Document:

cfoemploymentagreement.htm

 

May 16, 2014

John N. McMullen

 

 

Re:  Employment Agreement

Dear John:

This mutually agreeable form of employment agreement (this “Agreement”), will be your employment agreement with Eastman Kodak Company and will be effective on May 27, 2014 (“the Effective Date”).  For purposes of this Agreement, the term “Company” shall refer to Eastman Kodak Company.

	
1.  

	
Terms Schedule

Some of the terms of your employment are in the attached schedule (your “Schedule”), which is part of this Agreement.

	
2.  

	
Commencement of Employment

Your employment will begin on the Effective Date.

	
3.  

	
Your Position, Performance and Other Activities

	
a)  

	
Position.  You will be employed in the position stated in your Schedule.

	
b)  

	
Authority, Responsibilities, and Reporting.  Your authority, responsibilities and reporting relationships will correspond to your position and will include any particular authority, responsibilities and reporting relationships that the Company’s Board of Directors (the “Board”) or any officer of the Company to whom you report may assign to you from time to time.

	
c)  

	
Performance.  You will devote substantially all of your business time and attention to the Company and will use good faith efforts to discharge your responsibilities under this Agreement to the best of your ability.

	
d)  

	
Other Activities.  During your employment and subject to the terms of the Schedule, you may (1) serve on corporate, civic or charitable boards or committees, (2) manage personal investments, or (3) engage in any other permitted activity stated in your Schedule, so long as these activities, whether individually or in the aggregate, do not materially interfere with your performance of your responsibilities under this Agreement.

 

	
e)  

	
Incorporation of Employee’s Agreement.  The terms of Eastman Kodak Company Employee’s Agreement, attached hereto as Exhibit 1, are incorporated by reference and you agree to abide by all such terms.

 

  

  

 

 

	
4.  

	
 Your Compensation

	
a)  

	
Salary.  You will receive an annual base salary (your “Salary”).  Commencing on the Effective Date, the starting amount of your Salary will be the amount set forth in your Schedule.   The Executive Compensation Committee of the Board will review your Salary at least annually.  Your Salary will be paid in accordance with the Company’s normal practices for similarly situated executives.

	
b)  

	
Annual Incentive.  You will be eligible to participate in the Company’s short-term variable pay plan for its management level employees, known as Executive Compensation for Excellence and Leadership (“EXCEL”) (your “Annual Incentive”).  Your annual target award under EXCEL will be determined in accordance with your Schedule.  Any actual award in a given annual performance period will depend upon performance against corporate goals selected by management and approved by the appropriate committee of the Board and will be paid in the discretion of such committee.  The terms of the EXCEL plan itself govern and control all interpretations of the plan.

	
c)  

	
Sign-On Award.  On or shortly after the Effective Date, you will be granted the sign-on award stated in your Schedule, which will be subject to the terms and conditions set forth in the applicable award notice. This award is stated on your Schedule in terms of dollar ($) value. The actual number of restricted stock units you will be granted is calculated by dividing the dollar value of your award by the closing price of the Company’s stock on the New York Stock Exchange on the date of grant.

	
d)  

	
Long-Term Incentive Awards.  You will be eligible to participate in the Company’s Long-Term Incentive (LTI) program under the Eastman Kodak Company 2013 Omnibus Incentive Plan (the “Omnibus Plan”).  The amount and form of any award (the “Long-Term Equity Award”) to be granted to you will be determined by the Company in accordance with the terms of the Omnibus Plan and your Schedule, subject to approval by the appropriate committee of the Board and at the discretion of such committee.  The specific terms, conditions and restrictions on any Long-Term Equity Award will be contained in the Administrative Guide and Award Notice delivered to you within twenty (20) business days of the grant date.

	
5.  

	
 Your Benefits

	
a)  

	
Employee Benefit Plans.  During the Scheduled Term, you will be entitled to participate in each of the Company’s employee benefit and welfare plans, including plans providing retirement benefits and medical, dental, hospitalization, life and disability insurance, on a basis that is at least as favorable as that provided to similarly situated executives of the Company.

	
b)  

	
Vacation.  You will be entitled to paid annual vacation in accordance with your Schedule.

 

	
c)  

	
Business Expenses.  You will be reimbursed for all reasonable business expenses incurred by you in performing your responsibilities under this Agreement, subject to the terms of applicable Company reimbursement policies as in effect from time to time.

	
d)  

	
Additional Benefits.  During your employment, you will be provided any additional benefits stated in your Schedule.

 

 

  

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6.  

	
  New Hire Paperwork Completion and Submission

	
a)  

	
On-Boarding System.  The forms required for your employment will be available electronically in our on-boarding system.  Upon acceptance of this offer, you will receive an electronic welcome letter via email from the Company.  This letter contains a link to our on-boarding system which will allow you to complete your new hire paperwork electronically.  Please complete all paperwork within 5 business days of receipt of the email.

	
b)  

	
Employment Preconditions.  This Agreement is subject to the following conditions and may be revoked by the Company due to your inability to satisfy any one or more of these conditions.  By signing this letter, you agree and acknowledge that the Company may perform the activities contemplated below in order to verify the conditions.

	
1.  

	
Drug Test.  You are required to complete a drug screen as part of your pre-employment checks before this Agreement becomes final.  This will be at the Company's expense.  Your employment is contingent upon a negative drug screen urinalysis test result and other pre-employment assessments.  You will receive an email with instructions for your drug screening.  The drug screen must be completed within 48 hours of receipt of this email.

	
2.  

	
Background Check (Past Employment, Social Security Number, Criminal, Education, Credit History, Drivers Record, etc.)  Information to be verified by the Company includes, but is not limited to, your past employment history and your social security number, a check of your education, credit history, drivers record, and criminal convictions records.  Your employment is contingent upon these verifications and checks being acceptable to the Company.  The Company has engaged Sterling Testing Systems of 249 West 17th Street 6th floor, New York, NY 10001 to conduct the verifications and checks. Attached is the Consent and Authorization form that authorizes the Company to conduct these verifications and checks.  Please complete and return the form within forty-eight (48) hours of receipt.

	
3.  

	
Kodak Health Questionnaire.  Upon successful completion of the drug test and background check, you will receive a health questionnaire with instructions to submit to our medical department.

	
4.  

	
FORM I-9.  The Company is required by Immigration and Naturalization Service regulations and Federal Law to verify identity and authorization to work of all prospective employees.  This form will be provided to you electronically through our on-boarding system.  Further clearance may be required for foreign nationals under applicable Export Administration Regulations (EAR) (15 CFR, Part 730 et.seq.)and/or the International Traffic in Arms Regulations (ITAR) (22 CFR Part 120 et. seq.).

 

  

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7.  

	
Termination of Your Employment

	
a)  

	
No Reason Required.  Neither you nor the Company is under any obligation to continue your employment.  In addition, you or the Company may terminate your employment at any time for any reason, or for no reason, subject to compliance with Section 7(c).

	
b)  

	
Related Definitions.

	
1.  

	
“Cause” means any of the following:  (A) your continued failure, for a period of at least 30 calendar days following a written warning, to perform your duties in a manner deemed satisfactory by your supervisor, in the exercise of his or her sole discretion; (B) your failure to follow a lawful written directive from your supervisor or the Board; (C) your willful violation of any material rule, regulation, or policy that may be established from time to time for the conduct of the Company’s business; (D) your unlawful possession, use or sale of narcotics or other controlled substances, or performing job duties while illegally used controlled substances are present in your system; (E) any act or omission or commission by you in the scope of your employment (a) which results in the assessment of a civil or criminal penalty against you or the Company, or (b) which in the reasonable judgment of your supervisor could result in a material violation of any foreign or U.S. federal, state or local law or regulation having the force of law; (F) your conviction or of plea of guilt or no contest to any crime involving moral turpitude; (G) any misrepresentation of a material fact to, or concealment of a material fact from, your supervisor or any other person in the Company to whom you have a reporting relationship in any capacity; or (H) your breach of the Company’s Business Conduct Guide or the Eastman Kodak Company Employee’s Agreement.

	
2.  

	
“Good Reason” means any of the following:  (A) a material diminution in your total target cash compensation, comprised of your Salary and target Annual Incentive; (B) a material diminution in your authority or responsibilities as provided in Section 3(b); (C) any material breach of this Agreement by the Company;  or (D) any purported termination by the Company of your employment other than as expressly permitted by this Agreement; or (E) a Change of Control (as defined below) event followed by your involuntary termination (as determined by the Board or the appropriate committee of the Board) within two years of the Change of Control event.

	
  3.  

	
“Disability” means meeting the definition of disability under the terms of the Kodak Long-Term Disability Plan and receiving benefits under such plan.

	
4.   

	
“Willful” means any act done or omitted to be done not in good faith and without reasonable belief that such action or omission was in the best interest of the Company.

 

	5.  	"Change of Control" means the occurrence of any of the following events:

	
a)  

	
any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (“Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of the Company’s securities representing 50% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (“Company Voting Securities”); provided, however, that the event described in this paragraph (a) shall not be deemed to be a Change of Control by virtue of an acquisition of Company Voting Securities:  (i) by the Company or any Subsidiary, (ii) by any beneficial owner of the Company’s securities as of the Effective Date, (iii) by any employee benefit plan (or related trust) sponsored or maintained by Company or any Subsidiary, (iv) by any underwriter temporarily holding securities pursuant to an offering of such securities or (v) pursuant to a Non-Qualifying Transaction (as defined in paragraph (b) of this definition);

	
b)  

	
the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the Company’s shareholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination:  (i) more than 50% of the total voting power of (x) the entity resulting from such Business Combination (the “Surviving Entity”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting power, is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (ii) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Entity or the parent), is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the parent (or, if there is no parent, the Surviving Entity) and (iii) at least a majority of the members of the board of directors of the parent (or, if there is no parent, the Surviving Entity) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (i), (ii) and (iii) of this paragraph (b) shall be deemed to be a “Non-Qualifying Transaction”);

	
c)  

	
the consummation of a sale of all or substantially all of the Company’s assets (other than to an Affiliate); or

	
d)  

	
approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 50% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person (and in all cases results in beneficial ownership of more than 50% of the Company Voting Securities), a Change of Control shall then occur.

