<SUBMISSION>
<ACCESSION-NUMBER>0000950123-11-037611
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>6
<PERIOD>20110601
<FILING-DATE>20110421
<DATE-OF-FILING-DATE-CHANGE>20110421
<EFFECTIVENESS-DATE>20110421
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>Approach Resources Inc
<CIK>0001405073
<ASSIGNED-SIC>1311
<IRS-NUMBER>510424817
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>001-33801
<FILM-NUMBER>11772667
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>ONE RIDGMAR CENTRE
<STREET2>6500 WEST FREEWAY, SUITE 800
<CITY>FORT WORTH
<STATE>TX
<ZIP>76116
<PHONE>8179899000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>ONE RIDGMAR CENTRE
<STREET2>6500 WEST FREEWAY, SUITE 800
<CITY>FORT WORTH
<STATE>TX
<ZIP>76116
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>d81255def14a.htm
<DESCRIPTION>DEF 14A
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>SCHEDULE 14A</B>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>Proxy Statement Pursuant to Section&nbsp;14(a) of the<BR>
Securities Exchange Act of 1934 (Amendment No. </B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>)</B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Filed by the Registrant <FONT style="font-family: Wingdings">&#254;</FONT><BR>
Filed by a Party other than the Registrant <FONT style="font-family: Wingdings">&#111;</FONT>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box:</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Preliminary Proxy Statement</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2))</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings">&#254;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Definitive Proxy Statement</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Definitive Additional Materials</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Soliciting Material Pursuant to &#167;240.14a-12</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>Approach Resources Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
(Name of Registrant as Specified in its Charter)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt">(Name of Person(s) Filing Proxy Statement, if other than the Registrant)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Payment of Filing Fee (Check the appropriate box):
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings">&#254;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No fee required.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Title of each class of securities to which transaction applies:</TD>
</TR>

<TR>
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 6pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Aggregate number of securities to which transaction applies:</TD>
</TR>

<TR>
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 6pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule&nbsp;0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):</TD>
</TR>

<TR>
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 6pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Proposed maximum aggregate value of transaction:</TD>
</TR>

<TR>
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 6pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Total fee paid:</TD>
</TR>

<TR>
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 6pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fee paid previously with preliminary materials.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Check box if any part of the fee is offset as provided by Exchange
Act Rule&nbsp;0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amount Previously Paid:</TD>
</TR>

<TR>
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 6pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Form, Schedule or Registration Statement No.:</TD>
</TR>

<TR>
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 6pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Filing Party:</TD>
</TR>

<TR>
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 6pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Date Filed:</TD>
</TR>

<TR>
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 6pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --><!-- /Folio -->
</DIV>




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<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="50%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="48%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    <IMG src="d81255d8125500.gif" alt="(APPROACH RESOURCES INC LOGO)">
</TD>
<TD>
&nbsp;
</TD>
<TD align="right" valign="top">
    One Ridgmar Centre<BR>
    6500&#160;West Freeway, Suite 800<BR>
    Fort&#160;Worth, Texas 76116
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 12pt">NOTICE OF ANNUAL MEETING OF
    STOCKHOLDERS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    To our stockholders:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The 2011 annual meeting of stockholders of Approach Resources
    Inc., a Delaware corporation, will be held at the offices of
    Approach Resources Inc., located at One Ridgmar Centre,
    6500&#160;West Freeway, Suite&#160;800 in Fort&#160;Worth,
    Texas, on Wednesday, June&#160;1, 2011, at
    10:00&#160;a.m.&#160;Central Time, for the following purposes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    To elect three directors, Alan D. Bell, Sheldon B. Lubar and
    Christopher J. Whyte, to the class of directors whose term
    expires in 2014;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    To hold an advisory vote on our executive compensation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    To hold an advisory vote on the frequency of future advisory
    votes on our executive compensation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    To reapprove certain material terms of our 2007 Stock Incentive
    Plan to comply with Section&#160;162(m) of the Internal Revenue
    Code;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    To ratify the appointment of Hein&#160;&#038; Associates LLP as
    our independent registered public accounting firm for the fiscal
    year ending December&#160;31, 2011;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    To transact such other business as may properly come before the
    meeting.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    You may vote if you were a stockholder of record at the close of
    business on April&#160;13, 2011. To ensure that your vote is
    properly recorded, please vote as soon as possible, even if you
    plan to attend the annual meeting. You may still vote in person
    if you attend the annual meeting. For further details about
    voting, please see &#147;General Matters&#148; beginning on
    page&#160;1 of this proxy statement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>If your shares are held in &#147;street name&#148; in a stock
    brokerage account or by a bank or other nominee, you must
    provide your broker with instructions on how to vote your shares
    in order for your shares to be voted on important matters
    presented at the annual meeting. If you do not instruct your
    broker on how to vote in the election of directors and on
    compensation matters, your shares will not be voted on these
    matters.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This notice and proxy statement are first being sent to
    stockholders on or about April&#160;21, 2011. Our 2010 annual
    report to stockholders is being sent with this notice and proxy
    statement.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    BY ORDER OF THE BOARD OF DIRECTORS,
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <IMG src="d81255d8125503.gif" alt="-s- J. Ross Craft">
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    J. Ross Craft, P.E.
</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    President and Chief Executive Officer
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    April&#160;21, 2011
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Fort&#160;Worth, Texas
</DIV>
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<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="D81255tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
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<TR style="font-size: 1pt" valign="bottom">
    <TD width="96%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255101'>GENERAL MATTERS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255102'>PROPOSAL&#160;1&#160;&#151; ELECTION OF
    DIRECTORS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255103'>Nomination and Election of Directors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255104'>Directors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255105'>Vote Required</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255106'>Board Recommendation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255107'>PROPOSAL&#160;2&#160;&#151; ADVISORY VOTE ON
    EXECUTIVE COMPENSATION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255162'>Vote Required</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255163'>Board Recommendation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255108'>PROPOSAL&#160;3&#160;&#151; ADVISORY VOTE ON THE
    FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255109'>Vote Required</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255110'>Board Recommendation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255111'>PROPOSAL&#160;4&#160;&#151; REAPPROVAL OF
    MATERIAL TERMS OF OUR 2007 STOCK INCENTIVE PLAN TO COMPLY WITH
    SECTION&#160;162(M) OF THE INTERNAL REVENUE CODE</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255164'>Background and Purpose of the Proposal</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255165'>Material Terms of the Plan to be Reapproved</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255166'>Consequences of Failing to Approve the
    Proposal</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255167'>Summary of the 2007 Plan</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255168'>Federal Income Tax Consequences</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255169'>New Plan Benefits and Previously Awarded
    Options</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255112'>Vote Required</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255113'>Board Recommendation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255114'>PROPOSAL&#160;5&#160;&#151; RATIFICATION OF THE
    APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
    FIRM</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255115'>Vote Required</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255116'>Board Recommendation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255117'>BOARD OF DIRECTORS, BOARD MEETINGS AND
    COMMITTEES</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255118'>Board Structure</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255119'>Board Meetings</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255120'>Board Leadership Structure</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255121'>The Board&#146;s Role in Risk Oversight</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255122'>Committee Composition and Meetings</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255123'>Audit Committee</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255124'>Compensation and Nominating Committee</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255125'>CORPORATE GOVERNANCE</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255126'>Code of Conduct</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255127'>Board Independence</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255128'>Identifying and Evaluating Nominees for
    Directors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255129'>Communications with the Board</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    22
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255130'>Director Attendance at Annual Meetings of
    Stockholders</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    22
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    i
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="96%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255131'>STOCK OWNERSHIP MATTERS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    22
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255132'>Section&#160;16(a) Beneficial Ownership Reporting
    Compliance</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    22
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255133'>Security Ownership of Management and Certain
    Beneficial Owners</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255134'>EXECUTIVE OFFICERS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255135'>COMPENSATION DISCUSSION AND ANALYSIS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255136'>Introduction and Overview</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255137'>Executive Summary&#160;&#151; 2010 Executive
    Compensation Program</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255138'>Compensation Program Objectives and
    Methodology</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255139'>Setting Executive Officer Compensation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255140'>Elements of the Company&#146;s Executive Officer
    Compensation Program</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255141'>COMPENSATION COMMITTEE REPORT</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255170'>COMPENSATION PRACTICES AS THEY RELATE TO RISK
    MANAGEMENT</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255142'>COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
    PARTICIPATION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255143'>EXECUTIVE COMPENSATION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    41
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255144'>Summary Compensation Table</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    41
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255145'>Grants of Plan-Based Awards for Year Ended
    December&#160;31, 2010</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    42
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255146'>Outstanding Equity Awards at Fiscal Year End</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255147'>Option Exercises and Stock Vested</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255148'>Pension Benefits</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255149'>Non-Qualified Deferred Compensation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255150'>Potential Payments upon Termination or Change in
    Control</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255151'>DIRECTOR COMPENSATION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    49
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255171'>EQUITY COMPENSATION PLAN TABLE</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255152'>CERTAIN RELATIONSHIPS AND RELATED-PARTY
    TRANSACTIONS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255153'>INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255154'>Audit Fees</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255155'>Pre-Approval Policy and Procedures</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255156'>AUDIT COMMITTEE REPORT</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#D81255157'>OTHER MATTERS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255158'>Other Proposals at the Annual Meeting of
    Stockholders</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255159'>Submission of Stockholder Proposals and Other
    Deadlines for the 2012 Annual Meeting of Stockholders</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    53
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255160'>2010 Annual Report to Stockholders</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    53
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255172'>Stockholder List</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    53
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#D81255161'>Additional Information About Approach Resources
    Inc.&#160;</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    54
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV align="left">
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    <BR>
    ii
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<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 14pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">APPROACH
    RESOURCES INC.</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 12pt">PROXY STATEMENT</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 12pt">Annual Meeting of
    Stockholders</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 12pt">June&#160;1, 2011</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    These proxy materials are being furnished to you in connection
    with the solicitation of proxies by the Board of Directors of
    Approach Resources Inc. for use at the 2011 annual meeting of
    stockholders and any adjournments or postponements of the
    meeting. We refer to our Board of Directors as the
    &#147;Board&#148; and to Approach Resources Inc. as
    &#147;Approach,&#148; the &#147;Company,&#148; &#147;we,&#148;
    &#147;us&#148; or &#147;our.&#148; The annual meeting will be
    held at the offices of the Company, One Ridgmar Centre,
    6500&#160;West Freeway, Suite&#160;800 in Fort&#160;Worth,
    Texas, on Wednesday, June&#160;1, 2011, at
    10:00&#160;a.m.&#160;Central Time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The items to be considered are summarized in the notice of
    annual meeting of stockholders and more fully described in this
    proxy statement. The notice of annual meeting, this proxy
    statement, the enclosed proxy card and our 2010 annual report to
    stockholders are first being mailed on or about April&#160;21,
    2011, to all record holders of our common stock as of
    April&#160;13, 2011. Shares of our common stock represented by
    proxies will be voted as described below or as specified by each
    stockholder.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Important
    Notice Regarding the Availability of Proxy Materials<BR>
    for the Annual Meeting of Stockholders to be held on
    June&#160;1, 2011</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The notice of annual meeting, this proxy statement and our 2010
    annual report to stockholders are available at
    <I>www.approachresources.com. </I>On this site, you will be able
    to access these materials and any amendments or supplements to
    these materials that are required to be furnished to
    stockholders. Information contained on or connected to our
    website is not incorporated by reference into this proxy
    statement and should not be considered a part of this proxy
    statement or any other filing that we make with the Securities
    and Exchange Commission (the &#147;SEC&#148;).
</DIV>

