (the “Existing Personal
Investments”); (y) future expenditures made by Employee and his family members and his
controlled affiliates that are required to maintain, but not increase, their respective
current ownership interests in the Existing Personal Investments, excluding however, any
expenditure to participate in the acquisition, exploration, or development of any acreage
that is not currently included in the Existing Personal Investments as of the Effective
Date; and (z) any opportunity that is first offered to, and subsequently declined by, the
Company (acting through the Board).
	 
	14.	 	Confidentiality Obligations.

	 	(a)	 	Confidentiality and Non-Disclosure Acknowledgments and Obligations.
Employee hereby acknowledges that all trade secrets and confidential or proprietary
information of the Company and its Affiliates (collectively referred to herein as
“Confidential
Information”) constitute valuable, special and unique assets of the

Amended and Restated Employment Agreement — Page 15

 

 

	 	 	 	business of the Company and its Affiliates, and that access to and knowledge of such
Confidential Information is essential to the performance of Employee’s duties,
responsibilities, and authorities under this Agreement. During the Term and the
one-year period following the Date of Termination, Employee shall hold the
Confidential Information in strict confidence and shall not publish, disseminate, or
otherwise disclose, directly or indirectly, to any person other than the Company and
its Affiliates and their respective officers, directors, and employees, any
Confidential Information or use any Confidential Information for Employee’s own
personal benefit or for the benefit of anyone other than the Company and its
Affiliates. The Company agrees to provide previously undisclosed Confidential
Information to Employee in exchange for Employee’s agreement to keep such
Confidential Information, and any Confidential Information to which Employee has
already become privy, in strict confidence as provided in this Agreement.
	 
	 	(b)	 	Confidential Information Inclusions and Exclusions. For purposes of
this Agreement, Confidential Information includes, without limitation, any information
heretofore or hereafter acquired, developed, or used by the Company or its Affiliates
relating to Business Opportunities or Intellectual Property or other geological,
geophysical, economic, financial, or management aspects of the business, operations,
properties, or prospects of the Company or its Affiliates whether oral or in written
form in business records, but shall exclude any information that (i) has become part of
common knowledge or understanding in the oil and gas industry or otherwise in the
public domain (other than from disclosure by Employee in violation of this Agreement),
or (ii) was rightfully in the possession of Employee, as shown by Employee’s records,
prior to the Effective Date (including Employee’s method of selecting, purchasing, and
reworking oil and gas properties, which the Company and Employee may utilize subsequent
to the Term (subject to the other limitations contained in this Agreement));
provided, however, that Employee shall provide to the Company copies of all
information described in clause (ii); and provided further, however, that this
subparagraph shall not be applicable to the extent Employee is required to testify in a
judicial or regulatory proceeding pursuant to the order of a judge or administrative
law judge after Employee requests that such Confidential Information be preserved.

	15.	 	Obligations After Date of Termination.

	 	(a)	 	Non-Compete Obligations. The purposes of paragraph 14 and this
paragraph 15 are to protect the Company from unfair loss of goodwill and business
advantage and to shield Employee from pressure to use or disclose Confidential
Information or to trade on the goodwill belonging to the Company. Accordingly, during
the Post-Termination Non-Compete Term, Employee shall not engage or participate in any
manner, whether directly or indirectly through any family member or as an employee,
employer, consultant, agent, principal, partner, shareholder, officer, director,
licensor, lender, lessor, or in any other individual or representative capacity, in any
business or
activity that is in engaged in leasing, acquiring, exploring,

Amended and Restated Employment Agreement — Page 16

 

 

	 	 	 	developing or producing hydrocarbons and related products within the boundaries of,
or within a four mile radius of the boundaries of, any mineral property interest of
the Company or its Affiliates (including, without limitation, a mineral lease,
overriding royalty interest, production payment, net profits interest, mineral fee
interest, or option or right to acquire any of the foregoing, or an area of mutual
interest as designated pursuant to contractual agreements between the Company or its
Affiliates and any third party) or any other property on which the Company or its
Affiliates have an option, right, license, or authority to conduct or direct
exploratory activities, such as three dimensional seismic acquisition or other
seismic, geophysical and geochemical activities (but not including any preliminary
geological mapping), as of the Date of Termination or as of the end of the six-month
period following such Date of Termination; provided, however, that this
subparagraph shall not preclude Employee from making personal investments in
securities of oil and gas companies that are registered on a national stock
exchange, if the aggregate amount owned by Employee and all family members and
affiliates does not exceed 1% of such company’s outstanding securities.
	 