  

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c)  

	
Advance Notice Generally Required.

 

 

	
1.  

	
To terminate your employment, either you or the Company must provide a Termination Notice to the other.  A “Termination Notice” is a written notice that states the specific provision of this Agreement on which termination is based, including, if applicable, the specific clause of the definition of Cause or Good Reason and a reasonably detailed description of the facts that permit termination under that clause; provided, that the failure to include any fact in a Termination Notice that contributes to a showing of Cause or Good Reason does not preclude either party from asserting that fact in enforcing its rights under this Agreement.  If you do not give a Termination Notice within 90 days after you have knowledge that an event constituting Good Reason has occurred, the event will no longer constitute Good Reason.  In addition, you must give the Company 30 days to cure the first event constituting Good Reason.

	
2.  

	
You and the Company agree to provide 30 days’ advance Termination Notice of any termination, unless your employment is terminated by the Company for Cause or because of your Disability or death.  If you die or become Disabled after you provide a valid Termination Notice with Good Reason or the Company provides Termination Notice without Cause, your termination will be treated as a termination with Good Reason or without Cause, effective as of the date of your Disability or death.

Following receipt of such notice, the Company may, at its sole discretion, choose to either (1) waive that notice period (thereby immediately terminating your employment) or (2) place you on paid leave, at your then-current salary for any or all of the notice period.

	
d)  

	
With Good Reason or Without Cause.  If, during your employment, the Company terminates your employment without Cause or you terminate your employment for Good Reason:

	
1.  

	
The Company will pay you the following at the end of your employment: (A) your accrued but unpaid Salary through the last day of your employment, (B) your Salary for any accrued but unused vacation, and (C) any accrued expense reimbursements and other cash entitlements (including for accrued expense reimbursement for which supporting documentation is submitted within 30 days after termination of your employment) (together, your “Accrued Compensation”).  In addition, the Company will timely pay you any amounts and provide you any benefits that are required, or to which you are entitled, under any plan, contract or arrangement of the Company as of the end of your employment (together, the “Other Benefits”).

	
2.  

	
The Company will pay you severance (“Severance Payments”) in an amount equal to your Salary, multiplied by the severance multiplier on your Schedule (“Severance Multiplier”).

 

	
3.  

	
Your Annual Incentive will be governed by the terms of the EXCEL plan and any applicable Administrative Guide and/or Award Notice.

	
4.  

	
All unvested equity awards will be governed by the terms of the Omnibus Plan and any applicable Administrative Guide and/or Award Notice.

 

 

  

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e)  

	
For Cause or without Good Reason.  If the Company terminates your employment for Cause or you terminate your employment without Good Reason, the Company will pay your Accrued Compensation and your Other Benefits.  Effective upon the date of termination for Cause or without Good Reason, all of the unvested portion of your remaining equity would be immediately forfeited.

	
f)  

	
For Your Disability or Death.  If your employment terminates as a result of your Disability or death, the Company will pay your Accrued Compensation, Earned Annual Incentive and will provide Continued Vesting of your Long Term Incentive Awards in accordance with the terms of the applicable awards, without regard to any continued employment condition, and your Other Benefits.

	
g)  

	
Benefits Bearing.  In no event shall any of the severance payments or benefits provided under this Section 7 be “benefits bearing.”

	
h)  

	
Clawback.  In the event you breach any of the terms in the Eastman Kodak Company Employee’s Agreement, this Agreement or the release described in Section 7(i) below, in addition to and not in lieu of any other remedies that the Company may pursue against you, no further Severance Payments will be made to you pursuant to this Section 7 and you agree to immediately repay to the Company all moneys previously paid to you pursuant to this Section 7.

	
i)  

	
Timing.  The benefits provided in this Section 7 will begin at the end of your employment, and any cash payments owed to you under this Section 7 will be paid in one lump sum 65 days following your date of termination, except for Severance Payments, which will be made consistently with the Company’s normal payroll cycles and begin as soon as administratively practicable after your separation from service subject to Section 7(j).  Notwithstanding the foregoing, any Severance Payments owed to you and any continued vesting of your unvested equity awards will only be provided if, at the time of your termination, you provide a release of any and all claims you may have against the Company (other than the rights and benefits provided in Section 5 and the other rights under this Agreement that continue following your employment) in a form reasonably provided by the Company such that you have taken all action necessary for such release to become effective and irrevocable no later than 65 days following your date of termination.  The Termination Allowance Plan (“TAP”) provides broad-based severance benefits to eligible Company employees.  You agree that if you become eligible for severance payments under this Agreement you will not be entitled to TAP benefits.  Should a court nonetheless award you TAP benefits in such circumstances, you agree that the amount of severance payments will be reduced by such award and be immediately repaid to the Company.

	
j)  

	
Section 409A.  This Agreement is intended to comply with or be exempt from the requirements of Section 409A of the Code (“Section 409A”) with respect to amounts, if any, subject thereto and shall be interpreted, construed and performed consistent with such intent.  

	
  

	
To the extent you would otherwise be entitled to any payment that under this Agreement, or any plan or arrangement of the Company or its affiliates, constitutes “deferred compensation” subject to Section 409A, and that if paid during the six months beginning on the date of termination of your employment would be subject to the Section 409A additional tax because you are a “specified employee” (within the meaning of Section 409A and as determined by the Company), the payment, together with any earnings on it, will be paid to you on the earlier of the six-month anniversary of your date of termination or your death.  Similarly, to the extent you would otherwise be entitled to any benefit (other than a payment) during the six months beginning on termination of your employment that would be subject to the Section 409A additional tax, the benefit will be delayed and will begin being provided (together, if applicable, with an adjustment to compensate you for the delay) on the earlier of the six-month anniversary of your date of termination or your death or change in control (within the meaning of Section 409A).  In addition, any payment or benefit due upon a termination of your employment that represents “deferred compensation” subject to Section 409A shall be paid or provided to you only upon a “separation from service” as defined in Treas.  Reg.  § 1.409A-1(h).  Each payment under this Agreement shall be deemed to be a separate payment for purposes of Section 409A, amounts payable under Sections 7(d)(1), 7(d)(2), 7(d)(3) and 7(d)(4) of this Agreement shall be deeed not to be “deferred compensation” subject to Section 409A to the extent provided in the exceptions in Treas.  Reg.  Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treas.  Reg.  Section 1.409A-1 through A-6.

	
  

	
Notwithstanding anything to the contrary in this Agreement or elsewhere, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treas.  Reg.  Section 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to you only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of your second taxable year following your taxable year in which the “separation from service” occurs; and provided further that such expenses are reimbursed no later than the last day of your third taxable year following the taxable year in which your “separation from service” occurs.  Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which you incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

 

 

  

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8.  

	
 Confidential Information

You acknowledge and agree that confidential information, including, without limitation, Company intellectual property, customer lists and other proprietary business information, obtained by you while employed by the Company or any of its subsidiaries concerning the business affairs of the Company or any subsidiary of the Company are the property of the Company or such subsidiary (hereinafter, “Confidential Information”).  Consequently, you agree that, except to the extent required by applicable law, statute, ordinance, rule, regulation or orders of courts or regulatory authorities, you shall not at any time (whether during or after your employment) disclose to any unauthorized person or use for your own account any Confidential Information without the prior written consent of the Company, unless and to the extent that the aforementioned matters are or become generally known to and available for use by the public other than as a result of your acts or omissions to act or as required by law.  You shall deliver to the Company at the termination of your employment, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) containing or constituting Confidential Information which you may then possess or have under your control.  In the event of any inconsistency between the terms of this Section 8 and your Eastman Kodak Company Employee’s Agreement, the terms of this Section 8 shall apply.

	
9.  

	
 On-going Restrictions on Your Activities

	
a)  

	
Related Definitions.

	
1.  

	
“Competitive Enterprise” means any business enterprise that derives more than 20% of its revenue from any activity that competes anywhere with any activity that the Company is then engaged in and which activity generates more than 10% of the Company’s revenue.

	
2.  

	
“Client” means any client or prospective client of the Company to whom you provided services, or for whom you transacted business, or whose identity became known to you in connection with your relationship with or employment by the Company.

	
3.  

	
“Solicit” means any direct or indirect communication of any kind, regardless of who initiates it, that in any way invites, advises, encourages or requests any person to take or refrain from taking any action.

	
4.  

	
For purposes of this Section 9, “Company” means Eastman Kodak Company and its subsidiaries.

	
b)  

	
Your Importance to the Company and the Effect of this Section 9.  You acknowledge that:

	
1.  

	
In the course of your involvement in the Company’s activities, you will have access to Confidential Information and the Company’s client base and will profit from the goodwill associated with the Company.  On the other hand, in view of your access to Confidential Information and your importance to the Company, if you compete with the Company for some time after your employment, the Company will likely suffer significant harm.  In return for the benefits you will receive from the Company and to induce the Company to enter into this Agreement, and in light of the potential harm you could cause the Company, you agree to the provisions of this Section 9.  The Company would not have entered into this Agreement if you did not agree to this Section 9.

	
2.  

	
This Section 9 may limit your ability to earn a livelihood in a Competitive Enterprise and your relationship with Clients.  You acknowledge, however, that complying with this Section 9 will not result in severe economic hardship for you or your family.

	
c)  

	
Transition Assistance.  During the 90 days after a Termination Notice has been given, you will take all actions the Company may reasonably request to maintain for the Company the business, goodwill and business relationships with any Clients.

	
d)  

	
Non-Competition.  During your employment and for a period of eighteen (18) months following the end of your employment you agree that you will not directly or indirectly engage in (whether as an employee, consultant, agent, proprietor, principal, partner, stockholder, corporate officer, director or otherwise), nor have any material ownership interest in or participate in the financing, operation, management or control of a Competitive Enterprise.

