Document:

EX-10.1

 Exhibit 10.1 
  

 
  

STOCKHOLDERS AGREEMENT 
 by and
among 
 APPROACH RESOURCES INC., 

WILKS BROTHERS, LLC 
 and 

SDW INVESTMENTS, LLC 
 Dated as of
January 27, 2017 
  

							
	 ARTICLE 1
	 	 DEFINITIONS
	  	 	1	  
	 Section 1.1
	 	        Definitions	  	 	1	  
	 Section 1.2
	 	        Other Definitional and Interpretive Matters	  	 	6	  
	 ARTICLE 2
	 	 MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
	  	 	7	  
	 Section 2.1
	 	        Board	  	 	7	  
	 ARTICLE 3
	 	 ACQUISITIONS; TRANSFERS
	  	 	11	  
	 Section 3.1
	 	        Restrictions on Acquisitions	  	 	11	  
	 Section 3.2
	 	        Preemptive Rights	  	 	13	  
	 Section 3.3
	 	        Restrictions on Transfers	  	 	15	  
	 ARTICLE 4
	 	 TERMINATION
	  	 	16	  
	 ARTICLE 5
	 	 MISCELLANEOUS
	  	 	16	  
	 Section 5.1
	 	        Notices	  	 	16	  
	 Section 5.2
	 	        Governing Law: Venue: Jurisdiction	  	 	17	  
	 Section 5.3
	 	        Waiver of Jury Trial	  	 	17	  
	 Section 5.4
	 	        Successors and Assigns	  	 	18	  
	 Section 5.5
	 	        Counterparts	  	 	18	  
	 Section 5.6
	 	        Severability	  	 	18	  
	 Section 5.7
	 	        Specific Performance	  	 	18	  
	 Section 5.8
	 	        No Waivers; Amendments	  	 	19	  
	 Section 5.9
	 	        Non-Recourse	  	 	19	  
	 Section 5.10
	 	        Further Assurances	  	 	20	  
	 Section 5.11
	 	        Entire Agreement	  	 	20	  
	 Section 5.12
	 	        Ownership and Aggregation of Common Stock; Action by Holders	  	 	20	  

 Exhibit A – Form of Conditional Resignation 

 

  
 i 

 STOCKHOLDERS AGREEMENT 

THIS STOCKHOLDERS AGREEMENT (this “Agreement”), dated as of January 27, 2017, is entered into by and among APPROACH
RESOURCES INC., a Delaware corporation (the “Company”) and each of WILKS BROTHERS, LLC and SDW INVESTMENTS, LLC (collectively, the “Holders” and each, a “Holder”). 

Pursuant to, and in consideration of the obligations of the Company and the Holders under the Exchange Agreement (as hereinafter defined), the
premises, mutual covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 

ARTICLE 1 
 DEFINITIONS 

Section 1.1 Definitions. 

“ADF Acceptance Period” shall have the meaning set forth in Section 3.2.4(a). 

“Affiliate” means, with respect to any Person, any Person who, directly or indirectly, controls, is controlled by or is under
common control with that Person, and the term “control” (including the terms “controlled”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract (including proxy) or otherwise; provided, however, that for the avoidance of doubt that the Holders shall
not be deemed an affiliate of the Company solely on account of being party to this Agreement. 
 “Agreement” shall have the
meaning set forth in the introductory paragraph hereof. 
 “Alternative Debt Financing Offer” shall have the meaning set
forth in Section 3.2.2. 
 “Board” means the board of directors of the Company. 

“Board Designee” shall have the meaning set forth in Section 2.1.1(b). 

“Board Determination Date” shall have the meaning set forth in Section 2.1.1(a). 

“Board Reduction Event” shall have the meaning set forth in Section 2.1.1(a). 

“Business Day” means any day other than a Saturday, Sunday or a day on which state or federally chartered banking
institutions in New York City, New York or Fort Worth, Texas are not required to be opened. 
 “Bylaws” means the Second
Amended and Restated Bylaws of the Company, as adopted on November 6, 2013, as the same may be amended, restated, amended and restated, waived, supplemented or otherwise modified from time to time in accordance with its terms. 

  
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 “Certificate of Incorporation” means the Restated Certificate of Incorporation
of the Company, as the same may be amended, restated, amended and restated, waived, supplemented or otherwise modified from time to time in accordance with its terms. 

“Charter Amendment Approval” shall have the meaning set forth in the Exchange Agreement. 

“Commission” means the United States Securities and Exchange Commission. 

“Common Stock” means the common stock, par value $0.01 per share, of the Company, and any shares or capital stock for or into
which such common stock hereafter is exchanged, converted, reclassified or recapitalized by the Company or pursuant to an agreement to which the Company is a party. 

“Company” shall have the meaning set forth in the introductory paragraph hereof. 

“Contracting Parties” shall have the meaning set forth in Section 5.9. 

“Class I” means the class of directors of the Board designated as Class I pursuant to the Certificate
of Incorporation. 
 “Class II” means the class of directors of the Board designated as Class II
pursuant to the Certificate of Incorporation. 
 “Class III” means the class of directors of the Board
designated as Class III pursuant to the Certificate of Incorporation. 
 “Currency Agreement” means any foreign
exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any of its Subsidiaries against fluctuations in currency values. 

“Director Nominating Committee” means the Nominating and Corporate Governance Committee of the Company that exists pursuant
to the Nominating and Corporate Governance Committee Charter, adopted as of November 4, 2014, or such successor committee of the Board that nominates, or approves for nomination, candidates for election to the Board. 

“Dribble Out Period” shall have the meaning set forth in Section 3.3.2. 

“Equity Cap” means 48.61%. 

“Equity Securities” means common stock or other equity securities, including any security, convertible security, exercisable
warrant, option or other similar instrument conveying rights with respect to equity securities, including, in the case of the Company, Common Stock. 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the
Commission thereunder. 

  
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 “Exchange Agreement” means the Exchange Agreement, dated November 2, 2016,
by and between the Company and Holders. 
 “Exchange Offer” shall have the meaning set forth in the Exchange Agreement.

 “Exchange Transaction” shall have the meaning set forth in the Exchange Agreement. 

“Exempt Offerings” means (i) an issuance of awards of Equity Securities (“Awards”) to an employee
pursuant to any plan or arrangement approved by the Board, or a duly authorized subcommittee of the Board, or the issuance of Equity Securities upon the exercise or conversion of any such Awards, (ii) an issuance of Equity Securities pursuant
to an exercise or conversion of any Equity Securities with respect to which preemptive rights were provided at the time such Equity Securities were issued (or the issuance of which was itself an Exempt Offering), (iii) a subdivision of the issued
and outstanding Equity Securities into a larger number of Equity Securities or the issuance of Equity Securities as a pro rata dividend or distribution in respect of outstanding Equity Securities and Board, or (iv) Equity Securities issued in
consideration of a bona fide acquisition by the Company or any of its Subsidiaries, joint venture or other strategic transaction that was approved by the Board. 

“Extraordinary Transaction” means any merger, tender offer, exchange offer, consolidation, business combination,
recapitalization, restructuring, sale of all or substantially all assets, liquidation or dissolution involving the Company, and of its Subsidiaries or any of its or their securities or assets. 

“GAAP” means United States generally accepted accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a
significant segment of the accounting profession that are in effect from time to time, applied on a consistent basis for the periods involved. 

“Holder” and “Holders” shall have the meaning set forth in the introductory paragraph hereof. 

“Holder Ownership Percentage” means, at any time, a fraction (expressed as a percentage), the numerator of which is the
number of shares of Common Stock beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act), collectively, by the Holders and their Affiliates at such time, and the denominator of which is the
total number of issued and outstanding shares of Common Stock at such time. 
 “Independent” means, with respect to any
Board Designee, that such Board Designee shall qualify as an independent director of the Company under the Company’s corporate governance and independence guidelines, applicable law and the rules and regulations of the Commission (or any
successor thereto) and NASDAQ (or any other stock exchange on which the Company is then listed), including, if applicable, any enhanced requirements with respect to certain committees of the Company. 

“Non-Party Affiliates” shall have the meaning set forth in
Section 5.9. 

  
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 “Per Share Equity Value” means, as of the date of determination, the volume
weighted average closing stock price of a share of Common Stock for the thirty (30) day period immediately preceding the date of any such determination, as reported by NASDAQ, or, if the shares of Common Stock are then traded on a national
securities exchange other than NASDAQ, on the principal national securities exchange on which such shares are so traded. 

“Person” or “person” means any individual, firm, partnership, company or other entity, and shall include any
successor (by merger or otherwise) of such entity. 
 “Preemptive Debt Election Notice” shall have the meaning set forth in
Section 3.2.2. 
 “Preemptive Debt Notice” shall have the meaning set forth in
Section 3.2.1. 
 “Preemptive Debt Securities” means any bonds, debentures, notes, or other
similar evidences of indebtedness commonly known as “securities”, in each case, which bonds, debentures, notes, or other similar evidences of indebtedness are secured by a lien and/or security interest on any property of any of the Company
and its Subsidiaries and which lien and/or security interest is expressly subordinated (pursuant to any intercreditor agreement, subordination agreement or other similar agreement) in priority to any senior secured first lien indebtedness for
borrowed money of any of the Company and/or its Subsidiaries. For the avoidance of doubt, Preemptive Debt Securities does not include any bank debt financing or other credit facilities, including, without limitation, the Revolving Credit Facility
and any refinancing thereof. 
 “Preemptive Debt Terms” shall have the meaning set forth in
Section 3.2.1. 
 “Preemptive Debt Offer Period” shall have the meaning set forth in
Section 3.2.2. 
 “Preemptive Debt Purchase Election” shall have the meaning set forth in
Section 3.2.2. 
 “Preemptive Equity Election Notice” shall have the meaning set forth in
Section 3.2.7. 
 “Preemptive Equity Notice” shall have the meaning set forth in
Section 3.2.6. 
 “Preemptive Equity Offer Period” shall have the meaning set forth in
Section 3.2.7. 
 “Preemptive Equity Purchase Election” shall have the meaning set forth in
Section 3.2.7. 
 “Preemptive Equity Securities” means Equity Securities or rights to acquire
Equity Securities issued by the Company from and after the date of this Agreement except Equity Securities issued in an Exempt Offering. 