<A name='D81255101'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">GENERAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Record date.</I>&#160;&#160;The record date for the annual
    meeting is April&#160;13, 2011. On the record date, there were
    28,460,473&#160;shares of our common stock outstanding and there
    were no outstanding shares of any other class of stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Quorum.</I>&#160;&#160;In order for us to hold our annual
    meeting, holders of a majority of our outstanding shares of
    common stock as of April&#160;13, 2011, must be present in
    person or by proxy at the meeting. Proxy cards or voting
    instruction forms that reflect abstentions and broker non-votes
    will be counted as shares present to determine whether a quorum
    exists to hold the 2011 annual meeting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Voting Your Proxy.</I>&#160;&#160;Our stockholders are
    entitled to one vote for each share of common stock that is
    owned on the record date, April&#160;13, 2011, on all matters
    considered at the annual meeting. You may vote your shares
    either in person or by proxy. To vote by proxy, you may vote by
    telephone by using the toll-free number listed on the proxy
    card, by the Internet at the website for Internet voting listed
    on the proxy card or you may mark, date, sign and mail the
    enclosed proxy card in the prepaid envelope. If you plan to vote
    in person at the annual meeting, please bring proof of
    identification. Even if you currently plan to attend the annual
    meeting, we recommend that you also submit your proxy as
    described above so that your vote will be counted if you later
    decide not to attend the annual meeting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Shares&#160;Held of Record.</I>&#160;&#160;If your shares are
    held in your name and you vote by granting a proxy, the proxy
    holders will vote the shares in accordance with your
    instructions. If you submit a proxy without giving specific
    voting instructions, the proxy holders will vote those shares as
    recommended by our Board.
</DIV>
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    <BR>
    1
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Shares&#160;Held in Street Name.</I>&#160;&#160;If your
    shares are held in &#147;street name&#148; by your broker, bank
    or other nominee, you will receive a voting instruction form
    with this proxy statement. Like shares held of record, you may
    vote your shares held in street name in person at the annual
    meeting if you have obtained a legal proxy from the holder of
    record for your shares or you may sign and date the enclosed
    voting instruction form and return it in the enclosed,
    postage-paid envelope. If your shares are held in street name in
    a brokerage account or by a bank or other nominee, you must
    provide your broker with instructions on how to vote your shares
    in order for your shares to be voted on Proposals&#160;1, 2 and
    3. If you do not instruct your broker on how to vote these
    proposals, your shares will not be voted on these matters.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Revoking Your Proxy.</I>&#160;&#160;Even after you have
    returned your proxy card, you may revoke your proxy at any time
    before it is exercised by (i)&#160;submitting a written a notice
    of revocation to our Corporate Secretary by mail to Approach
    Resources Inc., One Ridgmar Centre, 6500&#160;West Freeway,
    Suite&#160;800, Fort&#160;Worth, Texas 76116 or by facsimile at
    <FONT style="white-space: nowrap">(817)&#160;989-9001,</FONT>
    (ii)&#160;mailing in a new proxy card with a later date or
    (iii)&#160;attending the annual meeting and voting in person,
    which suspends the powers of the proxy holder.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Vote Required.</I>&#160;&#160;For Proposal&#160;1, the
    election of three directors, you may vote <B>&#147;FOR ALL
    NOMINEES,&#148; &#147;WITHHOLD AUTHORITY FOR ALL NOMINEES&#148;
    </B>or <B>&#147;FOR ALL EXCEPT.&#148; </B>A plurality of the
    votes of the shares present in person or represented by proxy at
    the meeting and entitled to vote on the election of directors is
    required for the election of directors. This means that the
    three director nominees receiving the highest number of
    affirmative votes of the shares present in person or represented
    by proxy at the annual meeting and entitled to vote on the
    election of directors will be elected to our Board. Broker
    non-votes and votes marked &#147;WITHHOLD AUTHORITY FOR ALL
    NOMINEES&#148; will have no legal effect on the outcome of the
    election of directors. With respect to votes marked &#147;FOR
    ALL EXCEPT,&#148; votes for director nominees that are withheld
    will have no legal effect on the outcome of the election of
    directors, while votes for all other director nominees will
    count toward a plurality.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For each of the Proposals&#160;2, 4 and 5, you may vote
    <B>&#147;FOR,&#148; &#147;AGAINST&#148; </B>or
    <B>&#147;ABSTAIN</B>.&#148; For Proposal&#160;3, you may vote to
    hold an advisory vote on the frequency of future advisory votes
    on our executive compensation every <B>&#147;1 YEAR,&#148;
    &#147;2 YEARS&#148; </B>or <B>&#147;3 YEARS,&#148; </B>or you
    may <B>&#147;ABSTAIN</B>.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The affirmative vote of a majority of the shares present in
    person or represented by proxy and entitled to vote is required
    to approve Proposals&#160;2, 4 and 5. As such, abstentions will
    have the effect of a vote against the matters to be voted on in
    Proposals&#160;2, 4 and 5. Brokers will not have discretionary
    authority to vote on Proposals&#160;2 and 4, and broker
    non-votes will have no effect on the outcome of such votes.
    Brokers will have discretionary authority to vote on
    Proposal&#160;5. With respect to Proposal&#160;3, while approval
    of matters presented to the Company&#146;s stockholders
    generally requires the affirmative vote of a majority of the
    shares present in person or represented by proxy and entitled to
    vote, because this proposal is advisory and non-binding and
    there are four options from which a stockholder may choose to
    vote, the option receiving the greatest number of votes will be
    considered the frequency recommended by the Company&#146;s
    stockholders. Abstentions and broker non-votes will, therefore,
    have no legal effect on the outcome of the matter to be voted on
    in Proposal&#160;3.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you have any questions about this proxy statement or the
    annual meeting, please contact our Corporate Secretary at
    Approach Resources Inc., One Ridgmar Centre, 6500&#160;West
    Freeway, Suite&#160;800, Fort&#160;Worth, Texas&#160;76116, or
    by telephone at
    <FONT style="white-space: nowrap">(817)&#160;989-9000.</FONT>
</DIV>

<A name='D81255102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">PROPOSAL&#160;1
    - <BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">ELECTION
    OF DIRECTORS</FONT></B>
</DIV>

</A>
<A name='D81255103'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Nomination
    and Election of Directors</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Under our certificate of incorporation, the members of our Board
    are divided into three classes with staggered, three-year terms.
    The terms of three Class&#160;I directors expire at the 2011
    annual meeting.
</DIV>
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    <BR>
    2
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board has nominated Alan D. Bell for election as a director
    and Sheldon B. Lubar and Christopher J. Whyte for re-election as
    directors. Upon election, Mr.&#160;Bell, Mr.&#160;Lubar and
    Mr.&#160;Whyte will serve for terms expiring at the 2014 annual
    meeting of stockholders or, in each case, until their successors
    are elected and qualified.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each of the nominees has agreed to serve if elected. If any of
    them becomes unavailable to serve as a director, the Board may
    designate a substitute nominee. In that case, the persons named
    as proxies will vote for the substitute nominee designated by
    the Board. The Board does not presently expect that any of the
    nominees will become unavailable for election.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In making these nominations, the Compensation and Nominating
    Committee (&#147;Compensation Committee&#148;) reviewed the
    background of the nominees and recommended nomination to the
    full Board consistent with the Compensation Committee&#146;s
    guidelines for identifying and evaluating nominees for
    directors. Please see &#147;Corporate Governance&#160;&#151;
    Identifying and Evaluating Nominees for Directors&#148; for more
    information on the Compensation Committee&#146;s guidelines for
    identifying and nominating director nominees. In addition,
    information on each nominee is set forth below.
</DIV>

