Document:

exv10w1

Exhibit 10.1

FIRST AMENDMENT TO THE

APPROACH RESOURCES INC.

2007 STOCK INCENTIVE PLAN

     This First Amendment to the Approach Resources Inc. 2007 Stock Incentive Plan (the
“Amendment”) is made effective as of December 31, 2008, by Approach Resources Inc., a Delaware
corporation (“Approach”).

W I T N E S S E T H:

     WHEREAS, Approach established the Approach Resources Inc. 2007 Stock Incentive Plan (the
“Plan”) effective as of June 28, 2007; and

     WHEREAS, Approach now desires to amend the Plan for compliance with Internal Revenue Code
Section 409A and the Treasury Regulations issued thereunder;

     NOW, THEREFORE, pursuant to the authority reserved in Section 14.1, the Plan is amended as
follows:

     1. Section 4.2 of the Plan is hereby amended by the addition of the following sentence:

Notwithstanding the provisions of this Section 4.2, outstanding Awards and Award
Agreements shall be adjusted in accordance with (A) Sections 422 and 424 of the Code
and the regulations thereunder with respect to Incentive Stock Options and (B)
Section 409A of the Code and the regulations thereunder with respect to Nonqualified
Stock Options, SARs and, to the extent applicable, other Awards.

     2. Article V of the Plan is hereby amended by the addition of the following sentence:

Notwithstanding the foregoing, Employees, Outside Directors and other individuals or
entities that provide services to Affiliates that are not considered a single
employer with Approach under Code Section 414(b) or Code Section 414(c) shall not be
eligible to receive Awards which are subject to Code Section 409A until the
Affiliate adopts this Plan as a participating employer in accordance with Section
15.18.

     3. The second sentence of Section 7.1 of the Plan is hereby amended and restated in its
entirety as follows:

Nonqualified Stock Options may be granted only to Employees, Outside Directors or
other individuals or entities performing services for Approach or a corporation or
other type of entity in a chain of corporations or other entities in which each
corporation or other entity has a “controlling interest” in another corporation or
entity in the chain, starting with Approach and ending with the corporation or other
entity for which the Employee, Outside Director or other individual or entity
performs services.

     4. The first sentence of Section 8.1(b) of the Plan is hereby amended and restated in its
entirety as follows:

SARs may be granted only to Employees, Outside Directors or other individuals or
entities performing services for Approach or a corporation or other type of entity
in a chain of corporations or other entities in which each corporation or other
entity has a

 

 

“controlling interest” in another corporation or entity in the chain, starting with
Approach and ending with the corporation or other entity for which the Employee,
Outside Director or other individual or entity performs services.

     5. The Plan is hereby amended by the addition of the following as Section 15.18:

     15.18 Participating Affiliates. With the consent of the Committee, any
Affiliate that is not considered a single employer with Approach under Code Section
414(b) or Code Section 414(c) may adopt the Plan for the benefit of its Employees by
written instrument delivered to the Committee before the grant to the Affiliate’s
Employees under the Plan of any Award subject to Code Section 409A.

     6. Except as otherwise specifically set forth herein, all other terms and conditions of the
Plan shall remain in full force and effect.

     IN WITNESS WHEREOF, Approach has caused this Amendment to be executed on its behalf by its
duly authorized officer as of this the 31st day of December, 2008.

	 	 	 	 	 
	 	APPROACH RESOURCES INC.

 	 
	 	By:  	/s/ J. Ross Craft
 	 
	 	 	J. Ross Craft, President and Chief Executive Officer 	 
	 	 	 	 
	 

2exv10w2

Exhibit 10.2

FIRST AMENDMENT

TO

EMPLOYMENT AGREEMENT

J. Ross Craft

     This First Amendment to Employment Agreement (“Amendment”) is effective December 31, 2008, and
serves to modify only those certain terms of the Employment Agreement (“Agreement”) dated and
effective January 1, 2003, between Approach Resources Inc. (the “Company”) and J. Ross Craft (the
“Employee”), as stated herein.

     1. Paragraph 5(d) of the Agreement is hereby amended by adding the following sentence to the
end thereof:

Notwithstanding the foregoing, (i) the amount of expenses eligible for reimbursement during
a calendar year may not affect the expenses eligible for reimbursement in any other calendar
year, (ii) the reimbursement must be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred and (iii) the right to
reimbursement shall not be subject to liquidation or exchange for any other benefit.