“Registration Rights Agreement” means that certain registration rights agreement, dated as of January 27, 2017, by and
among the Company and the Holders, as the same may be amended, restated, amended and restated, waived, supplemented or otherwise modified from time to time in accordance with its terms. 

  
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 “Representatives” means, with respect to any Person, such Person’s
directors, officers, partners, employees, members, managers, agents, advisors (including attorneys, accountants, consultants and financial advisors and any representatives of a Person’s advisors) and other representatives 

“Restricted Period” shall have the meaning set forth in Section 3.3.1. 

“Revolving Credit Facility” means the senior secured revolving credit facility pursuant to the Amended and Restated Credit
Agreement, dated as of May 7, 2014, by and among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders from time-to-time party thereto,
as amended from time to time. 
 “Sale Transaction” means (a) the sale of all or substantially all of the consolidated
assets of the Company and its subsidiaries to a third-party purchaser; or (b) a merger, consolidation, recapitalization or reorganization of the Company with or into a third-party purchaser. 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission
thereunder. 
 “Stockholder Meeting” shall have the meaning set forth in the Exchange Agreement. 

“Subsidiary” of any Person means (a) a corporation a majority of whose outstanding shares of capital stock or other
equity interests with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such Person, by one or more subsidiaries of such Person or by such Person and one or more subsidiaries of such
Person, and (b) any other Person (other than a corporation) in which such Person, a subsidiary of such Person or such Person and one or more subsidiaries of such Person, directly or indirectly, at the date of determination thereof, has
(i) at least a majority ownership interest or (ii) the power to elect or direct the election of the directors or other governing body of such Person. 

“Target Value” means the sum of (a) the product of $10 and the number of shares of Common Stock issued and outstanding
immediately following the closing of the Exchange Transaction and (b) the product of $10 and the number of any shares of Common Stock issued pursuant to the Exchange Offer. 

“Total Market Capitalization” means, at any time, the product of (a) the Per Share Equity Value and (b) the number
of shares of Common Stock issued and outstanding as of such time. 
 “Transfer” means, when used as a verb, to sell,
transfer, assign, convey or otherwise dispose, and when used as a noun, any direct or indirect sale, transfer, assignment, conveyance or other disposition, including by merger, operation of law, bequest or pursuant to any domestic relations order,
whether voluntarily or involuntarily. 
 “Trigger Event” means the Per Share Equity Value is equal to or greater than the
Target Value. 

  
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 “Voting Securities” means any securities (including Equity Securities) that vote
generally in the election of directors, in the admission of general partners or in the selection of any other similar governing body. 

Section 1.2 Other Definitional and Interpretive Matters. For purposes of this Agreement, the following rules shall apply: 

1.2.1 Calculation of Time Period. When calculating the period of time before which, within which or following which any act is to be
done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question
shall end on the next succeeding Business Day. 
 1.2.2 Dollars. Any reference in this Agreement to “$” shall mean U.S.
dollars. 
 1.2.3 Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and
are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or
Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement. 
 1.2.4 Gender and Number. Any reference
in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa. 

1.2.5 Headings. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and
the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Article” or “Section” are to the
corresponding Article or Section of this Agreement unless otherwise specified. 
 1.2.6 Herein. The words such as “herein,”
“hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires. 

1.2.7 Including. The word “including” or any variation thereof means “including, without limitation” and shall not
be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it. 
 1.2.8
Successor Laws. Any reference to any law or code section thereof will be interpreted to include any revision of or successor to that section regardless of how it is numbered or classified. 

1.2.9 Heirs, Executors, etc. References herein to any Person shall include such Person’s heirs, executors, personal
representatives, administrators, successors and assigns; provided, however, that nothing contained in this Section 1.2.9 is intended to authorize any assignment or other Transfer not otherwise permitted by
this Agreement. 

  
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 1.2.10 Joint Drafting. It is the intention of the parties that every covenant, term and
provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any party (notwithstanding any rule of law requiring an agreement to be strictly construed against the drafting party). Further,
prior drafts of this Agreement or any ancillary agreements hereto or the fact that any clauses have been added, deleted or otherwise modified from any prior drafts of this Agreement or any ancillary agreements hereto shall not be used as an aide of
construction or otherwise constitute evidence of the intent of the parties hereto; and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of such prior drafts. 

ARTICLE 2 
 MANAGEMENT OF THE
COMPANY AND CERTAIN ACTIVITIES 
 Section 2.1 Board. 

2.1.1 Board Representation. 

(a) Until such time as the rights of the Holders are terminated or reduced in accordance with Section 2.1.7, the
Holders, collectively, shall be entitled to designate for nomination for election to the Board three (3) members of the Board as provided in Sections 2.1.2 and 2.1.3 hereof. If, at December 31, 2017 (the “Board
Determination Date’), the Holder Ownership Percentage is (x) less than 40%, the Holders shall cause the Board Designee who has been appointed as a Class III director to promptly tender his or her resignation, effective as of the
Board Determination Date, from the Board and any committee thereof on which he or she may be a member; or (y) equal to or greater than 40%, the Company shall cause a director other than a Board Designee to promptly tender his or her
resignation, effective as of the Board Determination Date, from the Board and any committee thereof on which he or she may be a member (either such resignation, the “Board Reduction Event”). In furtherance of the foregoing, Matthew
R. Kahn (and each successor Board Designee to Matthew R. Kahn’s position as a Class III director on the Board appointed or elected prior to the Board Determination Date) shall, prior to, and as a condition to his or her appointment to the
Board as a Board Designee, and the Holders shall cause Matthew R. Kahn (and each successor Board Designee to Matthew R. Kahn’s position as a Class III director on the Board appointed or elected prior to the Board Determination Date) to,
execute an irrevocable conditional resignation as director in the form attached hereto as Exhibit A. At the time of the Board Reduction Event, the Company shall take such action as is necessary to cause at such time the full board of
directors of the Company to be decreased by one member (with such decrease being the elimination of the directorship vacated by the Board Reduction Event to consist of seven (7) directors. 

(b) Members of the Board designated by the Holders pursuant to this Section 2.1.1 or appointed to fill a vacancy by
the Holders as provided in Section 2.1.2 or Section 2.1.5 shall be referred to as the “Board Designees.” The Company and the Board shall, subject to and consistent with the
Board’s fiduciary duties and applicable law, take such actions as necessary to cause Board Designees to be nominated and submitted to the stockholders of the Company for election to the Board, or appointed to the Board by the remaining members
of the Board, as provided in Section 2.1.2 and Section 2.1.4. 

  
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 (c) Prior to the Board Reduction Event, the number of directors on the Board shall not be
increased to greater than eight (8) without the unanimous approval of the Board Designees. Following the Board Reduction Event, the number of directors on the Board shall not be increased to greater than seven (7) without the unanimous
approval of the Board Designees. 
 2.1.2 Initial Board Representation. 

(a) Simultaneously with the execution and delivery of this Agreement, the three (3) Board Designees shall be appointed to the Board as
follows: (i) Morgan D. Neff shall be appointed as a Class I director on the Board; (ii) Matthew D. Wilks shall be appointed as a Class II director on the Board; and (iii) Matthew R. Kahn shall be appointed as a
Class III director on the Board. 
 2.1.3 Classified Board. For so long as the Company classifies and divides the Board into more
than one class in which the terms of the directors serving on the Board expire at different times depending on their class, then for so long as Holders are entitled to designate (A) two (2) Board Designees one such Board Designee shall serve as
a Class I director and one such Board Designee shall serve as a Class II director or (B) three (3) Board Designees one such Board Designee shall serve as a Class I director, one such Board Designee shall serve as a
Class II director and one such Board Designee shall serve as a Class III director. 
 2.1.4 Annual Meeting. 

(a) At each annual meeting of the Company’s stockholders or any special meeting in lieu thereof at which the term of any Board Designee
is to expire or at the date of which proxy materials for such meeting are mailed to the Company’s stockholders there shall be less than the maximum number of Board Designees that Holders are then entitled to designate serving on the Board, the
Holders, collectively, shall be entitled to designate for nomination as a director the number of individuals necessary so that, if such designees are elected to the Board at such annual meeting or any special meeting in lieu thereof, the maximum
number of Board Designees shall be serving on the Board. The Company and the Board shall, subject to and consistent with the Board’s fiduciary duties and applicable law, take such actions as necessary to cause each Board Designee so designated
by the Holders and to be nominated for election to the Board at each annual meeting of the Company’s stockholders or any special meeting in lieu thereof. To the extent the Company’s proxy statement for any annual meeting of stockholders,
or any special meeting in lieu thereof, includes a recommendation regarding the election of any other nominees to the Board, the Company and the Board shall, subject to and consistent with the Board’s fiduciary duties and applicable law,
include a recommendation of its Board that the stockholders also vote in favor of each Board Designee standing for election at such meeting. 