<A name='D81255104'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Directors</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board believes that each nominee and director has valuable
    individual skills and experiences that, taken together, provide
    us with the knowledge, judgment and strategic vision necessary
    to provide effective oversight of the Company. The biographies
    below reflect the particular experience, qualifications,
    attributes and skills that led the Board to conclude that each
    nominee and director should serve on the Board, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Experience in executive management and operations in exploration
    and production (&#147;E&#038;P&#148;), or oilfield service
    companies (Mr.&#160;Bell, Mr.&#160;Craft, Mr.&#160;Crain,
    Mr.&#160;Lubar and Mr.&#160;Whyte);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Detailed, technical understanding of the Company&#146;s
    operations, reserves, drilling and completion techniques
    (Mr.&#160;Craft);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Deep history and knowledge of asset acquisitions, divestitures
    and evaluations in the E&#038;P and broader energy sectors
    (Mr.&#160;Bell, Mr.&#160;Brandi, Mr.&#160;Craft, Mr.&#160;Crain,
    Mr.&#160;Lawrence, Mr.&#160;Lubar and Mr.&#160;Whyte);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Expertise in public and private capital markets in the E&#038;P
    and broader energy sectors (Mr.&#160;Bell, Mr.&#160;Brandi,
    Mr.&#160;Lawrence and Mr.&#160;Lubar);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Oversight of E&#038;P, midstream, oilfield services and other
    energy companies through other public boards of directors
    (Mr.&#160;Bell, Mr.&#160;Brandi, Mr.&#160;Crain,
    Mr.&#160;Lawrence, Mr.&#160;Lubar and Mr.&#160;Whyte);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    An advanced degree or license in public accounting
    (Mr.&#160;Bell and Mr.&#160;Crain);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    An advanced degree in law or the practice of oil and gas law
    (Mr.&#160;Crain and Mr.&#160;Lubar);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Government service in the executive branch
    (Mr.&#160;Lubar);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Board independence (Mr.&#160;Bell, Mr.&#160;Brandi,
    Mr.&#160;Crain, Mr.&#160;Lubar and Mr.&#160;Whyte).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board believes that these skills and experiences qualify the
    nominees and directors to serve on the Board of the Company.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    3
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The principal occupation and other information about our
    directors are set forth below. All of our directors are members
    of the National Association of Corporate Directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="68%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="8%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Director<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Term<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Age</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Since</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Expires</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Class</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Alan D. Bell
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    65
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2011
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Class I
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James H. Brandi
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    62
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2007
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2012
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Class&#160;II
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    54
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2002
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Class&#160;III
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James C. Crain
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    62
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2007
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2012
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Class&#160;II
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Bryan H. Lawrence
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    68
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2002
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Class&#160;III
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Sheldon B. Lubar
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2007
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2011
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Class I
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Christopher J. Whyte
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    54
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2007
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2011
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="bottom">
    Class I
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Alan D. Bell </I>was appointed to our Board in August 2010
    and is Chairman of our Audit Committee. Mr.&#160;Bell&#146;s
    prior experience includes 33&#160;years in various capacities at
    Ernst&#160;&#038; Young LLP from 1973 until his retirement in
    2006, when he was Director of Ernst&#160;&#038; Young&#146;s
    Energy Practice in the Southwest United States. Before joining
    Ernst&#160;&#038; Young, Mr.&#160;Bell was a production engineer
    with Chevron Oil Company in the Gulf of Mexico. In 2009,
    Mr.&#160;Bell served as the Chief Restructuring Officer of
    Energy Partners Ltd., a New Orleans-based exploration and
    development company that emerged from Chapter&#160;11 in
    September 2009. Mr.&#160;Bell currently serves on the Board of
    Directors of Dune Energy Inc., an independent energy company
    based in Houston, where he is
    <FONT style="white-space: nowrap">non-executive</FONT>
    Chairman of the Board of Directors. During the past five years,
    Mr.&#160;Bell has also been a director of Toreador Resources
    Corporation, an independent energy company with interests in
    developed and undeveloped oil properties in France.
    Mr.&#160;Bell earned a degree in Petroleum Engineering from the
    Colorado School of Mines and an M.B.A. from Tulane University.
    He is a current member of the American Institute of Certified
    Public Accountants, the Texas Society of Certified Public
    Accountants and is a licensed Certified Public Accountant in
    Texas. Mr.&#160;Bell is also a member of the Institute of
    Certified Management Accountants, Association of Certified Fraud
    Examiners and the Society of Petroleum Engineers. Mr.&#160;Bell
    is also an Eagle Scout.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>James H. Brandi </I>joined us as a director in June 2007 and
    is Chairman of our Compensation Committee and a member of our
    Audit Committee. Mr.&#160;Brandi has been a Managing Director in
    investment banking at BNP Paribas, a global bank and financial
    services company, since May 2010, when BNP Paribas acquired Hill
    Street Capital. From November 2005 to May 2010, Mr.&#160;Brandi
    was a partner at Hill Street Capital, a financial advisory and
    private investment firm. From 2000 until November 2005,
    Mr.&#160;Brandi was a Managing Director at UBS Securities, LLC,
    where he was the Deputy Global Head of the Energy and Power
    Groups. Before 2000, Mr.&#160;Brandi was a Managing Director at
    Dillon, Read&#160;&#038; Co. Inc. and later its successor firm,
    UBS Warburg, concentrating on transactions in the energy and
    consumer goods areas. Mr.&#160;Brandi is a director of OGE
    Energy Corp., an energy and energy services provider that
    delivers electricity in Oklahoma and Arkansas and gathers,
    processes and transports natural gas in the North Central United
    States through its subsidiary, Enogex LLC. During the past five
    years, Mr.&#160;Brandi also has been a director of Energy East
    Corp., a utility holding company, and Armstrong Land, LLC, a
    coal holding company. Mr.&#160;Brandi is a trustee of The Kenyon
    Review and a former trustee of Kenyon College. Mr.&#160;Brandi
    holds a B.A. in History from Yale University and an M.B.A. from
    Harvard Business School and attended Columbia Law School as a
    Harlan Fiske Stone Scholar.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>J.&#160;Ross Craft</I> has been our President and Chief
    Executive Officer and a member of our Board since our inception
    in September 2002. Before Approach, Mr.&#160;Craft co-founded
    Athanor Resources Inc., an international exploration and
    production company with operations in the United States and
    Tunisia, in 1998 and was its Executive Vice President from 1998
    until its merger with Nuevo Energy Company in September 2002.
    From 1988 to 1997, Mr.&#160;Craft served in various positions
    with American Cometra Inc., an independent exploration and
    production company with operations in the United States,
    including as Vice President&#160;&#151; Operations from 1995 to
    1997. American Cometra was sold in two parts, to Range Resources
    in 1995 and Pioneer Natural Resources in 1997. Mr.&#160;Craft
    has over 30&#160;years of experience in the oil and gas
    industry. Mr.&#160;Craft holds a B.S. in Petroleum Engineering
    from Texas A&#038;M University and is a registered Professional
    Engineer licensed in Texas. Mr.&#160;Craft is a member of the
    Society of Petroleum Engineers, the Texas Oil&#160;&#038; Gas
    Association, the Permian Basin Petroleum
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Association and the Independent Petroleum Association of
    America. Mr.&#160;Craft has served on the Board of the
    Fort&#160;Worth Chapter of the Society of Petroleum Engineers
    and on the Board of the Fort&#160;Worth Petroleum Engineers
    Club, where his last position was President. Mr.&#160;Craft is
    also an Eagle Scout. Mr.&#160;Craft is the
    <FONT style="white-space: nowrap">brother-in-law</FONT>
    of J. Curtis Henderson, our Executive Vice President and General
    Counsel.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>James C. Crain </I>joined us as a director in June 2007 and
    is a member of our Audit Committee and our Compensation
    Committee. Mr.&#160;Crain has been in the energy industry for
    over 30&#160;years, both as an attorney and as an executive
    officer. Since 1984, Mr.&#160;Crain has been an officer of Marsh
    Operating Company, an investment management company focusing on
    energy investing, including his current position as President,
    which he has held since 1989. Mr.&#160;Crain has served as
    general partner of Valmora Partners, L.P., a private investment
    partnership that invests in the oil and gas sector, among
    others, since 1997. Before joining Marsh in 1984, Mr.&#160;Crain
    was a partner in the law firm of Jenkens&#160;&#038; Gilchrist,
    where he headed the firm&#146;s energy section. Mr.&#160;Crain
    is a director of Crosstex Energy, Inc., a midstream natural gas
    company, and GeoMet, Inc., a natural gas exploration and
    production company. During the past five years, Mr.&#160;Crain
    has also been a director of Crosstex Energy GP, LLC, the general
    partner of a midstream natural gas company, and Crusader Energy
    Group Inc., an oil and gas exploration and production company.
    Mr.&#160;Crain holds a B.B.A., M.P.A. and J.D. from the
    University of Texas at Austin.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Bryan H. Lawrence </I>has been a member of our Board since
    2002 and is the Chairman of our Board. Mr.&#160;Lawrence is a
    founder and Senior Manager of Yorktown Partners LLC, the manager
    of the Yorktown group of investment partnerships, which make
    investments in companies in the energy industry. The Yorktown
    group of investment partnerships was formerly affiliated with
    the investment firm of Dillon, Read&#160;&#038; Co. Inc., where
    Mr.&#160;Lawrence had been employed since 1966, serving as a
    Managing Director until the merger of Dillon Read with SBC
    Warburg in 1997. Mr.&#160;Lawrence is a director of Crosstex
    Energy, Inc. and Crosstex Energy GP, LLC, midstream natural gas
    companies, Hallador Energy Company, an independent company
    engaged in the production of coal and the exploration and
    production of oil and gas, the general partner of Star Gas
    Partners, L.P., a home heating oil distributor and services
    provider, Winstar Resources Ltd. and Compass Petroleum Ltd.,
    Canadian oil and gas companies, and certain non-public companies
    in the energy industry in which the Yorktown group of investment
    partnerships holds equity interests. During the past five years,
    Mr.&#160;Lawrence has also been a director of TransMontaigne
    Inc., a refined petroleum products company. Mr.&#160;Lawrence is
    a graduate of Hamilton College and holds an M.B.A. from Columbia
    University.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Sheldon B. Lubar </I>joined us as a director in June 2007 and
    is a member of our Compensation Committee. Mr.&#160;Lubar has
    been Chairman of the Board of Lubar&#160;&#038; Co.
    Incorporated, a private investment and venture capital firm he
    founded, since 1977. He was Chairman of the Board of Christiana
    Companies, Inc., a logistics and manufacturing company, from
    1987 until its merger with Weatherford International in 1995.
    Mr.&#160;Lubar is a director of Crosstex Energy, Inc. and
    Crosstex Energy GP, LLC, midstream natural gas companies,
    Hallador Energy Company, an independent company engaged in the
    production of coal and the exploration and production of oil and
    gas, and the general partner of Star Gas Partners, L.P., a home
    heating oil distributor and services provider. During the past
    five years, Mr.&#160;Lubar has also been a director of
    Weatherford International, Inc., a global provider of oilfield
    products and services, and Grant Prideco, a provider of drill
    pipe and drill bits. Mr.&#160;Lubar previously held governmental
    appointments under three United States Presidents, including
    Commissioner of the White House Conference on Small Business
    from 1979 to 1980 under President Carter, Assistant Secretary,
    Housing Production and Mortgage Credit, Department of Housing
    and Urban Development, Commissioner of the Federal Housing
    Administration and Director of the Federal National Mortgage
    Association from 1973 to 1974 under Presidents Nixon and Ford.
    Mr.&#160;Lubar is a past president of the Board of Regents of
    the University of Wisconsin System. Mr.&#160;Lubar holds a
    B.B.A.,&#160;J.D. and an honorary Doctor of Humanities degree
    from the University of Wisconsin&#160;&#151; Madison, was
    awarded an honorary Doctor of Commercial Science degree from the
    University of Wisconsin&#160;&#151; Milwaukee, and an Honorary
    Doctors degree from the Medical College of Wisconsin.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Christopher J. Whyte </I>joined our Board in June 2007 and is
    a member of our Audit Committee. Mr.&#160;Whyte has been
    President, Chief Executive Officer and a director of
    PetroSantander Inc., which owns and operates oil and gas
    producing properties in the United States, Colombia and Brazil,
    since 1995. Mr.&#160;Whyte is a director of Winstar Resources
    Ltd. and Compass Petroleum Ltd., public Canadian oil and gas
    companies.
</DIV>
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    <BR>
    5
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Mr.&#160;Whyte holds a B.A. from the University of Pittsburgh.
    Mr.&#160;Whyte has over 25&#160;years of experience in various
    operating, executive and finance positions, including as a Chief
    Executive and Chief Financial Officer, in the E&#038;P and
    energy businesses.
</DIV>