     2. Paragraph 6(e) of the Agreement is hereby amended by restatement in its entirety to read as
follows:

	 	e.	 	Good Reason. At his option, Employee may terminate his employment
hereunder (a termination for “Good Reason”) in accordance with this paragraph 6(e) in
the event any of the following actions are taken without Employee’s consent:

	 	(i)	 	a material diminution in Employee’s authority, responsibilities
or duties;
	 
	 	(ii)	 	a material diminution in the authority, duties or
responsibilities of the supervisor to whom Employee is required to report,
including a requirement that Employee report to an officer or employee instead
of reporting directly to the Board (or similar governing body); or
	 
	 	(iii)	 	any other action or inaction by the Company that constitutes a
material breach by the Company of its obligations under this Agreement.

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

     3. The introductory language prior to subparagraph (a) of Paragraph 7 is hereby amended by
restatement in its entirety to read as follows:

 

 

Upon termination of Employee’s employment for one of the following reasons, Employee shall
be entitled to the following compensation:

     4. Paragraph 7(b) of the Agreement is amended by restatement in its entirety to read as
follows:

	 	b.	 	Termination by the Company or by Employee for Good Reason. If (i)
Employee’s employment shall be terminated without Cause as provided in paragraph 6(d)
or if the Company elects not to extend this Agreement as provided in paragraph 6(f) or
(ii) Employee should terminate his employment for Good Reason, then the Company shall
pay or provide Employee, in lieu of any further Base Salary payments to Employee:

	 	(A)	 	on or before the 20th day following Employee’s
Separation from Service, a lump sum in cash equal to 50% of his Base Salary in
effect as of such Separation from Service;
	 
	 	(B)	 	on or before the 60th day following Employee’s
Separation from Service, a lump sum in cash equal to 150% of Employee’s Base
Salary in effect as of such Separation from Service;
	 
	 	(C)	 	all benefits Employee may be entitled to receive pursuant to
any pension or employee benefit plan or other arrangement or life insurance
policy maintained by the Company; and
	 
	 	(D)	 	for a period of 24 months (one year if Employee terminates with
Good Reason) or, if less, the period ending on the date Employee is no longer
entitled to continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), a continuation of all benefits then
applicable to Employee and his immediate family under any employee welfare
benefit plan then maintained by the Company, including without limitation
health, dental and life insurance benefits; provided that if such continued
coverage after the Separation from Service is not permitted under the Company’s
plans, then the Company will provide Employee with substantially similar
benefits through an insurance policy or reimburse Employee for the full cost of
obtaining such insurance which reimbursement amount shall be paid within five
(5) days of Employee’s furnishing the Company with evidence of the cost of such
insurance, which evidence shall be furnished to the Company by Employee on a
monthly basis.

Notwithstanding the foregoing, Employee shall be entitled to the payments and
benefits above only if Employee’s termination of employment constitutes a
“Separation from Service.” For purposes of this Agreement, “Separation from
Service” means separation from service (within the meaning of Code Section 409A and
the regulations and other guidance promulgated thereunder) with the group of
employers that includes the Company and each of its “Affiliates.” For this purpose,
“Affiliate” means any incorporated or unincorporated trade or business or other
entity or person, other than the Company, that along with the Company is considered
a single employer under Code Section 414(b) or Code Section 414(c), but (i) in
applying Code Section 1563(a)(1), (2), and (3) for the purposes of determining a
controlled group of corporations under Code Section 414(b), the phrase “at least 50
percent” shall be used instead of the phrase “at least 80 percent” in each place the
phrase “at least 80 percent” appears in Code Section

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1563(a)(1), (2), and (3), and (ii) in applying Treasury Regulation Section
1.414(c)-2 for the purposes of determining trades or businesses (whether or not
incorporated) that are under common control for the purposes of Code Section 414(c),
the phrase “at least 50 percent” shall be used instead of the phrase “at least 80
percent” in each place the phrase “at least 80 percent” appears in Treasury
Regulation Section 1.414(c)-2.