(b) For any annual meeting of the Company’s stockholders or any special meeting in lieu thereof at which Holders are entitled to
designate an individual for nomination as a director pursuant to Section 2.1.4(a), the Company shall use its good faith efforts to notify Holders in writing no less than ten (10) days before the advance notice deadline set forth in the
Company’s bylaws of such entitlement. If, at any time neither Holder advises the Board in writing, delivered to the Board not less than ninety (90) and no more than one hundred 

  
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twenty (120) calendar days prior to the one year anniversary of the date of the Company’s proxy statement issued in connection with the prior year’s annual meeting in the case of
an annual meeting, and not less than sixty (60) days prior to the meeting in the case of a special meeting (provided, however, that if a Holder notifies the Board that Holders are unable to notify the Board within such time period, the Holders
and Board will work together in good faith to establish a later time period (taking into account the minimum amount of time the Company will reasonably need to include the information required by clauses (i) and (ii) below in any proxy
solicitation materials and prepare any other materials related thereto and to the election of directors)), of Holders intention to designate the number of directors which the Holders are then entitled to designate for nomination at the next annual
meeting of the Company’s stockholders or special meeting in lieu thereof, then the rights granted under this Section 2.1 with respect to the designation of Board Designees shall be applicable for such meeting only with
respect to the number of nominees as indicated in such writing, if any, that the Holders intend to designate, but shall continue to be fully effective with respect to subsequent meetings and interim vacancies. The Holders shall provide (i) the
information regarding each Board Designee as would be required to be included in solicitations of proxies for the election of directors in an election context or is otherwise required pursuant to the federal securities laws and regulations, had the
nominee been nominated, or intended to be nominated, by the Board and (ii) the consent of each such Board Designee to serve as a director of the Company if so elected. 

2.1.5 Board Committees. Subject to the Company’s corporate governance and independence guidelines, applicable law and the rules and
regulations of NASDAQ (or any other stock exchange on which the Company is then listed), including, if applicable, any enhanced requirements of with respect to certain committees of the Company, in each case, requiring that certain committee members
qualify as Independent, for so long as the Holders are represented on the Board by at least one Board Designee, the Company and the Board shall take such actions as necessary to cause at least one such Board Designee to be elected to, and to at all
times be a member of, each committee established by the Board based, if applicable, on whether or not such Board Designee qualifies as Independent; provided that such Board Designee, in his or her sole discretion, may decline to serve on such
committee. 
 2.1.6 Vacancies. If, prior to his or her election or appointment to the Board pursuant to this
Section 2.1, any Board Designee shall be unable or unwilling to serve as a director of the Company, then the Holders shall be entitled to nominate a replacement Board Designee, and the Company and the Board shall, subject
to and consistent with the Board’s fiduciary duties and applicable law, take such actions as necessary to cause such replacement Board Designee to be appointed to the Board or nominated and submitted to the stockholders, as applicable, pursuant
to this Section 2.1. If, following an election or appointment to the Board pursuant to this Section 2.1, any Board Designee shall resign or be removed or be unable to serve for any reason prior to
the expiration of his or her term as a director of the Company, then the Holders shall, within thirty (30) days of such event, notify the Board in writing of a replacement Board Designee, and the Company and the Board shall, subject to and
consistent with the Board’s fiduciary duties and applicable law, take such actions as necessary to cause such replacement Board Designee to be appointed to the Board to fill the unexpired term of the Board Designee who such new Board Designee
is replacing. 

  
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 2.1.7 Reduction; Termination of Rights. The right of the Holders to designate directors
under this Section 2.1 shall be reduced and terminate as follows: 
 (a) Upon written request to the Holders, if
the number of Board Designees exceeds the number of directors the Holders shall be entitled to designate pursuant to Section 2.1.1 (as such number may be adjusted pursuant to this Section 2.1.7,
the Holders shall cause the number of Board Designee(s) in excess of the number of Board Designees to which the Holders are then entitled to designate to resign from the Board such that the number of Board Designees shall be reduced to the number
the Holders are then entitled to designate. 
 (b) Upon the completion of a Sale Transaction, the Holders’ right to designate Board
Designees to the Board and its committees shall immediately expire and the Holders shall cause each Board Designee then serving on the Board to resign from the Board immediately after the completion of a Sale Transaction; provided,
however, that in the event such completed Sale Transaction is a sale of all or substantially all of the consolidated assets of the Company and its Subsidiaries, the Holders’ right to designate Board Designees to the Board and its
committees shall not expire until such time as a final determination has been made with respect to the complete disposition of the proceeds from such Sale Transaction, at which point in time the Holders shall cause each Board Designee then serving
on the Board to resign from the Board. 
 (c) Upon the Holder Ownership Percentage being less than 40% at any time on or after the Board
Determination Date, the Holders’ right to designate members of the Board pursuant to Section 2.1.1(a) shall be reduced to the right to designate two (2) members of the Board; provided, that, subject to Section 2.1.1(a)
with respect to a Board Reduction Event, the then current term of the Board Designees then serving on the Board shall not be affected solely by the loss of such right. 

(d) Upon the Holder Ownership Percentage being reduced to less than 20%, the Holders’ right to designate members of the Board pursuant to
Section 2.1.1(a) shall be reduced to the right to designate one (1) member of the Board; provided, that the then current term of the Board Designees then serving on the Board shall not be affected solely by the loss of such right.

 (e) Upon the Holder Ownership Percentage being reduced to less than 10%, the Holders’ right to designate members to the Board
pursuant to Section 2.1.1(a) shall immediately expire; provided, that the then current term of the Board Designees then serving on the Board shall not be affected solely by the loss of such right. 

2.1.8 Company Policies; Fees; Costs and Expenses. The parties hereto acknowledge that each Board Designee, upon election to the Board,
will serve as a member of the Board and will be governed by the same protections and obligations regarding confidentiality, conflicts of interest, related party transactions, fiduciary duties, codes of conduct, trading and disclosure policies,
director resignation policies, and other governance guidelines and policies of the Company as other directors, and shall be required to preserve the confidentiality of Company business and information, including discussions or matters considered in
meetings of the Board or committees of the Board, and shall have the same rights 

  
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and benefits, including with respect to insurance, indemnification and, with respect to Board Designees who qualify as Independent, compensation that are applicable to all Independent directors
of the Company. The Company will pay and reimburse each Board Designee (whether such Board Designee qualifies as Independent or not) for all reasonable out-of-pocket
expenses incurred by such Board Designee in connection with his or her participation in (or attendance at) meetings of the Board (and committees thereof) and the boards of directors (and committees thereof) of the Subsidiaries of the Company to the
same extent as the Company reimburses all other directors of the Company. 
 2.1.9 Voting. Until the occurrence of a Trigger Event,
each Holder shall, and shall cause its Affiliates to, vote all Voting Securities of the Company (including all Common Stock) held by such Holder and its Affiliates or over which such Holder or its Affiliates has voting control, and shall take all
other necessary or desirable actions within its control (including in its capacity as a stockholder, director, member of a board committee, officer or otherwise) to vote in the same proportion as shares of Voting Securities of the Company (including
Common Stock) that are not held by such Holder or its Affiliates or over which such Holder or its Affiliates does not have voting control with respect to (a) any ratification of the appointment of the Company’s independent registered
public accounting firm; (b) the Board’s recommendation with respect to the Company’s “say-on-pay” proposal or with respect to any other Company
proposal or stockholder proposal (other than any proposal with respect to any Extraordinary Transaction); (c) each nominee (including those that are not Board Designees) nominated and approved by the Director Nominating Committee; or (d) the
removal of any Board Designees selected by the Director Nominating Committee to reduce the number of Board Designees to the number of Board Designees to which the Holders are then entitled to designate if such Board Designees have not been removed
in accordance with Section 2.1.7. Following the occurrence of a Trigger Event, the foregoing restrictions on each of the Holders’ or its Affiliates’ voting of Voting Securities of the Company (including all Common
Stock) held by such Holder or its Affiliates or over which such Holder or its Affiliates has voting control, shall terminate and each such Holder or Affiliate shall be free to vote its Voting Securities in respect of each of the matters referenced
in the immediately preceding sentence in any way it chooses to do so. 
 ARTICLE 3 

ACQUISITIONS; TRANSFERS 

Section 3.1 Restrictions on Acquisitions. 

3.1.1 Subject to Section 3.1.2, from the date hereof until the eighteen (18) month anniversary of this
Agreement, each Holder agrees that other than in accordance herewith (including pursuant to the exercise of its rights under Section 2.1.1) or without the prior written consent of the Board, such Holder shall not, and shall
cause each of its Affiliates not to, directly or indirectly: 
 (a) in any manner acquire, agree to acquire or make any proposal or offer to
acquire, directly or indirectly, (i) any Voting Securities of the Company or any rights or options to acquire any such Voting Securities which would result in the Holder Ownership Percentage following such acquisition exceeding the Equity Cap
or (ii) any property of the Company or any rights or options to acquire any such property; 

  
 11 

 (b) propose to have such Holder or an Affiliate of such Holder enter into, directly or
indirectly, any merger or business combination involving the Company or propose to have such Holder or an Affiliate of such Holder purchase, directly or indirectly, a material portion of the assets of the Company; 

(c) make, or in any way participate, directly or indirectly, in any “solicitation” of “proxies” (as such terms are used in
Regulation 14A promulgated under the Exchange Act) to vote or consent, or seek or advise or influence any person with respect to the voting of, or granting of a consent with respect to, any Voting Securities of the Company; 

(d) other than with other Holders, form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any Voting Securities of the Company; 
 (e) except as may be required by law (provided that such legal
requirement does not arise as a result of or in connection with any breach of this Agreement by such Holder or its Representatives or Affiliates), disclose any intention, plan or arrangement inconsistent with the foregoing; 

(f) except as permitted pursuant to Section 3.2 hereof, provide, or act as agent for the purpose of obtaining, debt or equity financing
for any transaction described in clause (a) or (b) of this Section 3.1.1; or 
 (g) advise, assist or
encourage any other persons in connection with any of the foregoing. 
 Notwithstanding the foregoing provisions of this
Section 3.1.1, the restrictions set forth in this Section 3.1.1 shall terminate and be of no further force and effect if a public announcement or commencement is made of a tender or exchange offer
by any Person (other than a Holder or its Affiliates) for, or upon completion of which any Person would beneficially own (as such term is used in Rule 13d-3 of the Exchange Act), fifty percent (50%) or more of
the outstanding Voting Securities of the Company, and the Board approves or fails to oppose that tender or exchange offer in its statements in Schedule 14D-9 under the Exchange Act. 