<A name='D81255105'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Vote
    Required</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The affirmative vote of a plurality of the votes of the shares
    present in person or represented by proxy at the annual meeting
    and entitled to vote is required for the election of directors.
    A properly-executed proxy marked &#147;WITHHOLD AUTHORITY FOR
    ALL NOMINEES&#148; or &#147;FOR ALL EXCEPT&#148; with respect to
    the election of one or more directors will not be voted with
    respect to the director or directors indicated, although it will
    be counted for purposes of determining whether a quorum is
    present.
</DIV>

<A name='D81255106'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Recommendation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board recommends a vote <B>&#147;<U>FOR</U>&#148; </B>the
    election of each of the nominees.
</DIV>

<A name='D81255107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">PROPOSAL&#160;2
    - <BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">ADVISORY
    VOTE ON EXECUTIVE COMPENSATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Dodd-Frank Wall Street Reform and Consumer Protection Act
    (the &#147;Dodd-Frank Act&#148;), enacted in July 2010, requires
    that we provide our stockholders with the opportunity to vote to
    approve, on a non-binding, advisory basis, the compensation of
    our named executives officers as disclosed in this proxy
    statement in accordance with the compensation disclosure rules
    of the SEC.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As described in detail below in this proxy statement under
    &#147;Compensation Discussion and Analysis,&#148; we seek to
    (i)&#160;pay our named executive officers for performance,
    (ii)&#160;closely align the interests of our named executive
    officers with the interests of our stockholders and
    (iii)&#160;attract, retain and motivate top talent. Below is a
    summary of how we have structured our executive compensation
    program to achieve these goals:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="22%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="76%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>How Our Current Executive Compensation Program<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Objective</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Achieves This Objective</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Pay for Performance
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    &#149;&#160;&#160;&#160;In 2010, 75% of total compensation for
    our Chief Executive Officer was tied to performance, and over
    70% of total compensation for three out of our remaining four
    named executive officers was tied to performance.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    &#149;&#160;&#160;&#160;Our 2010 and 2011 annual incentive plans
    are tied to financial and operational performance measures (75%
    of total opportunity) as well as individual performance (25% of
    total opportunity).
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    &#149;&#160;&#160;&#160;Our 2010 and 2011 long-term incentive
    equity awards are 100% tied to an initial performance trigger
    requiring achievement of financial and operational performance
    measures in the award year.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Align Executive Interests with Stockholder Interests
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    &#149;&#160;&#160;&#160;Our compensation program provides our
    executives with meaningful equity ownership to give them the
    opportunity to acquire or increase a direct, proprietary
    interest in our operations and future success.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    &#149;&#160;&#160;&#160;Our 2010 and 2011 annual incentive plans
    and 2010 and 2011 long-term equity awards combine performance
    measures of both growth and cost control to encourage growth but
    avoid excessive risk-taking.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    &#149;&#160;&#160;&#160;We believe the performance measures in
    both our annual incentive plans and our long-term equity awards
    are strongly correlated to building stockholder value and
    increasing total stockholder returns.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Attract, Retain and Motivate Top Talent
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    &#149;&#160;&#160;&#160;After a challenging year for the oil and
    gas industry in 2009, we generally held base salaries flat in
    2010.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    &#149;&#160;&#160;&#160;After total stockholder returns of 199%
    in 2010 and a review of oil and gas industry salary information,
    we raised base salaries for 2011.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    &#149;&#160;&#160;&#160;Our 2010 and 2011 long-term incentive
    equity awards include vesting requirements over four years to
    retain top executives over the long term.
</DIV>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>
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    <BR>
    6
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The vote on this resolution is not intended to address any
    specific element of compensation; rather, the vote relates to
    the overall compensation of our named executive officers as
    described in this proxy statement in accordance with the
    compensation disclosure rules of the SEC. The vote is advisory,
    which means that the vote is not binding on the Company, our
    Board or the Compensation Committee. If there are significant
    votes against our named executive officer compensation as
    disclosed in this proxy statement, the Compensation Committee
    will evaluate whether any actions are necessary to address the
    concerns of stockholders.
</DIV>

<A name='D81255162'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Vote
    Required</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The affirmative vote of a majority of the shares present in
    person or represented by proxy and entitled to vote is required
    to approve this Proposal&#160;2.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The text of the resolution to be voted on is as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    &#147;RESOLVED, that the Company&#146;s stockholders approve, on
    an advisory basis, the compensation of the named executive
    officers as disclosed in the Company&#146;s proxy statement for
    the 2011 Annual Meeting of Stockholders pursuant to the
    compensation disclosure rules of the Securities and Exchange
    Commission, including the Compensation Discussion and Analysis,
    the 2010 Summary Compensation Table and other related tables and
    disclosure.&#148;
</DIV>

<A name='D81255163'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Recommendation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board recommends a vote <B>&#147;<U>FOR</U>&#148; </B>the
    approval of the compensation of our named executive officers as
    disclosed in this proxy statement.
</DIV>

<A name='D81255108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">PROPOSAL&#160;3
    - <BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">ADVISORY
    VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES<BR>
    </FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">ON
    EXECUTIVE COMPENSATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Dodd-Frank Act also provides that stockholders must be given
    the opportunity to vote, on a non-binding, advisory basis, for
    their preference on how frequently we should seek future
    advisory votes on the compensation of our named executive
    officers as disclosed in accordance with the compensation
    disclosure rules of the SEC. By voting on this Proposal&#160;3,
    stockholders may indicate whether they prefer that we conduct
    future advisory votes on executive compensation every one, two
    or three years. Stockholders also may, if they wish, abstain
    from casting a vote on this proposal.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    After careful consideration, our Board of Directors has
    determined that an advisory vote on executive compensation that
    occurs every year is the most appropriate alternative for the
    Company and, therefore, our Board recommends that you vote for
    an annual advisory vote on executive compensation. Although the
    Company&#146;s compensation policies and practices are designed
    to incentivize our named executive officers to build long-term
    stockholder value, the Board recognizes that executive
    compensation disclosures are made annually. Therefore, providing
    for an annual advisory vote on executive compensation may
    provide the Company with more direct and immediate feedback on
    our annual compensation disclosure.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This vote is advisory and not binding on the Company or our
    Board. However, the Board and the Compensation Committee will
    take into account the outcome of the vote in determining the
    frequency of future advisory votes on executive compensation.
    The Board may decide that it is in the best interests of our
    stockholders and the Company to hold an advisory vote on
    executive compensation more or less frequently than the
    frequency receiving the most votes cast by our stockholders.
</DIV>

<A name='D81255109'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Vote
    Required</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Because this Proposal&#160;3 seeks the input of our stockholders
    and provides our stockholders with the option to vote to hold an
    advisory vote on executive compensation once every one, two or
    three years (or to abstain from voting), the option receiving
    the greatest number of votes will be considered the frequency
    recommended by the Company&#146;s stockholders. Although our
    Board recommends holding this vote every year, you have the
</DIV>
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    <BR>
    7
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    option to specify one of four choices for this proposal on the
    proxy card: &#147;1 YEAR,&#148; &#147;2 YEARS,&#148; &#147;3
    YEARS&#148; or &#147;ABSTAIN.&#148; You are not voting to
    approve or disapprove of the Board&#146;s recommendation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The text of the resolution to be voted on is as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    &#147;RESOLVED, that the option of every one, two or three years
    that receives the highest number of votes properly cast for this
    resolution will be determined to be the preferred frequency
    recommended by the stockholders of the Company with which the
    Company is to hold a non-binding, advisory vote to approve the
    compensation of the Company&#146;s named executive officers in
    accordance with the compensation disclosure rules of the
    Securities and Exchange Commission.&#148;
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Recommendation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board recommends that you vote to conduct a non-binding,
    advisory vote on executive compensation every <B>&#147;<U>1
    YEAR</U>.&#148;</B>
</DIV>

<A name='D81255111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">PROPOSAL&#160;4
    - <BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">REAPPROVAL
    OF MATERIAL TERMS OF OUR 2007 STOCK INCENTIVE PLAN TO COMPLY
    WITH SECTION&#160;162(M) OF THE INTERNAL REVENUE CODE</FONT></B>
</DIV>