  

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e)  

	
Non-Solicitation of Clients.  Until the end of the 18 month period following the end of your employment, you will not attempt to Solicit any Client to transact business with a Competitive Enterprise or to reduce or refrain from doing any business with the Company or interfere with or damage any relationship between the Company and a Client.

	
f)  

	
Non-Solicitation of Company Employees.  Until the end of the 18 month period following the end of your employment, you will not attempt to Solicit anyone who is then an employee or consultant of the Company (or who was an employee or consultant of the Company within the prior six months) to resign from or cease to provide services to the Company or to apply for or accept employment with any Competitive Enterprise.

	
g)  

	
Notice to New Employers.  Before you accept employment with any other person or entity while this Section 9 is in effect, you will provide the prospective employer with written notice of the provisions of this Section 9 and will deliver a copy of the notice to the Company.

	
h)  

	
Terms of this Section Control.  In the event of any inconsistency between the terms of this Section 9 and your Eastman Kodak Company Employee’s Agreement, the terms of this Section 9 shall control.

	
10.  

	
 Effect on Other Agreements

	
a)  

	
Effect on Other Agreements; Entire Agreement.  This Agreement is the entire agreement between you and the Company with respect to the relationship contemplated by this Agreement and supersedes any earlier agreement, written or oral, with respect to the subject matter of this Agreement.  In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise or understanding that is not in this Agreement.

	
11.  

	
Successors

	
a)  

	
Assignment by You.  You may not assign this Agreement without the Company’s consent.  Also, except as required by law, your right to receive payments or benefits under this Agreement may not be subject to execution, attachment, levy or similar process.  Any attempt to effect any of the preceding in violation of this Section 11, whether voluntary or involuntary, will be void.

	
b)  

	
Assumption by any Surviving Company.  Before the effectiveness of any merger, consolidation, statutory share exchange or similar transaction (including an exchange offer combined with a merger or consolidation) involving the Company (a “Reorganization”) or any sale, lease or other disposition (including by way of a series of transactions or by way of merger, consolidation, stock sale or similar transaction involving one or more subsidiaries) of all or substantially all of the Company’s consolidated assets (a “Sale”), the Company will cause (1) the Surviving Company to unconditionally assume this Agreement in writing and (2) a copy of the assumption to be provided to you.  After the Reorganization or Sale, the Surviving Company will be treated for all purposes as the Company under this Agreement.  The “Surviving Company” means (A) in a Reorganization, the entity resulting from the Reorganization or (B) in a Sale, the entity that has acquired all or substantially all of the assets of the Company.

  

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12.  

	
General Provisions

	
a)  

	
Administrator.  All compensation and benefits provided under this Agreement will be administered by the Chief Administrative Officer for the Company (the “Administrator”). The Administrator will have total and exclusive responsibility to control, operate, manage and administer such compensation and benefits in accordance with their terms and all the authority that may be necessary or helpful to enable him to discharge his responsibilities with respect to them.  Without limiting the generality of the preceding sentence, the Administrator will have the exclusive right to:  interpret this Agreement, decide all questions concerning eligibility for and the amount of compensation and benefits payable, construe any ambiguous provision, correct any default, supply any omission, reconcile any inconsistency, and decide all questions arising in the administration, interpretation and application of this Agreement.  The Administrator will have full discretionary authority in all matters related to the discharge of his responsibilities and the exercise of his authority, including, without limitation, his construction of the terms of this Agreement and his determination of eligibility for compensation and benefits.  It is the intent of the parties hereto, that the decisions of the Administrator and his actions with respect to this Agreement will be final and binding upon all persons having or claiming to have any right or interest in or under this Agreement and that no such decision or actions shall be modified upon judicial review unless such decision or action is proven to be arbitrary or capricious.

	
b)  

	
Withholding.  You and the Company will treat all payments to you under this Agreement as compensation for services.  Accordingly, the Company may withhold from any payment any taxes that are required to be withheld under any law, rule or regulation

	
c)  

	
Confidentiality.  You agree to keep the existence and terms of this Agreement confidential except that you may review it with your financial advisor, attorney, or spouse/partner and with the Administrator.

	
d)  

	
Severability.  If any provision of this Agreement is found by any court of competent jurisdiction (or legally empowered agency) to be illegal, invalid or unenforceable for any reason, then (1) the provision will be amended automatically to the minimum extent necessary to cure the illegality or invalidity and permit enforcement and (2) the remainder of this Agreement will not be affected.  In particular, if any provision of Section 8 is so found to violate law or be unenforceable because it applies for longer than a maximum permitted period or to greater than a maximum permitted area, it will be automatically amended to apply for the maximum permitted period and maximum permitted area.

	
e)  

	
No Set-off or Mitigation.  Your and the Company’s respective obligations under this Agreement will not be affected by any set-off, counterclaim, recoupment or other right you or any member of the Company may have against each other or anyone else (except as this Agreement specifically states).  You do not need to seek other employment or take any other action to mitigate any amounts owed to you under this Agreement, and those amounts will not be reduced if you do obtain other employment.

  

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f)  

	
Notices.  All notices, requests, demands and other communications under this Agreement must be in writing and will be deemed given (1) on the business day sent, when delivered by hand or facsimile transmission (with confirmation) during normal business hours, (2) on the business day after the business day sent, if delivered by a nationally recognized overnight courier or (3) on the third business day after the business day sent if delivered by registered or certified mail, return receipt requested, in each case to the following address or number (or to such other addresses or numbers as may be specified by notice that conforms to this Section 12(f)):

If to you, to the address stated on the first page of this Agreement.

If to the Company or any other member of the Company, to:

Eastman Kodak Company

343 State Street

Rochester, New York  14650

Attention: General Counsel

	
g)  

	
Amendments and Waivers.  Any provision of this Agreement may be amended or waived but only if the amendment or waiver is in writing and signed, in the case of an amendment, by you and the Company or, in the case of a waiver, by the party that would have benefited from the provision waived.  Except as this Agreement otherwise provides, no failure or delay by you or the Company to exercise any right or remedy under this Agreement will operate as a waiver, and no partial exercise of any right or remedy will preclude any further exercise.

	
h)  

	
Jurisdiction; Choice of Forum; Costs.  You and the Company irrevocably submit to the exclusive jurisdiction of any state or federal court located in the County of New York over any controversy or claim arising out of or relating to or concerning this Agreement or any aspect of your employment with the Company (together, an “Employment Matter”).  Both you and the Company (1) acknowledge that the forum stated in this Section 11(h) has a reasonable relation to this Agreement and to the relationship between you and the Company and that the submission to the forum will apply even if the forum chooses to apply non-forum law, (2) waive, to the extent permitted by law, any objection to personal jurisdiction or to the laying of venue of any action or proceeding covered by this Section 12(h) in the forum stated in this Section, (3) agree not to commence any such action or proceeding in any forum other than the forum stated in this Section 12(h) and (4) agree that, to the extent permitted by law, a final and non-appealable judgment in any such action or proceeding in any such court will be conclusive and binding on you and the Company.  However, nothing in this Agreement precludes you or the Company from bringing any action or proceeding in any court for the purpose of enforcing the provisions of this Section 12(h).  To the extent permitted by law, the Company will pay or reimburse any reasonable expenses, including reasonable attorney’s fees, you incur as a result of any Employment Matter.

	
i)  

	
Governing Law.  This Agreement will be governed by and construed in accordance with the law of the State of New York applicable to contracts made and to be performed entirely within that State.

 

	
j)  

	
Counterparts.  This Agreement may be executed in counterparts, each of which will constitute an original and all of which, when taken together, will constitute one agreement.

  

10

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

	
EASTMAN KODAK COMPANY

	  
	  
	By:
	
Name

	
Jeffrey J. Clarke

	
Title

	
Chief Executive Officer

	
EXECUTIVE

	  
	  
	
John N. McMullen

  

11

 

Exhibit 1

Eastman Kodak Company Employee’s Agreement

 

EASTMAN KODAK COMPANY

EMPLOYEE’S AGREEMENT

PREAMBLE

Eastman Kodak Company and its affiliates and subsidiaries (hereinafter collectively called “Kodak”) operate in very competitive environments around the world.  As part of your employment, you may from time to time have access to confidential and proprietary company information.  This Employee’s Agreement governs certain understandings between Kodak and you regarding your work for Kodak, its confidential and proprietary information, and your responsibilities to Kodak including, but not limited to, nondisclosure of Kodak’s confidential and proprietary information (as defined in paragraph 1 below), assignment of rights, improper competition (as applicable), and nonsolicitation.

BACKGROUND

I understand that Kodak is engaged in the research, development, manufacture, use, marketing and sale of and services related to equipment, materials (including, but not limited to, photographic and other imaging media), software, firmware, components, web applications, multimedia data including, but not limited to, audio information, hardcopy information, digital information (including but not limited to metadata), chemicals, and systems including any of the foregoing (collectively, “Kodak Business”).  I also understand that, in connection with the Kodak Business, I will be exposed to and may generate information including, but not limited to, technical, marketing, accounting, cost, sales, medical, personnel data, customer lists, vendor lists, production procedures, administrative and service information (hereinafter collectively “Kodak Proprietary Information”).  I further understand that Kodak requires its employees to assign to it all right, title and interest in and to all worldwide inventions, discoveries, improvements, patents, trade secrets, trademarks, mask works, any and all other copyrightable subject matter, and any application for any of the foregoing (hereinafter separately and collectively called “Rights”) within or arising out of any field of employment in which they work during their employment by Kodak and for a period of time after termination of employment from Kodak as described more fully below, and that this Agreement is essential for the full protection of the Kodak Business.

Therefore, in consideration of my employment by Kodak and of certain other benefits to be received by me in connection with such employment, it is understood and agreed as follows:

	
1.  