For the avoidance of doubt, nothing in this Section 3.1.1 shall prohibit a Holder or any Affiliate of a Holder from
engaging in discussions regarding potential transactions with unaffiliated third parties provided that it promptly and fully discloses any such discussions to the Board and does not undertake any actions in furtherance of such a transaction without
having first obtained the approval of the Board. 
 3.1.2 Notwithstanding Section 3.1.1 or the expiration of the
term thereof, each Holder shall not, and shall cause each of its Affiliates not to, (a) until May 7, 2019, take any action (including any action described in Section 3.1.1) at any time if such action would result
in a “Change of Control” (as such term is defined in the Revolving Credit Facility) under the terms 

  
 12 

 
of the Revolving Credit Facility or (b) acquire, agree to acquire or make any proposal or offer to acquire, directly or indirectly, Common Stock such that, upon such acquisition, the Holder
Ownership Percentage would exceed the Equity Cap; provided that the restriction set forth in this Section 3.1.2(b) may be waived by the Company after a Trigger Event if such waiver is approved by a majority of the members of the
Board other than Board Designees and any other members of the Board nominated for election to the Board by Holders or any Holder. 

Section 3.2 Preemptive Rights. 

3.2.1 The Company shall not issue or sell, or agree to issue or sell, any Preemptive Debt Securities (other than (a) debt securities
issuable with respect to intercompany debt by and between the Company and any Subsidiaries or (b) in connection with the Exchange Offer (as such term is defined in the Exchange Agreement) contemplated by Section 5.g of the Exchange Agreement)
to any third party unless the Company shall have first delivered written notice (a “Preemptive Debt Notice”) to the Holders of the Company’s intent to issue, sell or exchange Preemptive Debt Securities, which Preemptive Debt
Notice shall (x) state the aggregate principal amount of the Preemptive Debt Securities the Company proposes to issue or sell and (y) may include the price and other material terms and conditions on which the Company proposes to issue or
sell the Preemptive Debt Securities (such items as described in this clause (y), the “Preemptive Debt Terms”). 
 3.2.2 For
a period of ten (10) Business Days from the date the Preemptive Debt Notice is delivered to Holders (the “Preemptive Debt Offer Period”), the Holders may, by written notice to the Company (the “Preemptive Debt Election
Notice”): (a) if the Preemptive Debt Notice included Preemptive Debt Terms, elect to purchase (“Preemptive Debt Purchase Election”) all of the Preemptive Debt Securities, which shall constitute an offer to purchase such
Preemptive Debt Securities which shall remain open and irrevocable for a period of ten (10) Business Days or (b) offer to provide debt financing (“Alternative Debt Financing Offer”) in an amount equal to the aggregate
principal amount of the Preemptive Debt Securities stated in the Preemptive Debt Notice and on such terms and conditions as the Holders shall specify in the Election Notice, which shall constitute an offer to provide such debt financing which shall
remain open and irrevocable until the end of the ADF Acceptance Period. 
 3.2.3 If one or both Holders makes a timely Preemptive Debt
Purchase Election, the Company shall provide written notice to such Holders establishing the date of the new issuance of the Preemptive Debt Securities and the procedures for purchasing the Preemptive Debt Securities and the Holder(s) delivering
such Preemptive Debt Purchase Election shall be obligated to provide the debt financing referred to in the Preemptive Debt Notice on the Preemptive Debt Terms. 

3.2.4 If the Company receives an Alternative Debt Financing Offer from one or both Holders: 

(a) The Company shall have thirty (30) days following its receipt of the Alternative Debt Financing Offer (the “ADF Acceptance
Period”) to determine whether to accept or reject the Alternative Debt Financing Offer. If the Company accepts the Alternative Debt Financing Offer, then the Holder(s) delivering such Alternative Debt Financing Offer shall be obligated to
provide the debt financing referred to in the Alternative Debt Financing Offer on the terms and conditions set forth in the Alternative Debt Financing Offer within sixty (60) days from the Company’s acceptance. 

  
 13 

 (b) If the Company rejects or otherwise does not accept the Alternative Debt Financing Offer,
then the Company may proceed with the issuance of the Preemptive Debt Securities to a third party during the one hundred and fifty (150) day period following the expiration of the ADF Acceptance Period on such terms and conditions as determined
by the Company in its sole discretion; provided such terms and conditions of the Preemptive Debt Securities must be no less favorable, taken as a whole and considering all factors deemed relevant by the Company, than the Preemptive Debt Terms
or the terms and conditions of the Alternative Debt Financing Offer. If the Company has not issued or sold (or executed definitive documents to issue or sell) the Preemptive Debt Securities within the one hundred and fifty (150) days following
the expiration of the ADF Acceptance Period, any proposed issuance of such Preemptive Debt Securities shall once again be subject to the terms and conditions of this Section 3.2. Notwithstanding the foregoing, if the
Preemptive Debt Notice included Preemptive Debt Terms and the Company rejects or otherwise does not accept the Alternative Debt Financing Offer, Company shall so notify Holders, and Holders shall have three (3) Business Days following such
notification to make a Preemptive Debt Purchase Election pursuant to Section 3.2.2, and if Holders do not make a Preemptive Debt Purchase Election within such three (3) Business Day period the Company may proceed with
the issuance of the Preemptive Debt Securities to a third party in accordance with the preceding sentence. 
 3.2.5 If neither Holder
delivers a Preemptive Debt Election Notice during the Preemptive Debt Offer Period, the Company shall be entitled to sell such Preemptive Debt Securities specified in the Preemptive Debt Notice on such terms and conditions as determined by the
Company in its sole discretion for a period of one hundred and eighty (180) days following the expiration of the Preemptive Debt Offer Period. Any Preemptive Debt Securities to be sold by the Company following the expiration of such one hundred
and eighty (180) day period must be reoffered to the Holders pursuant to the terms of this Section 3.2. 

3.2.6 The Company shall not issue or sell, or agree to issue or sell, any Preemptive Equity Securities to any third party unless the Company
shall have first delivered written notice (a “Preemptive Equity Notice”) to the Holders of the Company’s intent to issue, sell or exchange Preemptive Equity Securities, which Preemptive Equity Notice (a) shall state the
number and type of Preemptive Equity Securities proposed to be issued and (b) may include the price and other material terms and conditions on which the Company proposes to issue the Preemptive Equity Securities (provided if the Company does
not include the price at which the Company proposes to issue the Preemptive Equity Securities in a Preemptive Equity Notice, the Company shall use good faith efforts to provide to the Holders reasonable advance notice of the price range or price,
when determined, at which the Company proposes to issue the Preemptive Equity Securities). 
 3.2.7 For a period of ten (10) Business
Days from the date the Preemptive Equity Notice is delivered to Holders (the “Preemptive Equity Offer Period”), the Holders may, by written notice to the Company (the “Preemptive Equity Election Notice”) elect to
purchase (the “Preemptive Equity Purchase Election”), on the terms and conditions specified in the 

  
 14 

 
Preemptive Equity Election Notice but subject to Section 3.1.2, up to a number of Preemptive Equity Securities, in the aggregate as to both Holders, equal to
(a) the number of Preemptive Equity Securities proposed to be issued or sold by the Company multiplied by (b) the Holder Ownership Percentage immediately prior to the delivery of the Preemptive Equity Notice by the Company, which
shall constitute an offer to purchase such Preemptive Equity Securities. 
 3.2.8 If one or both Holders makes a timely Preemptive Equity
Purchase Election, the Company shall provide written notice to such Holder(s) establishing the date of the new issuance of Preemptive Equity Securities and the procedures for purchasing the Preemptive Equity Securities. Notwithstanding the
foregoing, the Company shall be under no obligation to consummate any proposed issuance of Preemptive Equity Securities, nor shall there be any liability on the part of the Company, or to the Board, to the Holders if the Company has not consummated
any proposed issuance of Preemptive Equity Securities pursuant to this Section 3.2 for whatever reason, regardless of whether the Company shall have delivered a Preemptive Equity Notice. 

3.2.9 If neither Holder delivers a Preemptive Equity Election Notice during the Preemptive Equity Offer Period, the Company shall be entitled
to sell such Preemptive Equity Securities in the Preemptive Equity Notice on such terms and conditions as determined by the Company in its sole discretion for a period of one hundred and fifty (150) days following the expiration of the
Preemptive Equity Offer Period. Any Preemptive Equity Securities to be sold by the Company following expiration of such one hundred and fifty (150) day period must be reoffered to the Holders pursuant to the terms of this
Section 3.2. 
 Section 3.3 Restrictions on Transfers. 

3.3.1 From the date hereof until the six (6) month anniversary of the this Agreement (the “Restricted Period”), each
Holder agrees that, without the prior written consent of the Company, such Holder shall not, and it shall cause each of its Affiliates not to, directly or indirectly, Transfer any shares of Common Stock (or any rights or interests of any nature
whatsoever in or with respect to any shares of Common Stock) beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by such Holder or its Affiliates. 