</A>
<A name='D81255164'>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Background
    and Purpose of the Proposal</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our Board originally adopted the Approach Resources Inc. 2007
    Stock Incentive Plan (the &#147;2007 Plan&#148;) on
    June&#160;26, 2007, and our stockholders originally approved the
    2007 Plan on that same date. At this annual meeting,
    stockholders will be asked to reapprove the material terms of
    the 2007 Plan so that awards granted under the 2007 Plan that
    are intended to qualify as &#147;performance-based
    compensation&#148; within the meaning of Section&#160;162(m) of
    the Internal Revenue Code (the &#147;Code&#148;) will be fully
    deductible by us and our subsidiaries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The use of stock-based awards under the 2007 Plan continues to
    be a key element of our compensation program. Of the
    2,822,689&#160;shares currently authorized for issuance under
    the 2007 Plan, a total of 1,612,281&#160;shares have been issued
    as of March&#160;31, 2011, after the lapse of restrictions on
    grants of restricted stock or upon the exercise of stock
    options. As of March&#160;31, 2011, under the 2007 Plan, a total
    of 313,566&#160;shares remained subject to outstanding stock
    options and 898,696&#160;shares remained subject to awards of
    restricted stock still subject to forfeiture. The 2007 Plan is a
    broad-based plan under which we grant awards to our employees,
    officers, directors and consultants. We continue to believe that
    our long-term interests are best served by aligning the
    interests of our outside directors and key employees with the
    interests of our stockholders. While the Board and Compensation
    Committee recognize the potential dilutive effect of
    compensatory stock awards, they also recognize the significant
    motivational and performance benefits that can be achieved from
    making such awards.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Reapproval of the material terms of the 2007 Plan will permit us
    to use stock-based compensation to align stockholder and
    employee interests in a manner that qualifies certain designated
    awards for exemption from the deduction limitations of
    Section&#160;162(m) of the Code. Under Section&#160;162(m), the
    federal income tax deductibility of compensation paid to our
    Chief Executive Officer and three other most highly compensated
    officers (other than our Chief Executive Officer and Chief
    Financial Officer) (&#147;Covered Employees&#148;) determined
    pursuant to the executive compensation disclosure rules under
    the Securities Exchange Act of 1934, as amended (the
    &#147;Exchange Act&#148;) may be limited to the extent such
    compensation exceeds $1,000,000 in any taxable year. However, we
    may deduct compensation paid to our Covered Employees in excess
    of that amount if it qualifies as &#147;performance-based
    compensation&#148; as defined in Section&#160;162(m). In
    addition to certain other requirements, in order for awards
    under the 2007 Plan to constitute &#147;performance-based
    compensation,&#148; the material terms of the 2007 Plan must be
    disclosed to and reapproved by our stockholders no later than
    the first meeting of our stockholders occurring after the close
    of the third calendar year following the calendar year in which
    our initial public offering occurred and, subsequently, every
    five years. Based on transition relief provided to newly public
    companies under the Section&#160;162(m) regulations, we were not
    previously subject to the deduction limitations of
    Section&#160;162(m).
</DIV>
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    <BR>
    8
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<A name='D81255165'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Material
    Terms of the Plan to be Reapproved</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Under the Section&#160;162(m) regulations, the material terms of
    the 2007 Plan are (i)&#160;the maximum amount of compensation
    that may be paid to a participant under the 2007 Plan in any
    fiscal year, (ii)&#160;the employees eligible to receive
    compensation under the 2007 Plan and (iii)&#160;the business
    criteria on which the performance goals are based. We intend
    that certain awards under the 2007 Plan qualify for exemption
    from the deduction limitations of Section&#160;162(m).
    Accordingly, we are asking our stockholders to reapprove the
    material terms of the 2007 Plan for Section&#160;162(m) purposes
    so that awards under the 2007 Plan will be fully deductible by
    us. The material terms of the 2007 Plan are disclosed below as
    follows: (i)&#160;the maximum amount of compensation that may be
    paid to a participant is described in the section entitled
    &#147;Summary of the 2007 Plan&#160;&#151; Maximum Amount of
    Compensation that May be Paid to a Participant,&#148;
    (ii)&#160;the eligible employees are described in the section
    entitled &#147;Summary of the 2007 Plan&#160;&#151; Persons Who
    May Participate&#148; and (iii)&#160;the business criteria are
    described in the section entitled &#147;Summary of the 2007
    Plan&#160;&#151; Awards under the 2007 Plan&#160;&#151;
    Performance Awards.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Assuming the presence of a quorum, the affirmative vote of a
    majority of the shares present, in person or by proxy, at the
    annual meeting is necessary for reapproval of the material terms
    of the 2007 Plan for Section&#160;162(m) purposes.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Consequences
    of Failing to Approve the Proposal</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Failure of our stockholders to approve this Proposal will not
    affect the rights of existing award holders under the 2007 Plan
    or under any previously granted awards under the 2007 Plan.
    However, if this proposal is not approved, the deductibility of
    awards granted to Covered Employees after the annual meeting
    will potentially be limited. In that event, we will be required
    to re-evaluate our executive compensation structure.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Summary
    of the 2007 Plan</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following summary of the 2007 Plan does not purport to be a
    complete description of all provisions of the 2007 Plan and
    should be read in conjunction with, and is qualified in its
    entirety by reference to, the complete text of (i)&#160;the 2007
    Plan, which was filed as Exhibit&#160;10.6 to our Registration
    Statement on
    <FONT style="white-space: nowrap">Form&#160;S-1</FONT>
    on July&#160;12, 2007, and (ii)&#160;the First Amendment to the
    2007 Plan, which was filed as Exhibit&#160;10.1 to our Current
    Report on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    on December&#160;31, 2008. The 2007 Plan gives the Compensation
    Committee the ability to award stock options, stock appreciation
    rights, restricted stock, restricted stock units, performance
    awards, unrestricted stock awards and other incentive awards,
    with vesting and other award provisions that provide effective
    incentives to our employees and outside directors and alignment
    of stockholder, management and outside director interests.
    Unless earlier terminated by action of our Board, the 2007 Plan
    will terminate on June&#160;26, 2017. Awards granted before the
    termination date of the 2007 Plan will continue to be effective
    in accordance with their terms and conditions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Persons Who May Participate.</I>&#160;&#160;Awards may be
    made under the 2007 Plan to our employees, outside directors and
    consultants, including any employee who is an officer, and to
    any other service provider who, in the opinion of the
    Compensation Committee, is in a position to make a significant
    contribution to our success. Only individuals who are our
    employees or who are employees of one of our corporate
    subsidiaries are eligible to receive incentive stock options.
    The Compensation Committee determines in its discretion which
    eligible persons will receive awards under the 2007 Plan. As of
    April&#160;13, 2011, approximately 58&#160;employees, five
    outside directors and one consultant were eligible to
    participate in the 2007 Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Shares&#160;Subject to the 2007 Plan.</I>&#160;&#160;The
    total aggregate number of shares of our common stock that may be
    subject to awards under the 2007 Plan is equal to 10% of our
    outstanding shares of common stock (which is adjusted at the
    beginning of each year to remain at 10% of the outstanding
    shares of our common stock), plus all shares of common stock
    that remain available for the grant of awards under our 2003
    Stock Option Plan (&#147;Prior Plan&#148;), plus shares of
    common stock subject to outstanding awards under the Prior Plan
    that later cease to be subject to those awards for any reason
    other than those awards having been exercised. Although the
    maximum number of shares of common stock available for grant of
    awards under the 2007 Plan adjusts on the first day of each year
    to 10% of our outstanding shares of common stock, we exclude
    shares of common stock subject to previously-granted awards
    under the 2007 Plan from our calculation of shares available for
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    grant. The maximum number of shares of common stock available
    for grant of awards under the 2007 Plan is also subject to
    adjustment for corporate events such as recapitalizations, stock
    splits, stock dividends and other corporate events. See
    &#147;Awards Under the 2007 Plan&#160;&#151; Corporate
    Events,&#148; below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our common stock issued or to be issued under the 2007 Plan
    consists of authorized but unissued shares. If an award granted
    under the 2007 Plan expires, is forfeited or becomes
    unexercisable for any reason without having been exercised in
    full, the undelivered shares of common stock that were subject
    to the award become available for future awards under the 2007
    Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Maximum Amount of Compensation that May be Paid to a
    Participant.</I>&#160;&#160;The maximum shares of common stock
    that may be subject to incentive stock options granted under the
    2007 Plan is 1,100,000. The maximum number of shares of common
    stock that may be subject to all awards granted to any one
    participant in each fiscal year is 330,000&#160;shares. The
    maximum number of shares of common stock that may be subject to
    nonqualified stock options and stock appreciation rights granted
    to any one participant during a fiscal year is
    330,000&#160;shares. The amount that may be paid in cash
    pursuant to performance awards granted to a Covered Employee
    that are intended to qualify as &#147;performance-based
    compensation&#148; under Section&#160;162(m) of the Code is
    $5,000,000 for each fiscal year during the applicable
    performance period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Administration.</I>&#160;&#160;The 2007 Plan provides for
    administration by the Board or the Compensation Committee, or
    another committee of the Board designated by the Board. Subject
    to the terms of the 2007 Plan, the Board or the Compensation
    Committee has broad authority to, among other things, select
    participants to receive awards, determine the types of awards
    and terms and conditions of awards and interpret provisions of
    the 2007 Plan. Currently, the 2007 Plan is administered by the
    Compensation Committee. Under NASDAQ rules, members of the
    Compensation Committee are required to satisfy the NASDAQ&#146;s
    standards for independence, subject to certain narrow
    exceptions. The Compensation Committee may delegate various
    functions to subcommittees or certain officers.
</DIV>