	
Nondisclosure

During my employment by Kodak, and thereafter, I will not disclose to any person or entity or make use of any Kodak Proprietary Information, trade secret, or other information of a confidential nature regarding the Kodak Business or the commercial, financial, technical or business affairs of Kodak, including such trade secret, proprietary or confidential information of any customer or other entity to which Kodak owes an obligation not to disclose such information, which I acquire during my employment by Kodak, including but not limited to records kept in the ordinary course of business (hereinafter collectively called “Kodak Confidential Information”), except as such disclosure or use may be required in connection with my work as an employee of Kodak.  I understand that this restriction prohibits disclosure to Kodak affiliates and subsidiaries in which Kodak owns less than 80% of the stock, unless I receive written authorization for specific disclosures from my management.

	
2.  

	
Assignment of Rights

	
2.1  

	
I hereby sell, assign and transfer to Kodak all of my right, title and interest in and to all Rights that, during my employment by Kodak and within two (2) years following termination of my employment from Kodak, are made or conceived by me, alone or with others, that (i) are within or arise out of any general field of the Kodak Business in which I have been employed or have worked during my employment by Kodak; or (ii) arise out of any work I perform or information I received regarding the Kodak Business which I received while employed by Kodak; or (iii) arise from work that Kodak authorizes me to perform for or on behalf of any person or entity affiliated with Kodak.

	
2.2  

	
While employed in California, no employee will be required to make an assignment of any invention to the extent prohibited by California Labor Code §2870(a) (a copy of which will be made available to any employee upon request).

	
2.3  

	
I will fully disclose to Kodak as promptly as available all information known or possessed by me concerning the Rights referred to in the preceding section 2.1, and upon request by Kodak and without any further remuneration in any form to me by Kodak, but at the expense of Kodak, execute all applications for patents and for copyright registrations, assignments thereof and other instruments and do all things which Kodak deems necessary to vest and maintain in it the entire right, title and interest in and to all such Rights.

3. Improper Competition

	
  3.1   

	
The restrictions contained in this section 3 will apply during my employment by Kodak and continue after the termination of my employment for any reason (whether voluntary or involuntary or with or without cause) for a period equal to the total number of months I was employed by Kodak, whether continuously or not, but not for fewer than six (6) months nor more than eighteen (18) months after such termination (the “Post Employment Period”).

	
  3.2  

	
During the period described in section 3.1 following termination of my   employment by Kodak, I will, prior to accepting employment with a Competing Business (as defined in section 3.3), inform that Competing Business of the existence of this Agreement and provide a copy to that Competing Business.

	
  3.3   

	
While employed by Kodak and during the Post-Employment Period, I will not work, be employed by, consult, advise, assist or engage in any business or activity that: (a) competes with any area of the Kodak Business in or with which I worked at Kodak (a “Competing Business”) during the two (2) years immediately preceding termination of my Kodak employment; and (b) involves subject matter(s) about which I gained Kodak Confidential Information during the two (2) years immediately preceding termination of my Kodak employment.  Prior to accepting employment, working, consulting, advising or assisting in or with any Competing Business, I agree to: (a) provide such Competing Business with a copy of this Agreement: (b) advise my Kodak supervisor or an appropriate Kodak Human Resources representative of my intent to accept such position; and (c) at Kodak’s request, to provide information and/or facilitate Kodak’s communication with such Competing Business concerning the nature, scope and responsibilities of such position.

	
  3.4   

	
During the Post-Employment Period, the restrictions of section 3.3 will apply only to my work or activities within the relevant geographic area(s) or with the accounts, as defined in this section.

	
  

	
3.4.1  If I was employed by Kodak in a sales or service job immediately prior to the termination of my employment, and if my responsibilities were confined to specific territories, accounts, or regions, then the restrictions will apply to:   (a) any and all sales or service territories, or regions in which I worked within the two (2) years prior to termination of my employment and, (b) the then existing accounts and prospective accounts of Kodak with which I worked within the two (2) years immediately preceding termination of my employment with Kodak.

	
  

	
3.4.2   If, immediately prior to the termination of my Kodak employment: (a) I was employed by Kodak in a sales or service job and my responsibilities were not confined to specific territories, accounts or regions, or (b) if I was employed by Kodak in any other capacity, then the relevant geographic area(s) will consist of the United States and any other country to which my responsibilities extended, unless a narrower geographic area would be sufficient to protect from disclosure the Kodak Confidential Information of which I have knowledge.

	
  

	
3.4.3   I understand and agree that the foregoing geographic restrictions are necessary in light of the international scope of the Kodak Business and the business of Kodak’s competitors, and that the disclosure or use anywhere of Kodak Confidential Information to or for the benefit of a Competing Business would irreparably harm Kodak.

	
  

	
3.4.4   If during the Post-Employment Period, this Agreement prohibits me from accepting an offer of full-time employment consistent with my skills, abilities, and education solely because of the provisions of this section 3, and if I provide to Kodak proof of such offer and rejection, the provisions of this section 3 shall thereafter continue to bind me only as long as Kodak pays me, for each month in which I am unable to secure a position consistent with my skills, abilities, and education, an amount equal to 1/12th of my annual total target compensation at the time of termination (exclusive of employee benefits, non-recurring bonuses, vacation pay and/or other special compensation), less any severance, separation or termination benefits or the like that I am entitled to receive from Kodak for the same pay period, and less any compensation I receive during the same period in the form of unemployment insurance or in exchange for any employment, consulting or other work I have undertaken.  Any such payments will also be less all amounts that Kodak is required by law to withhold.  Notwithstanding anything in this Agreement to the contrary, I understand that if Kodak declines or ceases to make one or more payments to me due to my failure to comply with the restrictions and obligations I have agreed to under the terms of this Agreement, or for any of the reasons enumerated in Section 3.4.6 below, I will not be excused from, and will continue to be subject to, all of the restrictions and obligations set forth in this section 3.

	
  

	
3.4.5   In return for any payments made by Kodak under section 3.4.4, I agree to make conscientious, aggressive and continuing efforts to find other employment or income consistent with my skills, abilities and education but not prohibited by this section 3.  Within seven (7) days of Kodak’s request, I will provide documentation satisfactory to Kodak of my efforts to obtain employment or income, all employment, contracting, or consulting offers I have received during the Post-Employment Period, the amount of any income received from employment (including self-employment), contracting, consulting, or any other work performed by me, and the identity of the employer offering employment, or other entity requesting contracting or consulting services or other work, and any other information or documents reasonably necessary for Kodak to verify my income and employment status.

	
  

	
3.4.6   Kodak, at its option and sole discretion, may decline to make post-employment compensation payments:

	
  

	
(1)  for any month during which I, in the reasonable determination of Kodak, have not conscientiously sought employment, or

	
  

	
(2)  for any month during which I have failed to provide documentation requested by Kodak, as provided for above, or

	
  

	
(3)  if I breach this Agreement or any other post-employment obligations I may owe Kodak; or

	
  

	
(4)  if I reject an offer of employment that Kodak does not deem to be  in violation of section 3.3 above; or

	
  

	
(5)  by giving me written permission to accept available employment or by giving me a written release from some or all of the obligations of section 3 of this Agreement (in which case, the terms of such release shall govern my obligations for the remainder of the Post-Employment Period); or

	
  

	
(6)  if I am terminated from Kodak or any subsequent employment, contracting, or consulting engagement “for cause,” which as defined herein includes, but is not limited to, the following:

	
·  

	
neglect of duties, failure to follow policies or supervisor’s directives, or insubordination;

	
·  

	
dishonesty, deception, fraud, or breach of trust or loyalty in connection with the affairs of an employer;

	
·  

	
conviction of any felony, gross misdemeanor, or misdemeanor, other than a minor traffic offense;

	
·  

	
any act or omission in the scope of employment that  places an employer in violation of any applicable law or regulation; or

	
·  

	
breach of any of the material terms or conditions  contained in this Agreement.

	
  

	
3.5  I understand that this section 3 will not be effective at any time during which I am employed by Kodak in the State of California.

4.      Nonsolicitation

	
  

	
During my Kodak employment and for a period of one (1) year after termination of my employment for any reason (whether voluntarily or involuntarily or with or without cause), I will not, directly or indirectly, either for myself or for the benefit of any other person or entity:  (i) induce or attempt to induce any employee of Kodak to leave the employ of Kodak, (ii) in any way interfere with the relationships between Kodak and any employee of Kodak, (iii) employ or otherwise engage as an employee, independent contractor or otherwise, any person who has been an employee of Kodak during the six months immediately preceding such employment or (iv) solicit, entice, call upon or in any way for the purpose of diverting or taking away or attempting to divert or take away any of Kodak’s customers and suppliers to do business with a Competing Business.

	
5.  

	
   Return of Property

	
  

	
I agree that, upon termination of my employment for any reason (whether voluntary or involuntary or with or without cause), I will immediately return to Kodak, (i) all Kodak Confidential Information in any form (including without limitation printed, handwritten, and electronically-stored materials or information), together with all copies, thereof, within my possession, custody  or control and; (ii) all other Kodak property in my possession, custody or control, including, but not limited to, office keys, identification badges or passes, Kodak credit cards, automobiles, computer equipment and software (“Kodak Property”).  Under no circumstances will I deliver or give such Kodak Confidential Information or Kodak Property to any person or entity without Kodak management’s advance written permission and, upon Kodak’s request, I will verify that I have not done so.

	
6.  

	
   At-Will Employment

	
  

	
I understand that, regardless of any statement made to me or contained in any handbook, policy statement, or other document, my employment will be “at-will”.  That is, I will be free to terminate my employment at any time, for any reason, and Kodak is free to do the same.  No other agreement relating to this issue will be effective unless it is contained in a written agreement which:  (1) mentions me by name; (2) references this Agreement by name and date; (3) specifically acknowledges that it is intended to amend this Agreement; and (4) is signed by a Kodak corporate officer and me.

	
7.  

	
Business Conduct

	
  

	
I understand that Kodak is an ethical company and that I am required to adhere to Kodak’s policies and procedures regarding ethical business practices, including but not limited to, Kodak’s conflict of interest policy and policies concerning the protection of Kodak Confidential Information.  I understand that my failure to do so constitutes a breach of this Agreement.

	
8.  