3.3.2 Upon the completion of the Restricted Period, the Holders agree not to Transfer more than five percent (5%) of the shares of Common Stock
beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by the Holders and their Affiliates, in the aggregate, per each rolling ninety (90) day period beginning with a Holder’s
(or its Affiliate’s) first transfer of shares of Common Stock after the termination of the Restricted Period until the date that is eighteen (18) months from the end of the Restricted Period (the “Dribble Out Period”);
provided, however, that, following the date that is six (6) months after the completion of the Restricted Period, the foregoing restriction set forth in this Section 3.3.2 shall not apply to any
underwritten offering effected pursuant to a Holder’s rights under, and subject to the terms of, the Registration Rights Agreement. 

3.3.3 Upon the completion of the Dribble Out Period, each Holder will be free to Transfer shares of Common Stock without limitation, except
that all such Transfers shall be in compliance with applicable state and federal securities laws and the terms of this Agreement. 

  
 15 

 3.3.4 Notwithstanding the foregoing, a Holder may Transfer shares of Common Stock (i) to any
Affiliate of such Holder; provided, that in the case of any such Transfer to such Affiliate, the Affiliate shall agree to be bound by the terms of this Section 3.3 and (ii) pursuant to any merger,
consolidation, recapitalization or reorganization of the Company with or into a third-party purchaser. 
 3.3.5 Notwithstanding this
Section 3.3, each Holder agrees that it shall not, and it shall cause each of its Affiliates not to, directly or indirectly, Transfer any shares of Common Stock (or any rights or interests of any nature whatsoever in or
with respect to any shares of Common Stock) beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by the Holder or its Affiliates if such Transfer would result in a “Change of
Control” (as such term is defined the Revolving Credit Facility) under the terms of the Revolving Credit Facility; provided, however, that the foregoing restriction shall not apply to any Transfer effected (a) as a
brokers’ transaction on a national securities exchange or (b) pursuant to an underwritten public offering registered under the Securities Act. 

ARTICLE 4 
 TERMINATION 

This Agreement shall terminate automatically upon the earlier to occur of: (i) the Holder Ownership Percentage being reduced to less than
ten percent (10%); and (ii) the five (5) year anniversary of this Agreement. 
 ARTICLE 5 

MISCELLANEOUS 
 Section 5.1
Notices. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by facsimile or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows (or at such other address as may be substituted by notice given as herein provided): 
 If to the Company:

 Approach Resources Inc. 

6500 West Freeway, Suite 800 

Fort Worth, Texas 76116 

Attention: J. Curtis Henderson 

Facsimile No.: (817) 989-9001 

If to the Holders: 
 Wilks
Brothers, LLC 
 17010 IH-20 

  
 16 

 Cisco, Texas 76437 

Attention: Morgan Neff and Matt Wilks 

Facsimile No.: (817) 850-3698 

SDW Investments, LLC 
 17010
IH-20 
 Cisco, Texas 76437 

Attention: Morgan Neff and Matt Wilks 

Facsimile No.: (817) 850-3698 

Any notice or communication hereunder shall be deemed to have been given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on receipt if sent by registered or certified mail. 

Section 5.2 Governing Law: Venue: Jurisdiction. THIS AGREEMENT and all claims or causes of action (whether in contract or tort)
that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in
or in connection with this Agreement) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Each party hereby agrees that any action based upon, arising out of or
relating to this Agreement (including any action concerning the violation or threatened violation of this Agreement) shall be heard and determined in any state or federal court sitting in the Court of Chancery of the State of Delaware (or, if the
Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, in the United States District Court for the District of Delaware), and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of
such courts (and, in the case of appeals, appropriate appellate courts therefrom) in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding. In addition, each
party consents to process being served in any such lawsuit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall
constitute good and sufficient service of process and notice thereof. The consents to jurisdiction set forth in this paragraph shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any
purpose except as provided in this Section 5.2 and shall not be deemed to confer rights on any Person other than the parties hereto. Nothing in this Section 5.2 shall affect or limit any right to
serve process in any other manner permitted by law. 
 Section 5.3 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS
RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT WHETHER BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 

  
 17 

 Section 5.4 Successors and Assigns. This Agreement shall be binding upon the Company,
the Holders, and their respective successors and permitted assigns (which shall be deemed to include any Affiliate of any Holder to which a Holder Transfers any shares of Common Stock); provided that if any Holder Transfers any shares of Common
Stock to any of its Affiliates such Holder shall remain the sole party entitled to exercise the rights of such Holder under this Agreement and such Affiliate shall (and such Holder shall require such Affiliate to execute a joinder to this Agreement
in form and substance reasonably acceptable to the Company agreeing to) be bound by the terms of this Agreement with respect to all shares of Common Stock held by such Affiliate. No Holder may assign any of its rights under this Agreement to any
other Person (including any transferee of any Common Stock held by a Holder) without the prior written consent of the Company, which consent may be granted or denied by the Company in its sole discretion and to be valid must be approved by a
majority of the members of the Board other than Board Designees and any other members of the Board nominated for election to the Board by Holders or any Holder, and any assignment in violation of the foregoing shall be void ab initio. 

Section 5.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement and any signed agreement entered into in connection herewith or contemplated hereby, and any amendments
hereto or thereto, to the extent signed and delivered by facsimile, by electronic mail in “portable document format” (“.pdf”) form, or any other electronic transmission, shall be treated in all manner and respects as an original
contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. 

Section 5.6 Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction
is, as to such jurisdiction, ineffective to the extent of any such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof, or affecting the validity, enforceability or legality of such provision in any
other jurisdiction, unless the ineffectiveness of such provision would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable. Upon a determination that any provision of this Agreement is
prohibited, unenforceable or not authorized, the parties hereto agree to negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible, in a mutually acceptable manner, in order
that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible. 
 Section 5.7
Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, including if the
parties hereto fail to take any action required of them hereunder to consummate this Agreement. It is accordingly agreed that, 

  
 18 

 
in addition to any other applicable remedies at law or equity, the parties shall be entitled to an injunction or injunctions, without proof of damages, to prevent breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement. Each party hereto agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief on the basis that (i) the other party has an
adequate remedy at law or (ii) an award of specific performance is not an appropriate remedy for any reason at law or in equity. Each of the parties hereto hereby waives (i) any defenses in any action for specific performance, including
the defense that a remedy at law would be adequate and (ii) any requirement under any law to post a bond or other security as a prerequisite to obtaining equitable relief. 

Section 5.8 No Waivers; Amendments. 

5.8.1 No failure or delay on the part of the Company or the Holder in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not
exclusive of any remedies that may be available to the Company or any Holder at law or in equity or otherwise. 
 5.8.2 Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver makes specific reference to this Agreement, and, (i) in the case of an amendment, such amendment is with the written consent of the Company and each Holder, and (ii),
in the case of a waiver, such waiver is signed by the Person against whom it is to be enforced; provided that any amendment of this Agreement or waiver by the Company hereunder shall only be effective if such amendment or waiver is approved by a
majority of the members of the Board other than Board Designees and any other members of the Board nominated for election to the Board by Holders or any Holder. 

Section 5.9 Non-Recourse. All claims, obligations, liabilities, or causes of action
(whether in contract or in tort, in law or in equity, or granted by statute) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Agreement, or the negotiation, execution, or
performance of this Agreement (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement), may be made only against (and are expressly limited to) the entities that are expressly identified as
parties in the preamble to this Agreement (“Contracting Parties”). No Person who is not a Contracting Party, including any director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, agent, attorney,
or representative of, and any financial advisor or lender to, any Contracting Party, or any director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, agent, attorney, or representative of, and any financial advisor
or lender to, any of the foregoing (“Non-party Affiliates”), shall have any liability (whether in contract or in tort, in law or in equity, or granted by statute) for any claims, causes of
action, obligations, or liabilities arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance, or breach; and, to the
maximum extent permitted by law, each Contracting Party hereby waives and releases all such liabilities, claims, causes of action, and obligations against any such Non-party Affiliates. 

  
 19 

 Section 5.10 Further Assurances. Each party shall cooperate and shall take such
further action and shall execute and deliver such further documents as may be reasonably requested by any other party in order to carry out the provisions and purposes of this Agreement. 

Section 5.11 Entire Agreement. This Agreement (including all schedules and exhibits hereto) contains the entire agreement among
the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters. 

Section 5.12 Ownership and Aggregation of Common Stock; Action by Holders. 

5.12.1 All shares of Common Stock beneficially owned by each Holder and its Affiliates shall be aggregated for purposes of interpreting the
term and terms of, and determining the application and availability of any obligations and rights under, this Agreement, unless the context otherwise requires. 

5.12.2 Any action to be taken or consent or approval to be given by Holders pursuant to this Agreement shall be deemed taken, consented to or
approved upon the affirmative consent or approval by either Holder; provided that, if the Company receives conflicting direction, consents or approvals from the Holders with respect to any action to be taken or consent or approval to be given by
Holders pursuant to this Agreement, then any action to be taken or consent or approval to be given by Holders pursuant to this Agreement shall be deemed taken, consented to or approved upon the affirmative consent or approval by the Holder that
holds a majority of the Common Stock held by both Holders. 
 5.12.3 From time to time upon the written request by the Company, each Holder
shall provide to the Company in writing a statement setting forth the number of shares of Common stock beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by such Holder, certified by
an officer or other duly authorized representative of such Holder. 
 [Remainder of Page Intentionally Left Blank] 

  
 20 

 SIGNATURES TO STOCKHOLDERS AGREEMENT 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the date first written above. 

 

			
	APPROACH RESOURCES INC.
		
	By:	 	 /s/ J. Ross Craft

	Name:	 	J. Ross Craft
	Title:	 	Chairman, President and Chief Executive Officer

 [Signature page to Stockholders Agreement] 

 
	
	SIGNATURES TO STOCKHOLDERS AGREEMENT

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the
date first written above. 
  