	 	(b)	 	Definition of Post-Termination Non-Compete Term. For purposes of this
Agreement, the “Post-Termination Non-Compete Term” is the one-year period
following the Date of Termination; provided, however, that the Post-Termination
Non-Compete Term shall be reduced to the six-month period following the Date of
Termination if this Agreement is terminated either (i) by Employee with Good Reason in
accordance with subparagraph 6(e) or (ii) on account of a Change in Control in
accordance with subparagraph 8(b).
	 
	 	(c)	 	Non-Solicitation Obligations. Employee shall not, during the Post
Termination Non-Compete Term, solicit, entice, persuade, or induce, directly or
indirectly, any employee (or person who within the preceding 90 days was an employee)
of the Company or its Affiliates to (i) terminate his or her employment by such person,
(ii) refrain from extending or renewing the same (upon the same or new terms), (iii)
refrain from rendering services to or for such person, (iv) become employed by or to
enter into contractual relations with any Persons other than such person, or (v) enter
into a relationship with a competitor of the Company or its Affiliates.
	 
	 	(d)	 	Discretionary Monthly Non-Compete Payments. The Company may, in its
sole discretion, elect to continue on the Company’s regularly scheduled paydays
Employee’s Base Salary in effect immediately before the Date of Termination during
each month of the Post-Termination Non-Compete Term (the “Monthly Non-Compete
Payments”). The Company shall provide written notice to Employee no later than 10
days after the Date of Termination or on or before the Company’s first regularly
scheduled payday following the Date of Termination, whichever is sooner, of its
election to make any Monthly Non-Compete Payments. If the Company does elect to make
the Monthly Non-Compete Payments, the Company shall not be
obligated to continue making any such Monthly Non-Compete Payments and shall be
entitled in its sole discretion to cease making the Monthly Non-Compete Payments at

Amended and Restated Employment Agreement — Page 17

 

 

	 	 	 	any time and for any reason but only upon at least 30 days’ written notice to
Employee, and the Company shall have no further obligation to Employee under this
subparagraph. If the Company starts but ceases making the Monthly Non-Compete
Payments, then, notwithstanding any contrary provision in this Agreement, the
Post-Termination Non-Compete Term for purpose of subparagraph 15(a) shall expire on
the last day of the month in which the final Monthly Non-Compete Payment was made by
the Company.

	16.	 	Common Law Duties. Employee acknowledges and agrees that his restrictive covenants
in paragraphs 12, 13, 14, and 15 of this Agreement shall supplement, rather than supplant, his
common law duties of confidentiality and loyalty owed to the Company.
	 
	17.	 	Survival of Covenants; Enforcement of Covenants; and Remedies.

	 	(a)	 	Survival of Covenants. Employee acknowledges and agrees that his
covenants in paragraphs 12, 13, 14, and 15 of this Agreement shall survive the
termination of this Agreement and shall be construed as agreements independent of any
other provision of this Agreement, and the existence of any Dispute of Employee with or
against the Company or its Affiliates whether predicated on this Agreement or otherwise
shall not constitute a defense to the enforcement by the Company of those covenants.
	 
	 	(b)	 	Enforcement of Covenants. Employee acknowledges and agrees that his
covenants in paragraphs 12, 13, 14, and 15 of this Agreement are ancillary to the
otherwise enforceable agreements to provide Employee with Confidential Information and
are supported by independent, valuable consideration. Employee further acknowledges
and agrees that the limitations as to time, geographical area, and scope of activity to
be restrained by those covenants are reasonable and acceptable to Employee and do not
import any greater restraint than is reasonably necessary to protect the Company’s
goodwill, Confidential Information, and other legitimate business interests. Employee
further agrees that if, at some later date, a court of competent jurisdiction
determines that any of the covenants in paragraphs 12, 13, 14, or 15 are unreasonable,
any such covenants shall be reformed by the court and enforced to the maximum extent
permitted under the law.
	 
	 	(c)	 	Remedies. In the event of breach or threatened breach by Employee of
any of his covenants in paragraphs 12, 13, 14, or 15 of this Agreement, the Company
shall be entitled to equitable relief by temporary restraining order, temporary
injunction, or permanent injunction or otherwise, in addition to other legal and
equitable relief to which it may be entitled, including any and all monetary damages
that the Company may incur as a result of such breach, violation, or threatened breach
or violation. The Company may pursue any remedy available to it concurrently or
consecutively in any order as to any breach, violation, or threatened breach or
violation, and the pursuit of one of such remedies at any time shall not be deemed an
election of remedies or waiver of the right to pursue any other of such remedies as to
such breach, violation,
or threatened breach or violation, or as to any other breach, violation, or threatened breach or violation.