	
    Miscellaneous

	
  

	
8.1   I agree that Kodak has provided me with valuable consideration for accepting the terms and conditions set forth in this Agreement, including those set forth in section 3.  Among other things, that consideration includes my employment and/or continued employment and certain benefits to be received by me in connection with such employment, some of which may be conditioned upon a validly executed Employee’s Agreement.

	
  

	
8.2  This Agreement replaces any and all previous agreements relating to the same or similar matters that I may have entered into with Kodak with respect to my present or any future period of employment by Kodak.  Further, the terms of this Agreement shall inure to the benefit of the successors and assigns of Kodak and shall be binding upon my heirs, assigns, administrators and representatives.  No  oral agreement, statement or representation shall be effective to alter the terms of this Agreement.

	
  

	
8.3   I understand and agree that a breach of the provisions of this Agreement will cause Kodak irreparable injury that may not be compensable by receipt of money damages.  I, therefore, expressly agree that Kodak shall be entitled, in addition to any other remedies legally available, to injunctive and/or other equitable relief, including but not limited to temporary, preliminary and/or permanent injunctive relief, to prevent or remedy a breach of this Agreement, or any part hereof, and to payment of reasonable attorneys fees it incurs in enforcing this Agreement.

	
  

	
8.4  If any one or more of the provisions of this Agreement shall be found to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.  If any one or more of the provisions of this Agreement is for any reason held unacceptably broad, it shall be construed or rewritten (blue-lined) so as to be enforceable to the extent of the greatest protection to Kodak under existing law.

	
  

	
8.5   All titles or headings in this agreement are for convenience only and shall not affect the meaning of any provision herein.

	
  

	
8.6  THIS AGREEMENT IS ENTERED INTO IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPALS OF CONFLICT OF LAWS.  I UNDERSTAND AND AGREE THAT ANY ACTION OR PROCEEDING UNDER, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT SHALL BE BROUGHT IN AND ADJUDICATED BY THE UNITED STATES DISTRICT COURT, WESTERN DISTRICT OF NEW YORK IN ROCHESTER, NEW YORK, UNLESS THERE IS NO BASIS FOR FEDERAL JURISDICTION, IN WHICH CASE SUCH ACTION OR PROCEEDING SHALL BE BROUGHT IN AND ADJUDICATED BY THE STATE OF NEW YORK, SUPREME COURT, COUNTY OF MONROE.

Dated ______________________________, 201__

	
___________________________________

	  	
__________________

	
             Signature of Employee

	  	
        Global I.D.

	  	  	  
	
___________________________________

	  	
____________________

	
        Employee Name (Print or Type)

	  	  
	  	  	
____________________

	  	  	
             Address

  

12

  

John McMullen

Employment Agreement effective May 27, 2014

Terms Schedule

	
Position

	
Chief Financial Officer and Executive Vice President, Eastman Kodak Company

 

	
Base Salary

	
$600,000

 

	
Annual Cash Performance Incentive under Company’s Executive Compensation for Excellence and Leadership (EXCEL) Plan1

 

	
The target level for your Annual Incentive will be 75% of your Base Salary.

 

The maximum payout under the EXCEL Plan is 200%.

 

Total Target Cash Compensation is $1,050,000.

 

	
Initial Sign-On Grant

	
$1,000,000 in Restricted Stock Units (RSUs), granted on the Effective Date of your agreement with vesting over a three-year period (33.3% vests each year).

 

	
Long-Term Incentive Compensation

	
Target award for annual equity grant:  $1,000,0002

 

Total Direct Compensation is $2,050,500 (Total Target Cash plus Annual Equity Awards).

 

	
Housing Allowance and Travel Expenses

	
$5,000 / month (net of taxes)

 

Housing and travel allowance provided to cover your housing and travel expenses incurred between San Francisco and Rochester.

 

	
Severance Multiplier

	
1X Base Salary

 

	
Change of Control

	
In the case of a Change of Control event followed by an involuntary termination3 within two years following the Change of Control, severance would be paid after the 409(a) waiting period.

 

	
Additional Benefits

	
Up to four weeks vacation.

 

	
Standard Benefits

	
Retirement – Kodak Retirement Income Plan (KRIP) Cash Balance Plan (see Plan Document for specifics)

· 4% Defined-Benefit Pension Contribution

· 401(k) Program with 3% Company Match

 

Flexible Benefits Program:

· Medical and Dental

· Flexible Spending Accounts

· Life Insurance and Dependent Life Insurance

· Accidental Death and Dismemberment Insurance

· Long-Term Disability

· Vacation Buy

 

1EXCEL Plan performance metrics are determined annually by the Executive Compensation Committee

2Equity vesting is over a three-year period with the form of equity to be determined by the Executive Compensation Committee (may be in time-based Restricted Stock Units, performance-based Restricted Stock Units or Stock Options)

3Leaving Reasons and associated eligibility are reviewed and approved by the Executive Compensation Committee

  

13EX-10.1

 Exhibit 10.1 

Execution Copy 

EXECUTIVE GRANT AND SEPARATION AGREEMENT 

This Executive Grant and Separation Agreement (the “Agreement”) is entered into as of May 12, 2014, by and
between APPROACH RESOURCES INC., a Delaware corporation (the “Company”), and RALPH P. MANOUSHAGIAN, an individual residing in the State of Texas (“Employee”). 

RECITALS 
 WHEREAS,
Employee has been employed by the Company pursuant to the Employment Agreement between the parties effective as of January 24, 2011 (the “Employment Agreement”); 

WHEREAS, Employee has previously been awarded restricted shares of the Company’s common stock, $0.01 par value per share (the
“Common Stock”) under the Company’s 2007 Stock Incentive Plan, as amended (the “Plan”) pursuant to separate grants on each of November 14, 2007, June 3, 2009, August 6,
2010, March 7, 2011, February 21, 2012, and February 20, 2013 (collectively, the “Restricted Stock Award Agreements”) and under which Employee holds 66,684 outstanding unvested shares subject to
performance and time vesting requirements; 
 WHEREAS, the parties desire to enter into this Agreement to, except as otherwise provided
herein, supersede and fully replace all provisions of the Employment Agreement and set forth the terms of the separation of Employee’s employment from the Company and Employee’s release of any claims or causes of action that he may have
arising from his employment with the Company, including but not limited to any claims arising from the separation from such employment; 

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

1. Separation of Employment. The parties acknowledge and agree that Employee’s employment as Executive Vice President, Land
and all other positions with the Company and all subsidiaries and affiliates will end effective on May 16, 2014 (the “Separation Date”). 

2. Consideration. Employee acknowledges and agrees that, but for entry into this Agreement, the Company has no obligation to pay
Employee the sums specified in Paragraph 3 below and that said sums are fair, adequate and independent valuable consideration for the promises, releases and waivers contained in this Agreement. Provided Employee executes this Agreement within the
twenty-one (21) day period referenced below (and is not revoked by him within seven (7) days of such execution), Employee shall be granted the following consideration: 

(a) Cash Severance – Salary and Vacation Days: Pursuant to Paragraph 7(e)(i) of the Employment Agreement (dealing with a
non-renewal of the Employment Agreement) and subject to the terms described therein, Employee shall be paid a lump sum in cash equal to 150% of Employee’s current base salary, or a total of $360,000, less required tax
withholdings, within 20 days after the Separation Date. In addition, on or before the date of payment set forth in the preceding sentence, Employee shall be paid a lump sum amount in cash, less any required withholdings, for Employee’s accrued,
unused vacation days at the rate of $923 per day. As of the day this Agreement is signed, Employee has 27.5 days of accrued, unused vacation days. 

 (b) [Intentionally omitted.] 

(c) Cash Severance – Continuation of Other Benefits: Pursuant to Paragraph 7(e)(iii) of the Employment Agreement, at the time of
the payment of the amount set forth in Paragraph 2(a) above, Employee shall be paid a lump sum in cash a total of $19,070, less required withholdings, attributable to health coverage for Employee during the applicable 18-month COBRA
continuation period. 
 (d) Restricted Stock: Pursuant to Paragraph 2(b) of the Restricted Stock Award Agreements, as of the
Separation Date, all of Employee’s 66,684 outstanding unvested restricted shares shall be forfeited entirely and for no consideration. 

3. Grant of Restricted Stock Units. Pursuant to the Restricted Stock Unit Grant and Agreement, attached hereto as Appendix
A, Employee shall be granted the number of Restricted Stock Units listed in such agreement on the date provided thereunder. 
 4.
Prior Rights and Obligations. This Agreement extinguishes all rights, if any, which Employee may have, contractual or otherwise, relating to or arising out of his employment with the Company. In entering into this Agreement,
Employee expressly acknowledges and agrees that he has received all leaves (paid and unpaid) to which he was entitled during his employment and, as of the date that Employee executes this Agreement, he has received all wages and been paid all sums
that he is owed by the Company, except for amounts remaining to be paid under this Agreement. 
 5. [Intentionally omitted.] 

6. Return of Company Materials and Confidential Information. Employee agrees that, as of the Separation Date, he has returned to
the Company: (a) all Company documents and other materials, including without limitation, electronic or “hard” data, bank files, software, computers (laptop or otherwise), policy manuals, office supplies, keys and any other tangible
item belonging to the Company; and (b) all confidential and/or proprietary information in his 

  
 - 2 - 

 
possession, including but not limited to, any customer information or records, strategic plans, business policies, financial information, intellectual property, methods of operation,
implementation strategies, and any documents or materials consisting of or containing the Company’s trade secrets or other legally protectable information in his possession or in the possession of any person or entity acting on his behalf. 