			
	WILKS BROTHERS, LLC
		
	By:	 	 /s/ Morgan D. Neff

	Name:	 	Morgan D. Neff
	Title:	 	Senior Portfolio Manager
		
	By:	 	 /s/ Matt Wilks

	Name:	 	Matt Wilks
	Title:	 	Portfolio Manager & Vice President Capital Investments
	
	SDW INVESTMENTS, LLC
		
	By:	 	 /s/ Morgan D. Neff

	Name:	 	Morgan D. Neff
	Title:	 	Senior Portfolio Manager
		
	By:	 	 /s/ Matt Wilks

	Name:	 	Matt Wilks
	Title:	 	Portfolio Manager & Vice President Capital Investments

 [Signature Page to Stockholders Agreement] 

 EXHIBIT A 

Conditional Resignation of Director 

January 27, 2017 
 Approach Resources Inc.

 One Ridgmar Centre 
 6500 West Freeway, Suite 800 

Fort Worth, Texas 76116 
 Attention: Corporate Secretary 

Ladies and Gentlemen: 
 Reference is hereby made
to that certain Stockholders Agreement, dated as of the date hereof, by and among Approach Resources Inc. (the “Company”), Wilks Brothers, LLC and SDW Investments, LLC (the “Stockholders Agreement”). Capitalized
terms used but not defined herein shall have the meanings ascribed to them in the Stockholders Agreement. 
 Effective upon the Board
Determination Date, I, Matthew R. Kahn, resign as a member of the board of directors of the Company and as a member of each committee of the board of directors of the Company on which I serve as of the Board Determination Date (the
“Conditional Resignation”); provided, if as of the Board Determination Date the Holder Ownership Percentage is equal to or greater than 40%, the Conditional Resignation shall be null and void. 

 

	
	Sincerely,
	      

	Matthew R. Kahn

  
 A-1Form of Medium-Term Notes, Series K, Principal at Risk Securities Linked

 Exhibit 4.1 

[Face of Note] 

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation
(“DTC”), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein. 
  

	 CUSIP NO. 94986R3Y5 
	
FACE AMOUNT: $                   
          

 REGISTERED NO.      

WELLS FARGO & COMPANY 

MEDIUM-TERM NOTE, SERIES K 

Due Nine Months or More From Date of Issue 

Principal at Risk Securities Linked to the Lowest Performing of the S&P 500®
Index 
 and the Russell 2000® Index due July 30, 2018 

WELLS FARGO & COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (hereinafter
called the “Company,” which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & Co., or registered assigns, an amount equal to the
Redemption Amount (as defined below) on the Stated Maturity Date (as defined below), unless this Security is redeemed prior to the Stated Maturity Date as provided below under “Optional Redemption,” and to pay Contingent Coupon Payments
(as defined below) on the Face Amount of this Security to the extent provided herein on the Contingent Coupon Payment Dates specified herein at the Contingent Coupon Rate (as defined below) until the earlier of the Stated Maturity Date and the
Optional Redemption Date (as defined below), if any. The “Initial Stated Maturity Date” shall be July 30, 2018. If the Final Calculation Day (as defined below) is not postponed, the Initial Stated Maturity Date will be the
“Stated Maturity Date.” If the Final Calculation Day is postponed, the “Stated Maturity Date” shall be the later of (i) the Initial Stated Maturity Date and (ii) the third Business Day (as defined below)
after the Final Calculation Day as postponed. 
 “Face Amount” shall mean, when used with respect to this
Security, the amount set forth on the face of this Security as its “Face Amount.” 
 Optional Redemption 

The Company may, at its option, redeem this Security, in whole but not in part, on any Optional Redemption Date (as defined
below) by giving notice to the Holder hereof on or before the 

 
Calculation Day (as defined below) immediately preceding that Optional Redemption Date. If this Security is redeemed, the Holder hereof will receive the Optional Redemption Price (as defined
below) plus a final Contingent Coupon Payment (as defined below), if any, on the applicable Optional Redemption Date. Unless the Company defaults in the payment of the Optional Redemption Price plus the final Contingent Coupon Payment, if any, this
Security will cease to be outstanding on such Optional Redemption Date, no additional Contingent Coupon Payments will be payable on this Security and the Holder hereof will have no further rights under this Security after such Optional Redemption
Date. The “Optional Redemption Price” is equal to the Face Amount of this Security. The “Optional Redemption Dates” shall be the Contingent Coupon Payment Dates (as defined below) following each Calculation Day
scheduled to occur from July 2017 to June 2018, inclusive. 
 Payment of Contingent Coupon Payments, the Redemption Amount and the Optional Redemption
Price 
 On each monthly Contingent Coupon Payment Date, the Company shall pay a Contingent Coupon Payment if, and
only if, the Closing Level (as defined below) of the Lowest Performing Index (as defined below) on the related Calculation Day (as defined below) is greater than or equal to its Threshold Level (as defined below). A “Contingent Coupon
Payment,” if payable as provided herein, shall be equal to the product of (i) the Face Amount of this Security, (ii) the Contingent Coupon Rate, and (iii) 30/360. The “Contingent Coupon Payment Dates” shall
be the fourth Business Day following each Calculation Day, as each such Calculation Day may be postponed as herein provided, provided that the Contingent Coupon Payment Date with respect to the Final Calculation Day will be the Stated Maturity Date.
The “Contingent Coupon Rate” is 7.40% per annum. Any Contingent Coupon Payments will be rounded to the nearest cent, with one-half cent rounded upward. 

Any Contingent Coupon Payment so payable, and punctually paid or duly provided for, on any Contingent Coupon Payment Date
will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such Contingent Coupon Payment next preceding such
Contingent Coupon Payment Date. The Regular Record Date for a Contingent Coupon Payment Date shall be the date one Business Day prior to such Contingent Coupon Payment Date. 

Any Contingent Coupon Payment not punctually paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. 

Payment of any Contingent Coupon Payment on this Security will be made in immediately available funds at the office or agency
of the Company maintained for that purpose in the City of Minneapolis, Minnesota; provided, however, that, at the option of the Company, payment of any 

  
 2 

 
Contingent Coupon Payment may be paid by check mailed to the Person entitled thereto at such Person’s last address as it appears in the Security Register or by wire transfer to such account
as may have been designated by such Person. Payments of any Contingent Coupon Payment and the Redemption Amount or the Optional Redemption Price, as applicable, on this Security at Maturity will be made against presentation of this Security at the
office or agency of the Company maintained for that purpose in the City of Minneapolis, Minnesota and at any other office or agency maintained by the Company for such purpose. Notwithstanding the foregoing, for so long as this Security is a Global
Security registered in the name of the Depositary, any payments on this Security will be made to the Depositary by wire transfer of immediately available funds. 

Payment of the Redemption Amount or the Optional Redemption Price, as applicable, and any Contingent Coupon Payments on this
Security will be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 

Definitions Relating to Redemption Amount, the Optional Redemption Price and Contingent Coupon Payments 

If this Security is not redeemed prior to the Stated Maturity Date as provided above under “Optional Redemption,”
the “Redemption Amount” of this Security will equal: 
  

	 	•	 	 if the Ending Level of the Lowest Performing Index on the Final Calculation Day (as defined below) is greater
than or equal to its Threshold Level: the Face Amount; or 

  

	 	•	 	 if the Ending Level of the Lowest Performing Index on the Final Calculation Day is less than its Threshold
Level: 

  

																											
		 		 		 		 		 		 		 		 		 		 		 		 		 	
		 		 		 		 	 	 	Face Amount	 	  x        	 	Performance Factor of the Lowest Performing	 	 	 		 		 		 		 	
		 		 		 		 	 	 	 	 	Index on the Final Calculation Day	 	 	 		 		 		 		 	

 All calculations with respect to the Redemption Amount will be rounded to the nearest one hundred-thousandth,
with five one-millionths rounded upward (e.g., 0.000005 would be rounded to 0.00001); and the Redemption Amount will be rounded to the nearest cent, with one-half cent rounded upward. 

“Index” shall mean each of the S&P 500 Index and the Russell 2000 Index. 

The “Pricing Date” shall mean January 23, 2017. 

The “Lowest Performing Index” on any Calculation Day will be the Index with the lowest Performance Factor on
that Calculation Day. 
 The “Performance Factor” with respect to an Index on any Calculation Day is its
Closing Level on such Calculation Day divided by its Starting Level (expressed as a percentage). 

  
 3 

 The “Starting Level” with respect to the S&P 500 Index is
2261.375, which is based upon an intra-day level of that Index on the Pricing Date, and with respect to the Russell 2000 Index is 1343.525, which is based upon an intra-day level of that Index on the Pricing Date. 

The “Ending Level” of an Index will be its Closing Level on the Final Calculation Day. 

The “Threshold Level” with respect to the S&P 500 Index is 1582.9625, which is equal to 70% of its
Starting Level, and with respect to the Russell 2000 Index is 940.4675, which is equal to 70% of its Starting Level. 
 The
“Closing Level” with respect to each Index on any Trading Day means the official closing level of that Index reported by the relevant Index Sponsor on such Trading Day, as obtained by the Calculation Agent on such Trading Day from
the licensed third-party market data vendor contracted by the Calculation Agent at such time; in particular, taking into account the decimal precision and/or rounding convention employed by such licensed third-party market data vendor on such date,
subject to the provisions set forth below under “—Market Disruption Events” and “—Discontinuance of an Index; Alteration of Method of Calculation.” 

“Index Sponsor” shall mean the sponsor or publisher of an Index. 