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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Awards
    Under the 2007 Plan</FONT></I></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Stock Options.</I>&#160;&#160;The 2007 Plan permits the
    granting of options to purchase shares of common stock intended
    to qualify as incentive stock options under the Code and stock
    options that do not qualify as incentive stock options (i.e.,
    nonqualified stock options). The exercise price of each stock
    option may not be less than 100% of the fair market value of the
    common stock on the date of grant. In the case of certain 10%
    stockholders who receive incentive stock options, the exercise
    price may not be less than 110% of the fair market value of the
    common stock on the date of grant. An exception to these
    requirements is made for options that we grant in substitution
    for options held by employees of companies that we acquire. In
    such a case, the exercise price is adjusted to preserve the
    economic value of the employee&#146;s stock option from his or
    her former employer.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The term of each stock option is fixed at the time of grant and
    may not exceed 10&#160;years from the date of grant. The
    Compensation Committee determines when each option may be
    exercised and the period of time, if any, after retirement,
    death, disability or other termination of employment during
    which options may exercised. Options may be exercisable in
    installments. The exercisability of options may be accelerated
    by the Compensation Committee. In general, a participant may pay
    the exercise price of an option in cash or in cash equivalents,
    by tendering shares of common stock having an aggregate fair
    market value at the time of exercise equal to the total exercise
    price, by surrendering a sufficient portion of the shares with
    respect to which the option is exercised having an aggregate
    fair market value at the time of exercise equal to the total
    exercise price, by a sale through a broker-dealer or in a
    combination of these forms, as permitted by the Compensation
    Committee. The 2007 Plan prohibits the repricing of stock
    options without stockholder approval.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Stock Appreciation Rights.</I>&#160;&#160;A stock
    appreciation right provides the right to receive a number of
    shares or, in the discretion of the Compensation Committee, an
    amount in cash or a combination of shares and cash, based on the
    increase in the fair market value of the shares underlying the
    rights during a specified period of time. The Compensation
    Committee may grant stock appreciation rights subject to such
    terms and conditions and exercisable at such times as determined
    by the Compensation Committee and specified in the applicable
    award agreement. The price at which stock appreciation rights
    may be exercised will not be less than 100% of
</DIV>
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    the fair market value of our common stock on the date of grant,
    unless the award is granted in substitution of an award held by
    an employee of a company we acquire. The term of a stock
    appreciation right will not exceed 10&#160;years. Stock
    appreciation rights may not be repriced without stockholder
    approval.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Restricted Stock.</I>&#160;&#160;A restricted stock award is
    an award of shares that is subject to one or more restrictions,
    including, without limitation, a restriction that constitutes a
    &#147;substantial risk of forfeiture&#148; within the meaning of
    Section&#160;83 of the Code and prohibitions regarding the
    transferability of the shares, for a period to be determined by
    the Compensation Committee. The Compensation Committee has the
    discretion to determine the terms of any restricted stock award
    including the number of shares subject to the award, the price
    (if any) paid for shares subject to the award and the minimum
    period over which a restricted stock award may be vested. Unless
    otherwise determined by the Compensation Committee, participants
    holding shares subject to restricted stock awards may exercise
    full voting rights with respect to the shares during the
    restriction period and will be entitled to receive all dividend
    and other distributions with respect to the shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Restricted Stock Units.</I>&#160;&#160;A restricted stock
    unit is an award of units denominated in shares and payable in
    shares or cash, which is subject to such performance
    <FONT style="white-space: nowrap">and/or</FONT> other
    conditions as are specified by the Compensation Committee. The
    Compensation Committee has the discretion to determine the terms
    of any restricted stock unit award, including the number of
    shares subject to such award and the minimum period over which
    the award may vest and be settled. Holders of restricted stock
    units will be entitled to receive dividend equivalents only to
    the extent provided by the Compensation Committee.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Performance Awards.</I>&#160;&#160;The 2007 Plan provides for
    the grant of performance awards, ultimately payable in common
    stock or cash (or a combination thereof), as determined by the
    Compensation Committee. Performance awards are conditioned upon
    the level of achievement of one or more stated performance goals
    over a specified performance period that is not shorter than one
    year. The applicable award agreement will specify the amount, or
    the formula for determining the amount, that may be earned under
    the performance award, the performance criteria and level of
    achievement versus the performance criteria that will determine
    the amount payable under the performance award, the performance
    period over which performance is measured, and such other terms
    and conditions as the Compensation Committee may determine.
    Performance awards to Covered Employees or to individuals who
    are likely to be Covered Employees may be designed to qualify as
    &#147;performance-based compensation&#148; under
    Section&#160;162(m) of the Code to the extent the Compensation
    Committee so designates. Notwithstanding satisfaction of any
    applicable performance goals, the number of shares issued under
    or the amount paid under an award may, to the extent specified
    in the award agreement, be reduced by the Compensation Committee
    on the basis of such further considerations as the Compensation
    Committee in its sole discretion shall determine.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Performance goals set by the Compensation Committee may relate
    to one or more of the following objective performance criteria
    (on an absolute basis or relative to the performance of other
    business entities) that the Compensation Committee determines is
    appropriate: (i)&#160;earnings or earnings per share (whether on
    a pre-tax, after-tax, operational or other basis),
    (ii)&#160;return on equity, (iii)&#160;return on assets or net
    assets, (iv)&#160;return on capital or invested capital and
    other related financial measures, (v)&#160;cash flow or EBITDA
    or EBITDAX, (vi)&#160;revenues, (vii)&#160;income or operating
    income, (viii)&#160;expenses or costs or expense levels or cost
    levels (absolute or per unit), (ix)&#160;one or more operating
    ratios, (x)&#160;stock price, (xi)&#160;total stockholder
    return, (xii)&#160;operating profit, (xiii)&#160;profit margin,
    (xiv)&#160;capital expenditures, (xv)&#160;net borrowing, debt
    leverage levels, credit quality or debt ratings, (xvi)&#160;the
    accomplishment of mergers, acquisitions, dispositions, public
    offerings or similar extraordinary business transactions,
    (xvii)&#160;net asset value per share, (xviii)&#160;economic
    value added, (xix)&#160;individual business objectives,
    (xx)&#160;growth in production, (xxi)&#160;growth in reserves,
    (xxii)&#160;reserve replacement ratio
    <FONT style="white-space: nowrap">and/or</FONT>
    (xxiii)&#160;finding and development costs per unit. The
    performance goals based on these performance measures may be
    made relative to the performance of other business entities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Other Awards.</I>&#160;&#160;In addition to the award types
    described above, the 2007 Plan permits the granting of the
    following types of awards:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Shares of unrestricted stock, which are shares of common stock
    issued at no cost or for a purchase price and that are free from
    any transferability and forfeiture restrictions.
</TD>
</TR>