7. Release, Covenants, and Continuing Obligations. 

(a) Release: Employee agrees to release and discharge the Company and any parent, subsidiary, predecessor, successor, assign or
affiliated entity, along with their respective past, present, and future owners, partners, officers, directors, employees, agents, attorneys, successors, administrators and insurers (collectively the “Company Parties”), from any and
all claims, demands, liabilities and causes of action, whether statutory or common law, including, but not limited to, any claim for salary, severance, benefits, payments, expenses, costs, damages, penalties, compensation, remuneration, wages,
contractual entitlements; and all claims or causes of action relating to any matter occurring on or prior to the date that Employee executed this Agreement, including without limitation (i) any alleged violation of: (A) the Age
Discrimination in Employment Act of 1967; (B) Title VII of the Civil Rights Act of 1964; (C) the Civil Rights Act of 1991; (D) Sections 1981 through 1988 of Title 42 of the United States Code; (E) the Employee Retirement Income
Security Act; (F) the Immigration Reform Control Act; (G) the Americans with Disabilities Act; (H) the National Labor Relations Act; (I) the Occupational Safety and Health Act; (J) the Family and Medical Leave Act;
(K) any state or federal anti-discrimination law; (L) any state or federal wage and hour law; (M) any other local, state or federal law, regulation or ordinance; (ii) any public policy, contract, tort, or common law claim;
(iii) any and all claims for costs, fees, or other expenses including attorneys’ fees incurred in the matters referenced herein; and (iv) any and all claims he may have arising as the result of any alleged breach of any contract,
incentive compensation plan or agreement or stock award plan or agreement with any Company Party, including without limitation the Plan, Restricted Stock Award Agreements, STIP and Employment Agreement (collectively, the “Released
Claims”). This Agreement is not intended to indicate that any such claims exist or that, if they do exist, they are meritorious. Rather, Employee is simply agreeing that, in exchange for the consideration recited in Paragraph 2 and 3 of
this Agreement, any and all potential claims of this nature that he may have against the Company Parties, regardless of whether they actually exist, are expressly settled, compromised and waived. Notwithstanding this release of liability, nothing in
this Agreement prevents Employee from filing any non-legally waivable claim, including a challenge to the validity of this Agreement with the Equal Employment Opportunity Commission (“EEOC”), or comparable state or local agency, or
participating in any investigation or proceeding conducted by the EEOC or comparable state or local agency; however, Employee understands and agrees that he is waiving any and all rights to recover any monetary or personal relief or recovery as a
result of such EEOC or comparable state or local agency proceeding or 

  
 - 3 - 

 
subsequent legal actions. Further, in no event shall the Released Claims include: (i) any claim which arises after the date this Agreement is executed by Employee, including any claim to
enforce his rights under this Agreement; or (ii) any claim to any vested benefits under an employee pension or retirement plan. Finally, Employee represents, warrants and agrees that at the time that Employee signs this Agreement, he has not
brought or joined any claims, appeals, complaints, charges or lawsuits against the Company Parties and has made no assignment, sale, delivery, transfer or conveyance of any rights he has asserted or may have against any of the Company Parties with
respect to any Released Claim. 
 (b) Non-Disclosure of Agreement: Employee agrees that, except to the extent disclosed in any public
filings required by law, the terms of this Agreement are confidential and that he will not voluntarily disclose to any third person, apart from his attorney, tax advisors and immediate family, the existence, terms or conditions of this Agreement or
to cause any third person to disclose the existence, terms or conditions of this Agreement, except as required by law or compelled by any governmental authority. If required by law or compelled by a government authority to involuntarily disclose the
existence, terms or conditions of this Agreement, Employee agrees to give the Company at least five (5) business days’ notice. 

(c) Non-Disparagement: Both Employee and the Company agree that the Company will communicate no adverse or derogatory information to
anyone concerning Employee or his employment, and Employee, likewise, will communicate no such information concerning the Company or any persons, corporations or other entities having any relationship with any part of the Company. 

(d) Non-Disclosure of Confidential Information: Paragraph 14 of the Employment Agreement is incorporated in its entirety by reference
herein. 
 (e) Non-Competition, Non-Solicitation: The purpose of Subparagraphs 7(d) and 7(e) are to protect the Company from unfair
loss of goodwill and/or business advantage. 
 (i) Paragraph 15 of the Employment Agreement is incorporated in its entirety by reference
herein. To the extent there are any inconsistencies between that Paragraph 15 and this Agreement, this Agreement controls. 

  
 - 4 - 

 (ii) Notwithstanding the foregoing, Employee further agrees that for the period during which any
Restricted Stock Units granted pursuant to the Restricted Stock Unit Grant and Agreement continue to vest, or for one (1) year following the end of the Post-Termination Non-Compete Term, as defined in Paragraph 15 of the Employment Agreement,
whichever ends earlier (the “Restricted Period”), Employee shall refrain from accepting other employment with, or providing services to any company or other entity that: 

(A) as of the Separation Date or as of the end of the six-month period following such Separation Date competes with the Company in the
upstream exploration and production business, which for the avoidance of doubt includes any leasing, acquiring, exploring, developing, or producing hydrocarbons and related products (the “E&P Business”) within the boundaries of,
or within a 25-mile radius of the boundaries of, any mineral property interest of the Company or its affiliates (including, without limitation, a mineral lease, overriding royalty interest, production payment, net profits interest, mineral fee
interest, or option or right to acquire any of the foregoing, or an area of mutual interest as designated pursuant to contractual agreements between the Company or its affiliates and any third party) or any other property on which the Company or its
affiliates have an option, right, license, or authority to conduct or direct exploratory activities, such as three dimensional seismic acquisition or other seismic, geophysical and geochemical activities (but not including any preliminary geological
mapping); or 
 (B) is an E&P Business that as of the Separation Date or as of the end of the six-month period following such
Separation Date, both (x) is headquartered within a 60-mile radius of the Company’s headquarters located at One Ridgmar Centre, 6500 West Freeway, Suite 800, Fort Worth, Texas 76116, where Employee was employed, and (y) has a
stockholders’ or members’ equity, or equivalent measure of equity capital under generally accepted accounting principles, of $200 million or more. Notwithstanding any other provision of this Agreement, the Company agrees that its sole and
exclusive remedy for a breach of this Paragraph 7(e)(ii)(B) by Employee shall be the forfeiture of any unearned Restricted Stock Units that have not become available as set forth in the schedule contained in the attached Appendix A. 

(iii) Notwithstanding the foregoing, nothing in this Paragraph 7(e) shall preclude Employee from making personal investments in securities of
oil and gas companies that are registered on a national stock exchange, if the aggregate amount owned by Employee and all immediate family members and affiliates does not exceed 1% of such company’s outstanding securities. 

(f) Post-Separation Cooperation: Following the Separation Date, Employee will cooperate with the Company at its request to assist with
existing or future investigations, proceedings, litigation, examinations or other fact-finding or adjudicative proceedings, public or private, involving any of the Company Parties. This obligation includes promptly meeting with representatives of
the Company at reasonable times upon their request, and providing information and, where applicable, testimony, that is truthful, accurate and complete, according to information known to Employee. From and after the Service Period, the Company will
pay Employee $200 for each hour that Employee provides such assistance at the Company’s request. Employee will submit to the Company a statement no later than thirty (30) days after providing

  
 - 5 - 

 
any such services under this Paragraph 7(f) setting out the number of hours such services were performed and the Company will pay for such services within thirty (30) days after receipt of
such statement. The Company also will reimburse Employee, within thirty (30) days after submission of substantiating documentation, for reasonable out-of-pocket travel, lodging and other incidental expenses (but not attorney’s fees)
Employee incurs in providing such assistance, provided that expenses over $500 have been approved in advance by an authorized representative of the Company and Employee submits such documentation within thirty (30) days after the expense is
incurred. If requested by any of the Company Parties, Employee will make good faith efforts to travel to such locations as any of the Company Parties may reasonably request to provide such assistance provided that travel time will be billed at the
above rate. 
 8. Enforcement of Covenants and Remedies. 

(a) Enforcement of Covenants: Employee acknowledges and agrees that the Company previously fulfilled its agreement to provide him with
confidential information and that his covenants in Paragraphs 6 and 7 of this Agreement are ancillary to that prior enforceable agreement and are supported by independent, valuable consideration. Employee further acknowledges and agrees that the
limitations as to time, geographical area, and scope of activity to be restrained by those covenants in Paragraphs 7(d) and 7(e) are reasonable and acceptable to Employee and do not import any greater restraint than is reasonably necessary to
protect the Company’s goodwill, confidential information, and other legitimate business interests. Employee further agrees that if, at some later date, a court of competent jurisdiction determines that any of the covenants in Paragraphs 7(d) or
7(e) are unenforceable, any such covenants shall be reformed by the court and enforced to the maximum extent permitted under law. 
 (b)
Remedies: In the event of a breach or threatened breach by Employee of any of his covenants in Paragraphs 6 or 7 of this Agreement, the Company shall be entitled to equitable relief by temporary restraining order, temporary injunction, or
permanent injunction or otherwise, in addition to other legal and equitable relief to which it may be entitled, including any and all monetary damages that the Company may incur as a result of such breach, violation, or threatened breach or
violation. Employee acknowledges that damages are an inadequate remedy for any breach of the terms and conditions set forth in Paragraphs 6 or 7 of this Agreement and agrees that the Company may pursue any remedy available to it concurrently or
consecutively in any order as to any breach, violation, or threatened breach or violation, and the pursuit of one of such remedies at any time shall not be deemed an election of remedies or waiver of the right to pursue any other of such remedies as
to such breach, violation, or threatened breach or violation, or as to any other breach, violation, or threatened breach or violation. 

  
 - 6 - 

 9. Employee Representations. Employee acknowledges that: 

(a) Employee is hereby advised to consult with an attorney before signing this Agreement and has had adequate opportunity to do so. 

(b) Employee would not otherwise have been entitled to the consideration described in Paragraph 3 of this Agreement and that Company agreed to
provide such consideration in return for Employee’s agreement to be bound by the terms of this Agreement. 
 (c) Employee has been
given at least twenty-one (21) days to review this Agreement and understands that if he does not accept this Agreement by May 12, 2014, this offer will expire. 