Amended and Restated Employment Agreement — Page 18

 

 

	18.	 	Successors and Assigns. This Agreement may not be assigned by the Company to any
other person or entity other than an Affiliate of the Company without Employee’s written
consent; provided, however, that in the event of a Change in Control, the Company
shall cause the surviving entity in any such transaction to assume the Company’s obligations
under paragraphs 7 and 8 to the extent such obligations have not yet been fully performed.
Employee’s duties, responsibilities, authorities, compensation, and benefits under this
Agreement are personal to Employee and may not be assigned to any person or entity without
written consent from the Board. In the event of Employee’s death, this Agreement shall be
enforceable by Employee’s estate, executors, or legal representatives. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective heirs, legal
representatives, successors, and permitted assigns.
	 
	19.	 	Representations of Employee. Employee hereby represents and warrants that he has not
previously assumed any obligations inconsistent with those in this Agreement. Employee
further represents and warrants that he has entered into this Agreement pursuant to his own
initiative and that the Company did not induce him to execute this Agreement in contravention
of any existing commitments. Employee further acknowledges that the Company has entered into
this Agreement in reliance upon the foregoing representations of Employee.
	 
	20.	 	Dispute Resolution. The parties agree to the following dispute resolution terms:

	 	(a)	 	Definition of Dispute. Any controversy, claim, complaint, cause of
action, or similar proceeding, whether based on statute, contract, common law,
negligence, tort, misrepresentation, or any other legal theory, arising out of or
relating to this Agreement or Employee’s employment with the Company (a
“Dispute”), shall be resolved solely in accordance with the terms of this
paragraph; provided, however, that the term Dispute shall not include
Employee’s claims for workers’ compensation or unemployment compensation benefits
(although any claim asserted under Ch. 451 of the Texas Labor Code shall be considered
a Dispute subject to dispute resolution under this paragraph).
	 
	 	(b)	 	Mediation. If a Dispute cannot be settled by good faith negotiation
between the parties, the parties shall submit the Dispute to nonbinding mediation as
soon as reasonably possible after the Dispute arose. If complete agreement cannot be
reached within five calendar days of submission to mediation, either party may file a
civil action against the other party in any court of competent jurisdiction permitted
under paragraph 26.
	 
	 	(c)	 	Waiver of Right to Jury Trial. NOTWITHSTANDING ANY OTHER PROVISION IN
THIS AGREEMENT, THE PARTIES SHALL, AND HEREBY DO,
IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE. IN
ADDITION, EMPLOYEE SHALL, AND HEREBY DOES,

Amended and Restated Employment Agreement — Page 19

 

 

	 	 	 	IRREVOCABLY WAIVE THE RIGHT TO PARTICIPATE IN ANY CLASS OR COLLECTIVE ACTION
WITH RESPECT TO ANY DISPUTE.

	21.	 	Attorneys’ Fees and Other Costs. If either party breaches this Agreement, or if a
Dispute arises between the parties based on or involving this Agreement, the party that
enforces its rights under this Agreement against the breaching party, or that prevails in the
resolution of such Dispute, shall be entitled to recover from the other party its reasonable
attorneys’ fees, court costs, and expenses incurred in enforcing such rights or resolving such
Dispute. For purposes of this paragraph, the finder of fact shall be requested to answer
affirmatively as to whether a party prevailed in order to recoup attorneys’ fees and other
costs pursuant to this paragraph.
	 
	22.	 	Entire Agreement. This Agreement constitutes the entire agreement between the
parties concerning its subject matters and supersedes all prior and contemporaneous agreements
and understandings, both written and oral, between the parties with respect to its subject
matters, including without limitation the Original Employment Agreement. Employee agrees that
the Company has not made any promise or representation to him concerning this Agreement not
expressed in this Agreement, and that, in signing this Agreement, he is not relying on any
prior oral or written statement or representation by the Company but is instead relying solely
on his own judgment and his legal and tax advisors, if any.
	 
	23.	 	Amendment of Agreement. This Agreement may not be modified or amended in any respect
except by an instrument in writing signed by the party against whom such modification or
amendment is sought to be enforced. Notwithstanding the previous sentence, the Company may
modify or amend this Agreement in its sole discretion at any time without the further consent
of the Employee in any manner necessary to comply with applicable law and regulations or the
listing or other requirements of any stock exchange upon which the Company is listed. No
modification or amendment may be enforced against the Company unless such modification or
amendment is in writing and signed by the Board.
	 
	24.	 	Waiver. The waiver by either party of a breach of any term of this Agreement shall
not operate or be construed as a waiver of a subsequent breach of the same provision by either
party or of the breach of any other term or provision of this Agreement.
	 