“Business Day” shall mean a day, other than a Saturday or Sunday, that is neither a legal holiday nor a day
on which banking institutions are authorized or required by law or regulation to close in New York, New York. 
 The
“Calculation Days” shall be the 24th day of each month, commencing February 2017 and ending June 2018, and the Final Calculation Day. If any such day is not a Trading Day with
respect to either Index, that Calculation Day for each Index will be postponed to the next succeeding day that is a Trading Day with respect to each Index. A Calculation Day is also subject to postponement due to the occurrence of a Market
Disruption Event (as defined below). The “Final Calculation Day” is July 24, 2018. If a Market Disruption Event occurs or is continuing with respect to either Index on any Calculation Day, then such Calculation Day will be
postponed for each Index to the first succeeding day that is a Trading Day for each Index and on which a Market Disruption Event has not occurred and is not continuing for either Index; however, if such first succeeding Trading Day has not occurred
as of the eighth day that is a Trading Day for each Index after the originally scheduled Calculation Day, that eighth day shall be deemed to be the Calculation Day for each Index. If a Calculation Day has been postponed to that eighth day and a
Market Disruption Event occurs or is continuing with respect to either Index on that eighth day, the Calculation Agent will determine the Closing Level of that Index on that day in accordance with the formula for and method of calculating the
Closing Level of such Index last in effect prior to commencement of the Market Disruption Event, using the closing price (or, with respect to any relevant security, if a Market Disruption Event has occurred with respect to such security, its good
faith estimate of the value of such security at the Scheduled Closing Time of the Relevant Stock Exchange for such security or, if earlier, the actual closing time of the regular trading session of such Relevant Stock Exchange) on that day of each
security included in such Index. As used herein, “closing price” means, with respect to any security on any date, the Relevant Stock Exchange traded or quoted price of such security as

  
 4 

 
of the Scheduled Closing Time of the Relevant Stock Exchange for such security or, if earlier, the actual closing time of the regular trading session of such Relevant Stock Exchange. 

“Calculation Agent Agreement” shall mean the Calculation Agent Agreement dated as of March 18, 2015
between the Company and the Calculation Agent, as amended from time to time. 
 “Calculation Agent” shall
mean the Person that has entered into the Calculation Agent Agreement with the Company providing for, among other things, whether a Contingent Coupon Payment will be made, the Optional Redemption Price, if any, and the Redemption Amount, if any,
which term shall, unless the context otherwise requires, include its successors under such Calculation Agent Agreement. The initial Calculation Agent shall be Wells Fargo Securities, LLC. Pursuant to the Calculation Agent Agreement, the Company may
appoint a different Calculation Agent from time to time after the initial issuance of this Security without the consent of the Holder of this Security and without notifying the Holder of this Security. 

Certain Definitions 
 A
“Trading Day” with respect to an Index means a day, as determined by the Calculation Agent, on which (i) the Relevant Stock Exchanges with respect to each security underlying such Index are scheduled to be open for trading for
their respective regular trading sessions and (ii) each Related Futures or Options Exchange with respect to such Index is scheduled to be open for trading for its regular trading session. 

The “Relevant Stock Exchange” for any security underlying an Index means the primary exchange or quotation
system on which such security is traded, as determined by the Calculation Agent. 
 The “Related Futures or Options
Exchange” for an Index means an exchange or quotation system where trading has a material effect (as determined by the Calculation Agent) on the overall market for futures or options contracts relating to such Index. 

Discontinuance Of An Index; Alteration Of Method Of Calculation 

If an Index Sponsor discontinues publication of an Index, and such Index Sponsor or another entity publishes a successor or
substitute equity index that the Calculation Agent determines, in its sole discretion, to be comparable to such Index (a “Successor Equity Index”), then, upon the Calculation Agent’s notification of that determination to the
Trustee and the Company, the Calculation Agent will substitute the Successor Equity Index as calculated by the relevant Index Sponsor or any other entity for purposes of calculating the Closing Level of such Index on any date of determination. Upon
any selection by the Calculation Agent of a Successor Equity Index, the Company will cause notice to be given to the Holder of this Security. 

In the event that an Index Sponsor discontinues publication of an Index prior to, and the discontinuance is continuing on, a
Calculation Day and the Calculation Agent determines that no Successor Equity Index is available at such time, the Calculation Agent will calculate a substitute Closing Level for such Index in accordance with the formula for and method of
calculating such Index last in effect prior to the discontinuance, but using only those securities that comprised such Index immediately prior to that discontinuance. If a Successor Equity Index is selected or

  
 5 

 
the Calculation Agent calculates a level as a substitute for such Index, the Successor Equity Index or level will be used as a substitute for such Index for all purposes, including the purpose of
determining whether a Market Disruption Event exists. 
 If on a Calculation Day an Index Sponsor fails to calculate
and announce the level of an Index, the Calculation Agent will calculate a substitute Closing Level of such Index in accordance with the formula for and method of calculating such Index last in effect prior to the failure, but using only those
securities that comprised such Index immediately prior to that failure; provided that, if a Market Disruption Event occurs or is continuing on such day with respect to such Index, then the provisions set forth above under the definition of
“Calculation Days” shall apply in lieu of the foregoing. 
 If at any time the relevant Index Sponsor makes
a material change in the formula for or the method of calculating an Index, or in any other way materially modifies such Index (other than a modification prescribed in that formula or method to maintain such Index in the event of changes in
constituent stock and capitalization and other routine events), then, from and after that time, the Calculation Agent will, at the close of business in New York, New York, on each date that the Closing Level of such Index is to be calculated,
calculate a substitute Closing Level of such Index in accordance with the formula for and method of calculating such Index last in effect prior to the change, but using only those securities that comprised such Index immediately prior to that
change. Accordingly, if the method of calculating an Index is modified so that the level of such Index is a fraction or a multiple of what it would have been if it had not been modified, then the Calculation Agent will adjust such Index in order to
arrive at a level of such Index as if it had not been modified. 
 Market Disruption Events 

A “Market Disruption Event” with respect to an Index means any of the following events as determined by the
Calculation Agent in its sole discretion: 
  

	 	(A)	 The occurrence or existence of a material suspension of or limitation imposed on trading by the Relevant Stock
Exchanges or otherwise relating to securities which then comprise 20% or more of the level of such Index or any Successor Equity Index at any time during the one-hour period that ends at the Close of Trading on that day, whether by reason of
movements in price exceeding limits permitted by those Relevant Stock Exchanges or otherwise. 

  

	 	(B)	 The occurrence or existence of a material suspension of or limitation imposed on trading by any Related
Futures or Options Exchange or otherwise in futures or options contracts relating to such Index or any Successor Equity Index on any Related Futures or Options Exchange at any time during the one-hour period that ends at the Close of Trading on that
day, whether by reason of movements in price exceeding limits permitted by the Related Futures or Options Exchange or otherwise. 

  

	 	(C)	 The occurrence or existence of any event, other than an early closure, that materially disrupts or impairs the
ability of market participants in general to effect 

  
 6 

	 	 
transactions in, or obtain market values for, securities that then comprise 20% or more of the level of such Index or any Successor Equity Index on their Relevant Stock Exchanges at any time
during the one-hour period that ends at the Close of Trading on that day. 

  

	 	(D)	 The occurrence or existence of any event, other than an early closure, that materially disrupts or impairs the
ability of market participants in general to effect transactions in, or obtain market values for, futures or options contracts relating to such Index or any Successor Equity Index on any Related Futures or Options Exchange at any time during the
one-hour period that ends at the Close of Trading on that day. 

  

	 	(E)	 The closure on any Exchange Business Day of the Relevant Stock Exchanges on which securities that then
comprise 20% or more of the level of such Index or any Successor Equity Index are traded or any Related Futures or Options Exchange with respect to such Index or any Successor Equity Index prior to its Scheduled Closing Time unless the earlier
closing time is announced by the Relevant Stock Exchange or Related Futures or Options Exchange, as applicable, at least one hour prior to the earlier of (1) the actual closing time for the regular trading session on such Relevant Stock
Exchange or Related Futures or Options Exchange, as applicable, and (2) the submission deadline for orders to be entered into the Relevant Stock Exchange or Related Futures or Options Exchange, as applicable, system for execution at such actual
closing time on that day. 

  

	 	(F)	 The Relevant Stock Exchange for any security underlying such Index or Successor Equity Index or any Related
Futures or Options Exchange fails to open for trading during its regular trading session. 

 For purposes
of determining whether a Market Disruption Event has occurred with respect to an Index: 
  

	 	(1)	 the relevant percentage contribution of a security to the level of such Index or any Successor Equity Index
will be based on a comparison of (x) the portion of the level of such Index attributable to that security and (y) the overall level of such Index or Successor Equity Index, in each case immediately before the occurrence of the Market
Disruption Event; 

  

	 	(2)	 the “Close of Trading” on any Trading Day for such Index or any Successor Equity Index means
the Scheduled Closing Time of the Relevant Stock Exchanges with respect to the securities underlying such Index or Successor Equity Index on such Trading Day; provided that, if the actual closing time of the regular trading session of any such
Relevant Stock Exchange is earlier than its Scheduled Closing Time on such Trading Day, then (x) for purposes of clauses (A) and (C) of the definition of “Market Disruption Event” above, with respect to any security
underlying such Index or Successor Equity Index for which such Relevant Stock Exchange is its Relevant Stock Exchange, the “Close of Trading” means such actual closing time and (y) for purposes of clauses (B) and (D) of the
definition of “Market Disruption Event” above, with 

  
 7 

	 	 
respect to any futures or options contract relating to such Index or Successor Equity Index, the “Close of Trading” means the latest actual closing time of the regular trading session
of any of the Relevant Stock Exchanges, but in no event later than the Scheduled Closing Time of the Relevant Stock Exchanges; 

  

	 	(3)	 the “Scheduled Closing Time” of any Relevant Stock Exchange or Related Futures or Options
Exchange on any Trading Day for such Index or any Successor Equity Index means the scheduled weekday closing time of such Relevant Stock Exchange or Related Futures or Options Exchange on such Trading Day, without regard to after hours or any other
trading outside the regular trading session hours; and 

  

	 	(4)	 an “Exchange Business Day” means any Trading Day for such Index or any Successor Equity Index
on which each Relevant Stock Exchange for the securities underlying such Index or any Successor Equity Index and each Related Futures or Options Exchange with respect to such Index or any Successor Equity Index are open for trading during their
respective regular trading sessions, notwithstanding any such Relevant Stock Exchange or Related Futures or Options Exchange closing prior to its Scheduled Closing Time. 