(d) Employee has seven (7) days after signing this Agreement to revoke it. This Agreement will not become effective or enforceable until
the revocation period has expired without Employee’s revocation. Any notice of revocation of the Agreement is effective only if received by the Company in writing by the seventh day after Employee signs this Agreement at the following address:
One Ridgmar Centre, 6500 West Freeway, Suite 800, Fort Worth, Texas 76116. Employee understands that if he revokes his acceptance of this Agreement pursuant to this Paragraph 9(d), the Company will not provide him with any severance payment
described in Paragraph 2, above, and all other terms of this Agreement will become null and void. 
 10. Corporate Changes. In
the event of any consolidation or merger of the Company into or with any other corporation during the term of this Agreement, or the sale of all or substantially all of the assets of the Company to another corporation during the term of this
Agreement, such successor corporation shall assume this Agreement and become obligated to perform all of the terms and provisions hereof applicable to the Company, and Employee’s obligations hereunder shall continue in favor of such successor
corporation. 
 11. Voluntary Agreement. Employee acknowledges and agrees that he has carefully read this Agreement and
understands that, except as expressly reserved herein, it is a release of all claims, known or unknown, past or present, including all claims under the Age Discrimination in Employment Act. Employee further warrants that he executes this Agreement
of his own free will, after having a reasonable period of time to review, study and deliberate regarding its meaning and effect, and after being advised to consult an attorney. Finally, Employee enters into this Agreement fully knowing its effect
and he does so voluntarily, in exchange for the consideration stated above. 
 12. Dispute Resolution. If any dispute arising
out of or relating to this Agreement, including any question regarding its existence or validity (a “Dispute”) cannot be amicably resolved by the parties, the parties shall submit the Dispute to nonbinding mediation as soon as

  
 - 7 - 

 
reasonably possible after the Dispute arose. If complete agreement cannot be reached within five (5) calendar days of submission to mediation, either party may file a civil action against
the other party in any court of competent jurisdiction permitted under Paragraph 17. 
 Waiver of Right to Jury Trial. NOTWITHSTANDING ANY OTHER
PROVISION IN THIS AGREEMENT, THE PARTIES SHALL, AND HEREBY DO, IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING FROM THIS AGREEMENT OR THE EMPLOYMENT AGREEMENT. IN ADDITION, EMPLOYEE SHALL, AND HEREBY DOES,
IRREVOCABLY WAIVE THE RIGHT TO PARTICIPATE IN ANY CLASS OR COLLECTIVE ACTION WITH RESPECT TO ANY DISPUTE. 
 13. Entire
Agreement. Employee and the Company agree that this Agreement contains the entire agreement between the parties, and supersedes all prior agreements or understandings between the parties, both written and oral, between the parties pertaining
to matters encompassed in this Agreement, including, without limitation the Employment Agreement. Employee agrees that the Company has not made any promise or representation to him concerning this Agreement not expressed in this Agreement, and that,
in signing this Agreement, he is not relying on any prior oral or written statement or representation by the Company, but is instead relying solely on his own judgment and his legal and tax advisors, if any. 

14. Amendment of Agreement. This Agreement cannot be modified except by a written agreement signed by both parties and
specifically identified as an amendment to this Agreement. Notwithstanding the previous sentence, the Company may modify or amend this Agreement in its sole discretion at any time without the further consent of the Employee in any manner necessary
to comply with applicable law and regulations or the listing or other requirements of any stock exchange upon which the Company is listed; provided, that such amendment is immaterial and would not cause a material reduction of any benefits
provided to Employee hereunder. 
 15. Waiver. The waiver by either party of a breach of any term of this Agreement shall not
operate or be construed as a waiver of a subsequent breach of the same provision by either party or of the breach of any other term of provision of this Agreement. 

16. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement. If any provision may be made enforceable by limitation, then such provision shall be deemed so limited and shall be enforceable to the maximum extent permitted by applicable law. This
Agreement will be binding upon and inure to the benefit of the parties’ respective successors, assigns, legal representatives and heirs. 

  
 - 8 - 

 17. Governing Law; Venue. This Agreement shall be governed by the laws of the State
of Texas, without regard to its conflict-of-laws principles. Employee and the Company hereby irrevocably consent to the binding and exclusive venue for any Dispute between the parties arising out of or related to this Agreement being in the state or
federal court of competent jurisdiction that regularly conducts proceedings in Tarrant County, Texas. Nothing in this Agreement, however, precludes Employee or the Company from seeking to remove a civil action from any state court to federal court.

 18. Notices. Any notice to be given to the Company hereunder shall be deemed sufficient if addressed to the Company in
writing and delivered or mailed by certified or registered mail to its offices at One Ridgmar Centre, 6500 West Freeway, Suite 800, Fort Worth, Texas 76116, or such other address as the Company may hereafter designate. Any notice to be given to
Employee hereunder shall be delivered or mailed by certified or registered mail to: 2425 Brookgreen Ct., Bedford, Texas 76021, or such other address as Employee may hereafter designate. 

19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all
of which together shall be considered one and the same agreement. The delivery of this Agreement in the form of a clearly legible facsimile or electronically scanned version by e-mail shall have the same force and effect as delivery of the
originally executed document. 
 20. Right to Consult a Tax Advisor. Notwithstanding any contrary provision in this Agreement,
Employee shall be solely responsible for any risk that the tax treatment of all or part of any payments provided by this Agreement may be affected by Section 409A, which may impose significant adverse tax consequences on him, including
accelerated taxation, a 20% additional tax, and interest. Because of the potential tax consequences, Employee has the right, and is encouraged by this paragraph, to consult with a tax advisor of his choice before signing this Agreement. 

[Signature Page Follows] 

  
 - 9 - 

			
	APPROACH RESOURCES INC.,
	a Delaware Corporation
		
	By:	 	 /s/ J. Ross Craft

	Name:	 	J. Ross Craft
	Title:	 	President and CEO
	
	Accepted by:
	
	 /s/ Ralph P. Manoushagian

	Ralph P. Manoushagian

 Date: May 12, 2014 

Attachments: Appendix A – Restricted Stock Unit Grant and Agreement 

  
 - 10 - 

 APPENDIX A 

APPROACH RESOURCES INC. 

2007 STOCK INCENTIVE PLAN 

RESTRICTED STOCK UNIT GRANT AND AGREEMENT 

This Restricted Stock Unit Grant and Agreement (“Agreement”) is made and entered into as of the date set forth below by and
between Approach Resources Inc., a Delaware corporation (the “Company”) and you; 
 WHEREAS, the Company agrees to
grant you this restricted stock unit award; 
 WHEREAS, the Company adopted the Approach Resources Inc. 2007 Stock Incentive Plan, as
it may be amended from time to time (the “Plan”) under which the Company is authorized to grant restricted stock units to certain Employees, Outside Directors and other service providers of the Company; 

WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part of this Agreement as if fully set forth herein; and

 WHEREAS, you desire to accept the restricted stock unit award made pursuant to this Agreement; 

NOW, THEREFORE, in consideration of and mutual covenants set forth herein and for other valuable consideration hereinafter set forth,
the parties agree as follows: 
 1. The Grant. Subject to the conditions set forth below, the Company hereby grants you,
effective as of the date set forth below, an award consisting of 41,281 restricted stock units (“Restricted Stock Units”), whereby each Restricted Stock Unit represents the right to receive one share of common stock, par value $0.01
per share, of the Company (“Stock”), plus the additional Cash Dividend Rights or Dividend Unit Rights, as applicable, set forth in Section 3, in accordance with the terms and conditions set forth herein and in the Plan (the
“Award”). To the extent that any provision of this Agreement conflicts with the expressly applicable terms of the Plan, you acknowledge and agree that those terms of the Plan shall control and, if necessary, the applicable terms of
this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan. Capitalized terms that are not otherwise defined in this Agreement shall have the meanings given to them in the Plan and/or in the Executive Grant and
Separation Agreement dated May 12, 2014 (the “Separation Agreement”). 
 2. No Shareholder
Rights. The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle you to any rights of a holder of Stock prior to the date shares of Stock are issued to you in settlement of the Award. Your rights with
respect to the Restricted Stock Units shall remain unsecured and unfunded at all times prior to the date on which such shares of Stock are issued pursuant to the schedule set forth in Section 6. 

3. Cash Dividend Rights; Dividend Unit Rights. In the event that the Company declares and pays a dividend in respect of its
outstanding shares of Stock and, on the record date 

  
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for such dividend, you hold Restricted Stock Units granted pursuant to this Agreement that have not been settled, the Company shall pay to you an amount in cash or additional restricted stock
units equal to the cash or Stock dividends, as applicable, that you would have received if you were the holder of record, as of such record date, of the number of shares of Stock related to the portion of your Restricted Stock Units that have not
been settled as of such record date, such payment to be made on or promptly following the date that the Company pays such dividend (however, in no event shall the Cash Dividend Rights or Dividend Unit Rights be paid later than thirty (30) days
following the date on which the Company pays such dividend to its shareholders generally). To the extent any additional Restricted Stock Units are delivered pursuant to a Dividend Unit Right, such additional Restricted Stock Units shall be subject
to the payment schedule set forth below in Section 6. 
 4. Restrictions. The Restricted Stock Units are restricted in
that they may not be sold, transferred or otherwise alienated or hypothecated until these restrictions are removed or expire pursuant to the schedule set forth in Section 6 of this Agreement and Stock is issued to you as described in
Section 5 of this Agreement. 
 5. Issuance of Stock. No shares of Stock shall be issued to you prior to the date on
which the Restricted Stock Units are scheduled to be settled in accordance with Section 6. After reaching a scheduled date pursuant to Section 6, the Company shall, promptly and within fifteen (15) days of such date, cause to be
issued Stock registered in your name in payment of such Restricted Stock Units upon receipt by the Company of any required tax withholding, as set forth in Section 7 hereof. The Company shall evidence the Stock to be issued in payment of the
scheduled Restricted Stock Units in the manner it deems appropriate. The value of any fractional Restricted Stock Units shall be rounded down at the time Stock is issued to you in connection with the Restricted Stock Units. No fractional shares of
Stock, nor the cash value of any fractional shares of Stock, will be issuable or payable to you pursuant to this Agreement. The value of such shares of Stock shall not bear any interest owing to the passage of time. Neither this Section 5 nor
any action taken pursuant to or in accordance with this Section 5 shall be construed to create a trust or a funded or secured obligation of any kind. 