</TABLE>
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Other incentive awards, which may be payable in common stock,
    cash or other property as determined by the Compensation
    Committee. The terms and conditions of such awards will be
    specified by the Compensation Committee in the applicable award
    agreement.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Transferability.</I>&#160;&#160;Unless otherwise provided by
    the Compensation Committee, awards under the 2007 Plan are
    generally only transferable (i)&#160;by the recipient&#146;s
    last will and testament and by the applicable laws of descent
    and distribution, (ii)&#160;pursuant to a domestic relations
    order or (iii)&#160;to immediate family members or trusts or
    partnerships solely for the benefit of the participant&#146;s
    immediate family members. Incentive stock options are
    transferable only as provided in clause&#160;(i) above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Tax Withholding.</I>&#160;&#160;A participant must satisfy
    any applicable federal, state, local or foreign tax withholding
    obligations that arise due to an award made under the 2007 Plan,
    and the Compensation Committee will not be required to issue any
    shares or make any payment until the participant satisfies those
    obligations in a manner satisfactory to us. The Compensation
    Committee may permit tax withholding obligations to be satisfied
    by having the Company withhold a portion of the shares that
    would otherwise be issued to the participant under an award or
    by allowing the participant to surrender previously acquired
    shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Amendment and Termination.</I>&#160;&#160;Our Board may
    amend, suspend or terminate the 2007 Plan at any time and for
    any reason. Amendments to the 2007 Plan will be submitted for
    stockholder approval if an amendment increases the maximum
    number of shares available under the 2007 Plan (except as
    otherwise allowable under the 2007 Plan), changes the
    designation or class of persons eligible to receive awards under
    the 2007 Plan or if required by applicable law or by applicable
    stock exchange listing requirements. Amendments to limit the
    scope of the 2007 Plan do not require stockholder approval. No
    amendment to the 2007 Plan or awards may adversely affect in any
    material way any outstanding award without the consent of the
    holder of such award.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Corporate Events.</I>&#160;&#160;We may make appropriate
    adjustments in outstanding awards and the number of shares
    available for issuance under the 2007 Plan, including the
    individual limitations on awards, to reflect recapitalizations,
    reclassifications, stock splits, reverse stock splits, stock
    dividends and other similar events. Unless provided otherwise in
    an applicable award agreement, in the event of a &#147;change in
    control&#148; (as defined in the 2007 Plan), the vesting of all
    awards will be accelerated and any performance criteria will be
    deemed to be achieved to the maximum extent possible. If there
    is a change in control and we are not the surviving corporation
    (or if we survive only as a subsidiary of another corporation),
    unless the Compensation Committee determines otherwise, awards
    will be replaced with similar awards of the surviving
    corporation (or parent of the surviving corporation). The
    Compensation Committee may require the surrender to us by
    selected participants of some or all of the outstanding awards
    held by such participants, at which time we will cancel those
    awards and cause to be paid to each affected participant a
    certain amount of cash per share, as specified in the 2007 Plan.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Federal
    Income Tax Consequences</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following discussion is for general information only and is
    intended to summarize briefly the U.S.&#160;federal tax
    consequences to participants arising from participation in the
    2007 Plan. This description is based on current law, which is
    subject to change (possibly retroactively). The tax treatment of
    participants in the 2007 Plan may vary depending on the
    particular situation and therefore may be subject to special
    rules not discussed below. No attempt has been made to discuss
    any potential foreign, state or local tax consequences.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Incentive Options; Nonqualified Options; Stock Appreciation
    Rights.</I>&#160;&#160;Participants will not realize taxable
    income upon the grant of a nonqualified stock option or a stock
    appreciation right. Upon the exercise of a nonqualified stock
    option or a stock appreciation right, a participant will
    recognize ordinary compensation income (subject to withholding)
    in an amount equal to the excess of (i)&#160;the amount of cash
    and the fair market value of the common stock received, over
    (ii)&#160;the exercise price (if any) paid. A participant will
    generally have a tax basis in any shares of common stock
    received pursuant to the exercise of a stock appreciation right,
    or pursuant to the cash exercise of a nonqualified stock option,
    that equals the fair market value of such shares on the date of
    exercise. Subject to the discussion under &#147;Federal Income
    Tax Consequences&#160;&#151; Tax Code Limitations on
    Deductibility&#148; below, we or one of our subsidiaries (as
    applicable) will be entitled to a
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    deduction for federal income tax purposes that corresponds as to
    timing and amount with the compensation income recognized by a
    participant under the rules described above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Participants eligible to receive an incentive stock option will
    not recognize taxable income on the grant of an incentive stock
    option. Upon the exercise of an incentive stock option, a
    participant will not recognize taxable income, although the
    excess of the fair market value of the shares of common stock
    received upon exercise of the incentive stock option (&#147;ISO
    Stock&#148;) over the exercise price will increase the
    alternative minimum taxable income of the participant, which may
    cause such participant to incur alternative minimum tax. The
    payment of any alternative minimum tax attributable to the
    exercise of an incentive stock option would be allowed as a
    credit against the participant&#146;s regular tax liability in a
    later year to the extent the participant&#146;s regular tax
    liability is in excess of the alternative minimum tax for that
    year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon the disposition of ISO Stock that has been held for the
    requisite holding period (generally, at least two years from the
    date of grant and one year from the date of exercise of the
    incentive stock option), a participant will generally recognize
    capital gain (or loss) equal to the excess (or shortfall) of the
    amount received in the disposition over the exercise price paid
    by the participant for the ISO Stock. However, if a participant
    disposes of ISO Stock that has not been held for the requisite
    holding period (a &#147;Disqualifying Disposition&#148;), the
    participant will recognize ordinary compensation income in the
    year of the Disqualifying Disposition in an amount equal to the
    amount by which the fair market value of the ISO Stock at the
    time of exercise of the incentive stock option (or, if less, the
    amount realized in the case of an arm&#146;s-length disposition
    to an unrelated party) exceeds the exercise price paid by the
    participant for such ISO Stock. A participant would also
    recognize capital gain to the extent the amount realized in the
    Disqualifying Disposition exceeds the fair market value of the
    ISO Stock on the exercise date. If the exercise price paid for
    the ISO Stock exceeds the amount realized (in the case of an
    arm&#146;s-length disposition to an unrelated party), such
    excess would ordinarily constitute a capital loss.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Generally, we will not be entitled to any federal income tax
    deduction upon the grant or exercise of an incentive stock
    option, unless a participant makes a Disqualifying Disposition
    of the ISO Stock. If a participant makes a Disqualifying
    Disposition, we will then, subject to the discussion below under
    &#147;Federal Income Tax Consequences&#160;&#151; Tax Code
    Limitations on Deductibility,&#148; be entitled to a tax
    deduction that corresponds as to timing and amount with the
    compensation income recognized by a participant under the rules
    described in the preceding paragraph.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Under current rulings, if a participant transfers previously
    held shares of common stock (other than ISO Stock that has not
    been held for the requisite holding period) in satisfaction of
    part or all of the exercise price of a nonqualified stock option
    or incentive stock option, no additional gain will be recognized
    on the transfer of such previously held shares in satisfaction
    of the nonqualified stock option or incentive stock option
    exercise price (although a participant would still recognize
    ordinary compensation income upon exercise of a nonqualified
    stock option in the manner described above). Moreover, that
    number of shares of common stock received upon exercise that
    equals the number of shares of previously held common stock
    surrendered in satisfaction of the nonqualified stock option or
    incentive stock option exercise price will have a tax basis that
    equals, and a capital gains holding period that includes, the
    tax basis and capital gains holding period of the previously
    held shares of common stock surrendered in satisfaction of the
    nonqualified stock option or incentive stock option exercise
    price. Any additional shares of common stock received upon
    exercise will have a tax basis that equals the amount of cash
    (if any) paid by the participant, plus the amount of
    compensation income recognized by the participant under the
    rules described above. If a reload option is issued in
    connection with a participant&#146;s transfer of previously held
    common stock in full or partial satisfaction of the exercise
    price of an nonqualified stock option or incentive stock option,
    the tax consequences of the reload option will be as provided
    above for a nonqualified stock option or incentive stock option,
    depending on whether the reload option itself is a nonqualified
    stock option or incentive stock option.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The 2007 Plan allows the Compensation Committee to permit the
    transfer of awards in limited circumstances. See &#147;Summary
    of the 2007 Plan&#160;&#151; Transferability.&#148; For income
    and gift tax purposes, certain transfers of nonqualified stock
    options and stock appreciation rights generally should be
    treated as completed gifts, subject to gift taxation.
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Internal Revenue Service (&#147;IRS&#148;) has not provided
    formal guidance on the income tax consequences of a transfer of
    nonqualified stock options (other than in the context of
    divorce) or stock appreciation rights. However, the IRS has
    informally indicated that after a transfer of stock options
    (other than in the context of divorce pursuant to a domestic
    relations order), the transferor will recognize income, which
    will be subject to withholding, and FICA/FUTA taxes will be
    collectible at the time the transferee exercises the stock
    options.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, if a participant transfers a vested nonqualified
    stock option to another person and retains no interest in or
    power over it, the transfer is treated as a completed gift. The
    amount of the transferor&#146;s gift (or generation-skipping
    transfer, if the gift is to a grandchild or later generation)
    equals the value of the nonqualified stock option at the time of
    the gift. The value of the nonqualified stock option may be
    affected by several factors, including the difference between
    the exercise price and the fair market value of the stock, the
    potential for future appreciation or depreciation of the stock,
    the time period of the nonqualified stock option and the
    illiquidity of the nonqualified stock option. The transferor
    will be subject to a federal gift tax, which will be limited by
    (i)&#160;the annual exclusion of $13,000 (for 2011)&#160;per
    donee, (ii)&#160;the transferor&#146;s lifetime unified credit
    or (iii)&#160;the marital or charitable deduction rules. The
    gifted nonqualified stock option will not be included in the
    participant&#146;s gross estate for purposes of the federal
    estate tax or the generation-skipping transfer tax.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This favorable tax treatment for vested nonqualified stock
    options has not been extended to unvested nonqualified stock
    options. Whether such consequences apply to unvested
    nonqualified stock options is uncertain, and the gift tax
    implications of such a transfer are a risk the transferor will
    bear upon such a disposition. The IRS has not specifically
    addressed the tax consequences of a transfer of stock
    appreciation rights.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Restricted Stock Awards; Restricted Stock Units; Cash
    Awards.</I>&#160;&#160;A participant will recognize ordinary
    compensation income upon receipt of cash pursuant to a cash
    award or, if earlier, at the time the cash is otherwise made
    available for the participant to draw upon. A participant will
    not have taxable income at the time of grant of a stock award in
    the form of restricted stock units denominated in common stock,
    but rather, will generally recognize ordinary compensation
    income at the time he receives cash or common stock in
    settlement of the restricted stock units in an amount equal to
    the cash or the fair market value of the common stock received.
    In general, a participant will recognize ordinary compensation
    income as a result of the receipt of common stock pursuant to a
    restricted stock award in an amount equal to the fair market
    value of the common stock when such stock is received; provided
    that, if the stock is not transferable and is subject to a
    substantial risk of forfeiture when received, a participant will
    recognize ordinary compensation income in an amount equal to the
    fair market value of the common stock (i)&#160;when the common
    stock first becomes transferable or is no longer subject to a
    substantial risk of forfeiture, in cases where a participant
    does not make an valid election under section&#160;83(b) of the
    Code, or (ii)&#160;when the common stock is received, in cases
    where a participant makes a valid election under
    section&#160;83(b) of the Code.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A participant will be subject to withholding for federal, and
    generally for state and local, income taxes at the time he
    recognizes income under the rules described above for common
    stock or cash received. Dividends that are received by a
    participant before the common stock is taxed to the participant
    under the rules described in the preceding paragraph are taxed
    as additional compensation, not as dividend income. The tax
    basis in the common stock received by a participant will equal
    the amount recognized by him as compensation income under the
    rules described in the preceding paragraph, and the
    participant&#146;s capital gains holding period in those shares
    will commence on the later of the date the shares are received
    or the restrictions lapse.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Subject to the discussion immediately below, we or one of our
    subsidiaries (as applicable) will be entitled to a deduction for
    federal income tax purposes that corresponds as to timing and
    amount with the compensation income recognized by a participant
    under the rules described above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Tax Code Limitations on Deductibility.</I>&#160;&#160;In
    order for the amounts described above to be deductible, such
    amounts must constitute reasonable compensation for services
    rendered or to be rendered and must be ordinary and necessary
    business expenses.
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our ability (or the ability of one of our subsidiaries, as
    applicable) to obtain a deduction for future payments under the
    2007 Plan could also be limited by the golden parachute payment
    rules of Section&#160;280G of the Code, which prevent the
    deductibility of certain excess parachute payments made in
    connection with a change in control of an employer-corporation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Finally, our ability (or the ability of one of our subsidiaries,
    as applicable) to obtain a deduction for amounts paid under the
    2007 Plan could be limited by Section&#160;162(m) of the Code,
    which limits the deductibility, for federal income tax purposes,
    of compensation paid to &#147;covered employees&#148; of a
    publicly traded corporation to $1,000,000 for any such officer
    during any taxable year of the corporation. However, an
    exception applies to this limitation in the case of certain
    &#147;performance-based compensation.&#148; In order to exempt
    &#147;performance-based compensation&#148; from the $1,000,000
    deductibility limitation, the grant or vesting of the award
    relating to the compensation must be based on the satisfaction
    of one or more performance goals as selected by the Compensation
    Committee. Performance-based awards intended to comply with
    Section&#160;162(m) may not be granted in a given period if such
    awards relate to shares of common stock that exceed a specified
    limitation or, alternatively, the performance-based awards may
    not result in compensation, for a participant, in a given period
    that exceeds a specified limitation. If the material terms of
    the 2007 Plan are reapproved at the annual meeting, a
    participant who receives an award or awards intended to satisfy
    the &#147;performance-based compensation&#148; exception to the
    $1,000,000 deductibility limitation may not receive
    performance-based awards relating to more than
    330,000&#160;shares of common stock or, with respect to awards
    not related to shares of common stock, $5,000,000, in any given
    fiscal year. Although the 2007 Plan has been drafted to satisfy
    the requirements for the &#147;performance-based
    compensation&#148; exception, we may determine that it is in our
    best interests not to satisfy the requirements for the
    exception. See &#147;Summary of the 2007 Plan&#160;&#151; Awards
    under the 2007 Plan&#160;&#151; Performance Awards.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Requirements Regarding Deferred
    Compensation.</I>&#160;&#160;Certain of the benefits under the
    2007 Plan may constitute &#147;deferred compensation&#148;
    within the meaning of Section&#160;409A of the Code. Failure to
    comply with the requirements of Section&#160;409A regarding the
    timing of payment distributions could result in the affected
    participants being required to recognize ordinary income for
    federal tax purposes earlier than expected, and being subject to
    substantial penalties.
</DIV>