Calculation Agent 

The Calculation Agent will determine whether a Contingent Coupon Payment will be made, the Optional Redemption Price, if any,
and the Redemption Amount, if any. In addition, the Calculation Agent will (i) determine if adjustments are required to the Closing Level of an Index under the circumstances described in this Security, (ii) if publication of an Index is
discontinued, select a Successor Equity Index or, if no Successor Equity Index is available, determine the Closing Level of such Index under the circumstances described in this Security, and (iii) determine whether a Market Disruption Event has
occurred. 
 The Company covenants that, so long as this Security is Outstanding, there shall at all times be a Calculation
Agent (which shall be a broker-dealer, bank or other financial institution) with respect to this Security. 

All determinations made by the Calculation Agent with respect to this Security will be at the sole discretion of the
Calculation Agent and, in the absence of manifest error, will be conclusive for all purposes and binding on the Company and the Holder of this Security. 

Redemption and Repayment 

This Security is not subject to repayment at the option of the Holder hereof prior to July 30, 2018. This Security is
subject to redemption prior to July 30, 2018 as set forth under “Optional Redemption” above. This Security is not entitled to any sinking fund. 

Acceleration 
 If
an Event of Default, as defined in the Indenture, with respect to this Security shall occur and be continuing, the Redemption Amount (calculated as set forth in the next two sentences) of this Security may be declared due and payable in the manner
and with the effect provided in the 

  
 8 

 
Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to the Redemption Amount hereof calculated as provided herein, plus a portion
of a final Contingent Coupon Payment, if any. The Redemption Amount and any final Contingent Coupon Payment will be calculated as though the date of acceleration were the Final Calculation Day. The final Contingent Coupon Payment, if any, will be
prorated from and including the immediately preceding Contingent Coupon Payment Date to but excluding the date of acceleration. 
  

 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place. 
 Unless the certificate of authentication
hereon has been executed by the Trustee referred to on the reverse hereof by manual signature or its duly authorized agent under the Indenture referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose. 
 [The remainder of this page has been left intentionally blank] 

  
 9 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
under its corporate seal. 
 DATED:
                                 

 

					
	WELLS FARGO & COMPANY
		
	By:	 	 
		 	 
		 	Its:	 	 

 [SEAL] 
  

					
	Attest:	 	 
		 	 
		 	Its:	 	 

  

			
	 TRUSTEE’S CERTIFICATE OF

AUTHENTICATION
 This is one of the Securities of the

series designated therein described
 in the within-mentioned Indenture.

	
	 CITIBANK, N.A.,

      as Trustee

		
	By:	 	 
		 	Authorized Signature
	
	OR
	
	 WELLS FARGO BANK, N.A.,

  as Authenticating Agent for the Trustee

		
	By:	 	 
		 	Authorized Signature

  
 10 

 [Reverse of Note] 

WELLS FARGO & COMPANY 

MEDIUM-TERM NOTE, SERIES K 

Due Nine Months or More From Date of Issue 

Principal at Risk Securities Linked to the Lowest Performing of the S&P 500®
Index 
 and the Russell 2000® Index due July 30, 2018 

This Security is one of a duly authorized issue of securities of the Company (herein called the
“Securities”), issued and to be issued in one or more series under an indenture dated as of July 21, 1999, as amended or supplemented from time to time (herein called the “Indenture”), between the Company and
Citibank, N.A., as Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is
one of the series of the Securities designated as Medium-Term Notes, Series K, of the Company, which series is limited to an aggregate principal amount or face amount, as applicable, of $25,000,000,000 or the equivalent thereof in one or more
foreign or composite currencies. The amount payable on the Securities of this series may be determined by reference to the performance of one or more equity-, commodity- or currency-based indices, exchange traded funds, securities, commodities,
currencies, statistical measures of economic or financial performance, or a basket comprised of two or more of the foregoing, or any other market measure or may bear interest at a fixed rate or a floating rate. The Securities of this series may
mature at different times, be redeemable at different times or not at all, be repayable at the option of the Holder at different times or not at all and be denominated in different currencies. 

Article Sixteen of the Indenture shall not apply to this Security. 

The Securities are issuable only in registered form without coupons and will be either
(a) book-entry securities represented by one or more Global Securities recorded in the book-entry system maintained by the Depositary or (b) certificated
securities issued to and registered in the names of, the beneficial owners or their nominees. 
 The Company agrees, to the
extent permitted by law, not to voluntarily claim the benefits of any laws concerning usurious rates of interest against a Holder of this Security. 

Modification and Waivers 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the
Securities at the 

  
 11 

 
time Outstanding of all series to be affected, acting together as a class. The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities of all
series at the time Outstanding affected by certain provisions of the Indenture, acting together as a class, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with those provisions of the Indenture. Certain
past defaults under the Indenture and their consequences may be waived under the Indenture by the Holders of a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such
series. Solely for the purpose of determining whether any consent, waiver, notice or other action or Act to be taken or given by the Holders of Securities pursuant to the Indenture has been given or taken by the Holders of Outstanding Securities in
the requisite aggregate principal amount, the principal amount of this Security will be deemed to be equal to the amount set forth on the face hereof as the “Face Amount” hereof. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Security. 
 Defeasance 

Section 403 and Article Fifteen of the Indenture and the provisions of clause (ii) of Section 401(1)(B) of the
Indenture, relating to defeasance at any time of (a) the entire indebtedness on this Security and (b) certain restrictive covenants and certain Events of Default, upon compliance by the Company with certain conditions set forth therein,
shall not apply to this Security. The remaining provisions of Section 401 of the Indenture shall apply to this Security. 
 Authorized
Denominations 
 This Security is issuable only in registered form without coupons in denominations of $1,000 or any
amount in excess thereof which is an integral multiple of $1,000. 
 Registration of Transfer 

Upon due presentment for registration of transfer of this Security at the office or agency of the Company in the City of
Minneapolis, Minnesota, a new Security or Securities of this series, with the same terms as this Security, in authorized denominations for an equal aggregate Face Amount will be issued to the transferee in exchange herefor, as provided in the
Indenture and subject to the limitations provided therein and to the limitations described below, without charge except for any tax or other governmental charge imposed in connection therewith. 

This Security is exchangeable for definitive Securities in registered form only if (x) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for this Security or if at any time the Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and a successor depositary is not
appointed within 90 days after the Company receives such notice or becomes aware of such ineligibility, (y) the Company in its sole discretion determines that this Security shall be exchangeable for definitive Securities in registered form
and notifies the Trustee thereof or (z) an Event of Default with respect to the Securities represented hereby has occurred and is continuing. If this Security is exchangeable pursuant to the preceding sentence, it shall be exchangeable for
definitive Securities in registered 

  
 12 

 
form, bearing interest at the same rate, having the same date of issuance, Stated Maturity Date and other terms and of authorized denominations aggregating a like amount. 

This Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor of the Depositary or a nominee of such successor. Except as provided above, owners of beneficial interests in this Global
Security will not be entitled to receive physical delivery of Securities in definitive form and will not be considered the Holders hereof for any purpose under the Indenture. 

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary. 
 Obligation of the Company Absolute 

No reference herein to the Indenture and no provision of this Security or the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the Contingent Coupon Payments, if any, and the Redemption Amount or the Optional Redemption Price, as applicable, on this Security at the times, place and rate, and in the coin or
currency, herein prescribed, except as otherwise provided in this Security. 
 No Personal Recourse 

No recourse shall be had for the payment of any Contingent Coupon Payments or the Redemption Amount or the Optional Redemption
Price, as applicable, on this Security or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly waived and released. 
 Defined Terms 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture
unless otherwise defined in this Security. 
 Governing Law 

This Security shall be governed by and construed in accordance with the law of the State of New York, without regard to
principles of conflicts of laws. 

  
 13 

 ABBREVIATIONS 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they
were written out in full according to applicable laws or regulations: 
  

					
	 TEN COM
	 	  -- 
	 	 as tenants in common

			
	 TEN ENT
	 	  -- 
	 	 as tenants by the entireties

			
	 JT TEN
	 	  -- 
	 	 as joint tenants with right

of survivorship and not
 as
tenants in common

  

									
	 UNIF GIFT MIN ACT
	 	  -- 
	 	 	 	 Custodian
	 	 
		 		 	(Cust)	 		 	(Minor)

  

	
	Under Uniform Gifts to Minors Act
	
	   

	(State)

 Additional abbreviations may also be used though not in the above list. 

FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto 

 

	
	 Please Insert Social Security or
 Other
Identifying Number of Assignee

	
	   

  
  

 
  
  

 
 (PLEASE
PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)

  
 14 

 the within Security of WELLS FARGO & COMPANY and does hereby irrevocably constitute and
appoint                                      attorney to
transfer the said Security on the books of the Company, with full power of substitution in the premises. 
 Dated:
                                         
        
  

	
	   

  

	
	   

 NOTICE: The signature to this assignment must correspond with the name as written upon the face of the
within instrument in every particular, without alteration or enlargement or any change whatever. 

  
 15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00266-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00266-of-00352.parquet"}]]