6. Schedule of Settlement Payments. 

(a) The restrictions on all of the Restricted Stock Units granted pursuant to this Agreement will expire and Stock will become issuable with
respect to the Restricted Stock Units, as set forth in this Section 6 (which Stock will be transferable when issued, and nonforfeitable) on or subsequent to the applicable dates set forth in the following schedule: 

 

							
	Total Number of Shares
underlying RSUs at Grant	 	 	Number of Shares
available on 12/31/2014	 
	 	41,281	  	 	 	41,281	  

 (b) Notwithstanding the schedule set forth in (a) above, 

  
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 (i) if you die prior to the time at which you would otherwise become entitled to a payment of
the Stock with respect to your Restricted Stock Units, then the schedule set forth above shall be accelerated and 100% of all previously unpaid shares of Stock attributable to your Restricted Stock Units shall become due and payable as of the date
of your death, or 
 (ii) if a Change of Control occurs then the schedule set forth above shall be accelerated and 100% of all previously
unpaid shares of Stock attributable to your Restricted Stock Units shall become due and payable as of the date upon which such Change of Control occurs. 

(c) For purposes of this Agreement, “Change of Control” has the definition provided such term in the Plan with the following
language added as the last sentence:  
 Notwithstanding the foregoing, with respect to an Award that is subject to
Section 409A of the Code and with respect to which a Change of Control will accelerate payment, “Change of Control” shall mean an event that qualifies both as a “change of control” as defined in the Plan as well as a
“change of control event” as defined in the regulations and guidance issued under Section 409A of the Code 
 7.
Payment of Taxes. The Company may require you to pay to the Company (or a subsidiary of the Company’s if you are an employee of such entity), an amount the Company deems necessary to satisfy its (or its subsidiary’s) current
or future obligation to withhold federal, state or local income or other taxes that you incur as a result of the Award. With respect to any required tax withholding, you may (a) direct the Company to withhold from the shares of Stock to be
issued to you under this Agreement the number of shares necessary to satisfy the Company’s obligation to withhold taxes; which determination will be based on the shares’ Fair Market Value at the time such determination is made;
(b) deliver to the Company shares of Stock sufficient to satisfy the Company’s tax withholding obligations, based on the shares’ Fair Market Value at the time such determination is made; or (c) deliver cash to the Company
sufficient to satisfy its tax withholding obligations. If you desire to elect to use the stock withholding option described in subsection (a) of the foregoing sentence, you must make the election at the time and in the manner the Company
prescribes. 
 8. Compliance with Securities Law. Notwithstanding any provision of this Agreement to the contrary, the
issuance of Stock will be subject to compliance with all applicable requirements of federal, state, or foreign law with respect to such securities and with the requirements of any stock exchange or market system upon which the Stock may then be
listed. No Stock will be issued hereunder if such issuance would constitute a violation of any applicable federal, state, or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which
the Stock may then be listed. In addition, Stock will not be issued hereunder unless (a) a registration statement under the Securities Act is, at the time of issuance, in effect with respect to the shares issued or (b) in the opinion of
legal counsel to the Company, the shares issued may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. YOU ARE CAUTIONED THAT ISSUANCE OF STOCK IN SETTLEMENT OF RESTRICTED
STOCK UNITS GRANTED PURSUANT TO THIS AGREEMENT MAY NOT OCCUR UNLESS THE 

  
 - 13 - 

 
FOREGOING CONDITIONS ARE SATISFIED. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares subject to the Award will relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority has not been obtained. As a condition to any
issuance hereunder, the Company may require you to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such
compliance as may be requested by the Company. From time to time, the Board and appropriate officers of the Company are authorized to take the actions necessary and appropriate to file required documents with governmental authorities, stock
exchanges, and other appropriate persons to make shares of Stock available for issuance. 
 9. Clawback. Notwithstanding any
provisions in this Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of the Stock delivered hereunder), whether in the form of cash or otherwise, shall be subject to a clawback
to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Section 304 of the Sarbanes Oxley Act of 2002, or any
regulations promulgated thereunder. 
 10. Legends. The Company may at any time place legends referencing any restrictions
imposed on the shares of Stock pursuant to this Agreement on all certificates representing shares of Stock issued with respect to this Award. 

11. Furnish Information. You agree to furnish to the Company all information requested by the Company to enable it to comply
with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation. 
 12. No
Liability for Good Faith Determinations. The Company and the members of the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Restricted Stock Units granted
hereunder. 
 13. Execution of Receipts and Releases. Any payment of cash or any issuance or transfer of shares of Stock or
other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such persons hereunder. The Company may require
you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance, to execute a release and receipt therefor in such form as it shall determine. 

14. No Guarantee of Interests. The Board and the Company do not guarantee the Stock of the Company from loss or depreciation.

 15. Company Records. Records of the Company or any of its subsidiaries regarding your period of service, termination of
service and the reason(s) therefor, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect. 

  
 - 14 - 

 16. Company Action. Any action required of the Company shall be by resolution of
the Board or by a committee, person or entity authorized to act by resolution of the Board. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board or the stockholders of the Company to make or
authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation
of the Company or any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding. 

17. Information Confidential. As partial consideration for the granting of the Award hereunder, you hereby agree to keep
confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to the terms and conditions of this Agreement; provided, however, that such information may be disclosed
as required by law and may be given in confidence to your spouse and tax and financial advisors. 
 18. Dispute Resolution.
Paragraph 12 of the Separation Agreement is incorporated in its entirety by reference herein. 
 19. Notice. Any notice to be
given to the Company hereunder shall be deemed sufficient if addressed to the Company in writing and delivered or mailed by certified or registered mail to its offices at One Ridgmar Centre, 6500 West Freeway, Suite 800, Fort Worth, Texas 76116, or
such other address as the Company may hereafter designate. Any notice to be given to Employee hereunder shall be delivered or mailed by certified or registered mail to: 2425 Brookgreen Ct., Bedford, Texas 76021, or such other address as
Employee may hereafter designate. 
 20. Waiver of Notice. Any person entitled to notice hereunder may waive such notice in
writing. 
 21. Successors. This Agreement shall be binding upon you, your legal representatives, heirs, legatees and
distributees, and upon the Company, its successors and assigns. In the event of any consolidation or merger of the Company into or with any other entity during the term of this Agreement, or the sale of all or substantially all of the assets of the
Company to another person or entity during the term of this Agreement, such successor person or entity shall assume this Agreement and become obligated to perform all of the terms and provisions hereof applicable to the Company, and your obligations
and restrictions hereunder shall continue in favor of such successor person or entity. 
 22. Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision may be made enforceable by limitation, then such provision shall be deemed so limited and
shall be enforceable to the maximum extent permitted by applicable law. This Agreement will be binding upon and inure to the benefit of the parties’ respective successors, assigns, legal representatives and heirs. 

  
 - 15 - 

 23. Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which together shall be considered one and the same agreement. The delivery of this Agreement in the form of a clearly legible facsimile or electronically scanned version by e-mail shall have the same
force and effect as delivery of the originally executed document. 
 24. Headings. The titles and headings of Sections are
included for convenience of reference only and are not to be considered in construction of the provisions hereof. 
 25. Governing
Law; Venue. This Agreement shall be governed by the laws of the State of Texas, without regard to its conflict-of-laws principles. You and the Company hereby irrevocably consent to the binding and exclusive venue for any Dispute between the
parties arising out of or related to this Agreement being in the state or federal court of competent jurisdiction that regularly conducts proceedings in Tarrant County, Texas. Nothing in this Agreement, however, precludes you or the Company from
seeking to remove a civil action from any state court to federal court. The obligation of the Company to sell and deliver Stock hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Stock. 
 26. Amendment. This Agreement cannot be modified except by a
written agreement signed by both parties and specifically identified as an amendment to this Agreement. Notwithstanding the previous sentence, the Company may modify or amend this Agreement in its sole discretion at any time without your further
consent in any manner necessary to comply with applicable law and regulations or the listing or other requirements of any stock exchange upon which the Company is listed; provided, that such amendment is immaterial and would not cause a
material reduction of any benefits provided to you. 
 27. The Plan. This Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan. 
 28. Right to Consult a Tax Advisor. Notwithstanding any contrary
provision in this Agreement, you shall be solely responsible for any risk that the tax treatment of all or part of any payments provided by this Agreement may be affected by Section 409A, which may impose significant adverse tax consequences on
you, including accelerated taxation, a 20% additional tax, and interest. Because of the potential tax consequences, you have the right, and are encouraged by this paragraph, to consult with a tax advisor of your choice before signing this Agreement.

 [Remainder of page intentionally left blank] 

  
 - 16 - 

 By your signature and the signature of the Company’s representative below, you and the
Company hereby acknowledge receipt of the Restricted Stock Units issued on the date set forth below, which have been granted under the terms and conditions contained herein and in the Plan. 

You acknowledge and agree that (a) you are not relying upon any written or oral statement or representation of the Company, its
affiliates, or any of their respective employees, directors, officers, attorneys or agents (collectively, the “Company Parties”) regarding the tax effects associated with your execution of this Agreement and your receipt and holding
of and the vesting of the Restricted Stock Units, and (b) in deciding to enter into this Agreement, you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted. You hereby release,
acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any nature whatsoever, known or unknown, on account of, arising out of, or
in any way related to the tax effects associated with your execution of the Agreement and your receipt and holding of and the settlement of the Restricted Stock Units. 

You further acknowledge receipt of a copy of the Plan and agree to all of the terms and conditions of the Plan which are incorporated herein
by reference. 
  

			
	APPROACH RESOURCES INC.,
	a Delaware Corporation
		
	By:	 	  

	Name:	 	  

	Title:	 	  

	
	Accepted by:
	
	  

	Ralph P. Manoushagian
		
	Date:	 	  

 Attachments: Approach Resources Inc. 2007 Stock Incentive Plan, as amended 

  
 - 17 -

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