	25.	 	Severability. If any provision of this Agreement is held to be illegal, invalid, or
unenforceable, (a) this Agreement shall be considered divisible, (b) such provision shall be
deemed inoperative to the extent it is deemed illegal, invalid, or unenforceable, and (c) 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, then such
provision shall be deemed to be so limited and shall be enforceable to the maximum extent
permitted by applicable law.
	 
	26.	 	Governing Law; Venue. This Agreement shall be governed by the laws of the State of
Texas, without regard to its conflict-of-laws principles. Employee and the Company hereby
irrevocably consent to the binding and exclusive venue for any Dispute between the parties

Amended and Restated Employment Agreement — Page 20

 

 

	 	 	arising out of or related to this Agreement being in the state or federal court of competent
jurisdiction that regularly conducts proceedings in Tarrant County, Texas. Nothing in this
Agreement, however, precludes Employee or the Company from seeking to remove a civil action
from any state court to federal court.
	 
	27.	 	Notices. All notices under this Agreement shall be in writing and shall be deemed to
have been delivered on the date personally delivered or three calendar days after the date
deposited in a receptacle maintained by the United States Postal Service for such purpose,
postage prepaid, by certified mail, return receipt requested, addressed to the Company at its
headquarters or Employee at the address of such person as set forth in the Company’s records.
Either party may designate a different address by providing written notice of such new address
to the other party.
	 
	28.	 	Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be considered one and the
same agreement. The delivery of this Agreement in the form of a clearly legible facsimile or
electronically scanned version by e-mail shall have the same force and effect as delivery of
the originally executed document.
	 
	29.	 	Code Section 409A.

	 	(a)	 	Intent. All or a portion of the payments and benefits provided under
this Agreement is intended to be exempt from Section 409A and any ambiguous provision
will be construed in a manner that is compliant with or exempt from the application of
Section 409A. In particular, such payments and benefits are intended to constitute
short-term deferrals described in Treasury Regulation Section 1.409A-1(b)(4) or a
payment or benefit described in Treasury Regulation Section 1.409A-1(b)(9)(v). The
provisions of this Agreement shall be interpreted in a manner consistent with this
intent.
	 
	 	(b)	 	Specified Employee Postponement. Notwithstanding
subparagraph (a) of this paragraph or any other provision of this Agreement to the
contrary, if the Company or an Affiliate that is treated as a “service
recipient” (as defined in Section 409A) is publicly traded on an established
securities market (or otherwise) and Employee is a “specified employee” (as
defined below) and is entitled to receive a payment that is subject to Section 409A on
account of Employee’s Separation from Service, such payment may not be made earlier
than six months following the date of his Separation from Service if required by
Section 409A, in which case, the accumulated postponed amount shall be paid in a lump
sum payment on the Section 409A Payment Date. The “Section 409A Payment Date”
is the earlier of (i) the date of Employee’s death or (ii) the date that is six months
and one day after Employee’s Separation from Service. If any payment to Employee is
delayed pursuant to the foregoing sentence, such amount instead will be paid, with
interest at the rate set out in Section 11(d), on the Section 409A Payment Date. For
purposes of Section 409A,
each payment amount or benefit due under this Agreement will be considered a
separate payment and Employee’s entitlement to a series of payments or benefits

Amended and Restated Employment Agreement — Page 21

 

 

	 	 	 	under this Agreement is to be treated as an entitlement to a series of separate
payments. The determination of whether Employee is a “specified employee” shall be
made in accordance with Section 409A using the default provisions in the Section
409A unless another permitted method has been prescribed for such purpose by the
Company.

	30.	 	Right to Consult a Tax Advisor. Notwithstanding any contrary provision in this
Agreement, Employee shall be solely responsible for any risk that the tax treatment of all or
part of any payments provided by this Agreement may be affected by Section 409A, which may
impose significant adverse tax consequences on him, including accelerated taxation, a 20%
additional tax, and interest. Because of the potential tax consequences, Employee has the
right, and is encouraged by this paragraph, to consult with a tax advisor of his choice before
signing this Agreement.

[Signature Page Follows]

Amended and Restated Employment Agreement — Page 22

 

 

	 	 	 	 	 
	 	EMPLOYEE:

 	 
	 	/s/ J. Ross Craft
 	 
	 	Name: J. Ross Craft 
	 	 	 
	 
	 	COMPANY:

APPROACH RESOURCES INC.,

A Delaware Corporation

 	 
	 	By:  	/s/ Steven P. Smart
 	 
	 	 	Name:  	Steven P. Smart 	 
	 	 	Title:  	Executive Vice President and Chief Financial Officer 	 
	 

Amended and Restated Employment Agreement — Page 23

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