     5. Paragraph 7(c) of the Agreement is hereby deleted in its entirety.

     6. Paragraph 8(a) of the Agreement is hereby amended by restatement in its entirety to read as
follows:

	 	a.	 	If there is a “Change in Control” as defined in this paragraph and Employee is
employed on the Change in Control date, then this Agreement will terminate, regardless
of whether Employee terminates or experiences a Separation from Service, and the
Company shall pay or provide to Employee, in lieu of the payments and benefits provided
for in Section 7(b):

	 	(A)	 	on or before the 20th day following the date of the
Change in Control, a lump sum in cash equal to 50% of his Base Salary in effect
as of the date of the Change in Control;
	 
	 	(B)	 	on or before the 60th day following the date of the
Change in Control, a lump sum in cash equal to 150% of Employee’s Base Salary
in effect as of the date of the Change in Control;
	 
	 	(C)	 	in the event of Employee’s termination for any reason on or
after the date of the Change in Control, all benefits Employee may be entitled
to receive pursuant to any pension or employee benefit plan or other
arrangement or life insurance policy maintained by the Company; and
	 
	 	(D)	 	in the event of Employee’s termination for any reason on or
after the date of the Change in Control, for a period of 24 months following
such termination or, if less, the period ending on the date Employee is no
longer entitled to continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), a continuation of all benefits then
applicable to Employee and his immediate family under any employee welfare
benefit plan then maintained by the Company, including without limitation
health, dental and life insurance benefits; provided that if such continued
coverage after the Date of Termination is not permitted under the Company’s
plans, then the Company will provide Employee with substantially similar
benefits through an insurance policy or reimburse Employee for the full cost of
obtaining such insurance which reimbursement amount shall be paid within five
(5) days of Employee’s furnishing the Company with evidence of the cost of such
insurance, which evidence shall be furnished to the Company by Employee on a
monthly basis.

     7. Paragraph 9(d) of the Agreement is hereby amended to add the following to the end thereof:

Such interest shall be paid in a lump sum at the same time as the related past due
amounts.

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     8. Paragraph 9 of the Agreement is hereby amended to add the following paragraph to the end
thereof:

	 	e.	 	IRC Section 409A. All or a portion of the severance pay and benefits
provided under this Agreement is intended to be exempt from Code Section 409A and any
ambiguous provision will be construed in a manner that is compliant with or exempt from
the application of Code Section 409A. In particular, such severance pay and benefits
are intended to constitute a payment or benefit described in paragraphs (b)(9)(iv) and
(v) of Treasury Regulation Section 1.409A-1 and/or severance pay due to involuntary
separation from service under Treasury Regulation Section 1.409A-1(b)(9)(iii).
Notwithstanding any provision in this Agreement to the contrary, if any payment or
benefit provided for herein would be subject to additional taxes and interest under
Code Section 409A if Employee’s receipt of such payment or benefit is not delayed until
the Section 409A Payment Date, then such payment or benefit will not be provided to
Employee (or Employee’s estate, if applicable) until the Section 409A Payment Date.
The “Section 409A Payment Date” is the earlier of (a) the date of Employee’s death or
(b) the date that is six months and one day after Employee’s Separation from Service.
If any payment to Employee is delayed pursuant to the foregoing sentence, such amount
instead will be paid, with interest at the rate set out in Section 9(d), on the Section
409A Payment Date. For purposes of Code Section 409A, each payment amount or benefit
due under this Agreement will be considered a separate payment and Employee’s
entitlement to a series of payments or benefits under this Agreement is to be treated
as an entitlement to a series of separate payments. Any amount that Employee is
entitled to be reimbursed under this Agreement will be reimbursed to Employee as
promptly as practicable and in any event not later than the last day of the calendar
year after the calendar year in which the expenses to be reimbursed are incurred, and
the amount of the expenses eligible for reimbursement during any calendar year will not
affect the amount of expenses eligible for reimbursement in any other calendar year.

     9. The third sentence of paragraph 16 of the Agreement is hereby amended by restatement in its
entirety to read as follows:

In the event of Employee’s death, this Agreement shall be enforceable by Employee’s estate,
executors, or legal representatives.

     10. Except and only as expressly provided herein, all provisions of the Agreement shall remain
unchanged and continue in full force and effect, and are hereby ratified by the parties hereto.

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     IN WITNESS WHEREOF, the Company has caused this Amendment to be executed on its behalf by its
duly authorized officer, and the Employee has executed this Amendment, effective as of the date
first set forth above.

	 	 	 	 	 
	APPROACH RESOURCES INC.
	 	EMPLOYEE
	 
	 	 	 	 
	By:

	 	/s/ J. Curtis Henderson
	 	/s/ J. Ross Craft
	 

	 	 
	 	 
	 

	 	J. Curtis Henderson
	 	J. Ross Craft
	 

	 	Executive Vice President and General Counsel	 	 

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