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    <B><FONT style="font-family: 'Times New Roman', Times">New Plan
    Benefits and Previously Awarded Options</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The awards, if any, that will be made to eligible persons under
    the 2007 Plan are subject to the discretion of the Compensation
    Committee and, therefore, we cannot currently determine the
    benefits or number of shares subject to awards that may be
    granted in the future to our executive officers, employees and
    directors under the 2007 Plan. Therefore, a New Plan Benefits
    Table is not provided.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We made annual equity awards under the 2007 Plan in 2010 to the
    named executive officers, outside directors and to other
    eligible employees. The 2010 grants to the named executive
    officers are reflected in the &#147;Grants of Plan-Based Awards
    for Year Ended December&#160;31, 2010&#148; table on
    page&#160;42 of this proxy statement. The 2010 grants to outside
    directors are reflected in the Director Compensation Table on
    page&#160;50 of this proxy statement. On April&#160;13, 2011,
    the closing price of our common stock was $27.73 per share.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    15
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table sets forth, for the named executive officers
    and certain other groups, all shares underlying outstanding
    stock options awarded before December&#160;31, 2010, under the
    2007 Plan and the Prior Plan. No associate of any of the
    directors, named executive officers or nominees set forth below
    holds or has held options to purchase our common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="81%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="8%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of Shares<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Issued or Underlying<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name and Principal Position</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Options</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    President and Chief Executive Officer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    152,892
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Executive Vice President and Chief Financial Officer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,845
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Executive Vice President and General Counsel
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Executive Vice President&#160;&#151; Business
    Development&#160;&#038; Geosciences
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Executive Vice President&#160;&#151; Land
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,845
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    All executives as a group
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    210,582
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Non-executive director group(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Non-executive officer employee group
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    123,756
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    334,338
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Consists of all members of the Board who are not also our
    executive officers.</TD>
</TR>

</TABLE>

<A name='D81255112'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Vote
    Required</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The reapproval of the material terms of the 2007 Plan to comply
    with the &#147;performance-based compensation&#148; exception of
    Section&#160;162(m) of the Code requires the affirmative vote of
    the holders of a majority of the shares of common stock present
    in person or by proxy and entitled to vote on the matter.
</DIV>

<A name='D81255113'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Recommendation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board believes that the reapproval of the material terms of
    the 2007 Plan for purposes of Section&#160;162(m) is essential
    to our continued success. For the reasons stated above, the
    stockholders are being asked to approve this proposal.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board recommends a vote <B>&#147;<U>FOR</U>&#148; </B>the
    reapproval of the material terms of the 2007 Plan to comply with
    Section&#160;162(m) of the Code.
</DIV>

<A name='D81255114'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">PROPOSAL&#160;5
    - <BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">RATIFICATION
    OF THE APPOINTMENT OF THE<BR>
    </FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">INDEPENDENT
    REGISTERED PUBLIC ACCOUNTING FIRM</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Audit Committee of the Board has appointed Hein&#160;&#038;
    Associates LLP (&#147;Hein&#148;) as the independent registered
    public accounting firm to audit our consolidated financial
    statements as of and for the fiscal year ending
    December&#160;31, 2011, and our internal controls over financial
    reporting as of December&#160;31, 2011. Hein has served as our
    independent registered public accounting firm since 2005 and has
    provided us certain audit-related services during that time.
    Hein also provided us certain tax services through 2008.
    Representatives of Hein are expected to be present at the annual
    meeting to respond to appropriate questions from stockholders
    and will be given the opportunity to make a statement if they
    desire to do so.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    16
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The submission of this matter for approval by stockholders is
    not legally required; however, the Board and Audit Committee
    believe that such submission is consistent with best practices
    in corporate governance and is an opportunity for stockholders
    to provide direct feedback to the Board and Audit Committee on
    an important issue of corporate governance. If the appointment
    is not ratified, the Audit Committee will consider whether it
    should select another independent registered public accounting
    firm.
</DIV>

<A name='D81255115'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Vote
    Required</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The affirmative vote of a majority of the shares of our common
    stock present in person or by proxy and entitled to vote on the
    matter is required for the ratification of the appointment of
    Hein&#160;&#038; Associates LLP as our independent registered
    public accounting firm for fiscal year 2011.
</DIV>

<A name='D81255116'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Recommendation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board recommends a vote <B>&#147;<U>FOR</U>&#148; </B>the
    ratification of the appointment of Hein&#160;&#038; Associates
    LLP as our independent registered public accounting firm for the
    fiscal year 2011.
</DIV>

<A name='D81255117'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">BOARD OF
    DIRECTORS, BOARD MEETINGS AND COMMITTEES</FONT></B>
</DIV>

</A>
<A name='D81255118'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Structure</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As of the date of this proxy statement, our Board has seven
    directors and two committees, the Audit Committee and the
    Compensation and Nominating Committee. Our Board is classified
    into three classes of directors, each serving staggered,
    three-year terms. As a result, stockholders will elect a portion
    of our Board each year. The current terms of Class&#160;I,
    Class&#160;II and Class&#160;III directors expire at the annual
    meeting of stockholders in 2011, 2012 and 2013, respectively.
    Our bylaws provide that the Board will consist of at least three
    but not more than nine directors, and the exact number of
    directors that make up the Board will be fixed from time to time
    by resolution of the Board. No decrease in the number of
    directors may shorten the term of any incumbent director.
</DIV>

<A name='D81255119'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Meetings</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    During 2010, our Board held 10 meetings. The independent
    directors met two times in executive session during 2010. Each
    director attended at least 75% of the meetings of the Board.
</DIV>

<A name='D81255120'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Leadership Structure</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our Board currently separates the roles of Chairman of the Board
    and Chief Executive Officer (&#147;CEO&#148;). The Board
    believes that the functions of the Chairman of the Board are
    distinct from those of the CEO. The Board believes that,
    although these functions may be fulfilled by a single
    individual, separation of the positions currently serves to
    enhance the Board&#146;s oversight of, and independence from,
    management. Our Board does not have a written policy regarding
    the separation of the positions of Chairman and CEO, and may
    modify this structure in the future to best address
    circumstances as appropriate.
</DIV>

<A name='D81255121'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Board&#146;s Role in Risk Oversight</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Assessing and managing risk is the responsibility of the
    management of the Company. However, the Board has an active
    role, as a whole, and also at the committee level, in overseeing
    management of the Company&#146;s risks. The Board regularly
    reviews information regarding the Company&#146;s credit,
    liquidity and operations, as well as the risks associated with
    each.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Under its charter, the Audit Committee reviews and discusses
    with management the Company&#146;s major financial risk
    exposures and the steps management has taken to monitor and
    control such exposures, including the Company&#146;s risk
    assessment and risk management policies. In addition, the Audit
    Committee oversees risks related to the Company&#146;s financial
    statements, the financial reporting process, accounting, tax and
    legal matters as well as liquidity risks and guidelines,
    policies and procedures for monitoring and mitigating risks.
</DIV>
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    <BR>
    17
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Audit Committee meets regularly in executive session without
    the Company&#146;s independent registered public accounting firm
    and without management. Members of the Audit Committee routinely
    attend meetings of the Company&#146;s Disclosure Committee,
    which meets before the Company files quarterly and annual
    financial reports with the SEC. In addition, the Audit Committee
    reviews and discusses with management and the Company&#146;s
    independent registered public accounting firm any major issues
    as to the adequacy of the Company&#146;s internal controls, any
    special steps adopted in light of material control deficiencies
    and the adequacy of disclosures about changes in internal
    control over financial reporting. The Audit Committee also meets
    with our internal controls, Sarbanes-Oxley compliance and
    enterprise risk management consultants, and, if applicable,
    reviews related-party transactions for potential conflicts of
    interest. Specifically relating to enterprise risk management
    during
    <FONT style="white-space: nowrap">2010-2011,</FONT>
    the Company performed an enterprise risk assessment to identify
    key risks and assess procedures for managing, monitoring and
    mitigating risks. The Audit Committee met with management and
    the Company&#146;s enterprise risk management consultant
    regarding this process.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Compensation and Nominating Committee manages risks
    associated with executive compensation and the independence of
    the Board, and meets regularly in executive session without
    management. While each committee is responsible for evaluating
    certain risks and overseeing the management of such risks, the
    entire Board is regularly informed through committee reports
    about such risks.
</DIV>

<A name='D81255122'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Committee
    Composition and Meetings</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Committee membership during the last fiscal year, number of
    meetings and the function of each of the committees are
    described below. Each of the committees operates under a written
    charter adopted and approved by our Board. Each of the committee
    charters is available under the Corporate Governance section of
    our website at <I>www.approachresources.com </I>and is available
    in printed form upon request by any stockholder.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="62%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="10%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="7%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Compensation<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Board of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name of Director</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Audit</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>and Nominating</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Directors</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Alan D. Bell
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member(1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James H. Brandi
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member(2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James C. Crain
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Chair(1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Bryan H. Lawrence
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Chair
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Sheldon B. Lubar
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Chair(2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Christopher J. Whyte
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Member
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Number of meetings in 2010
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    6
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    6
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    10
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Bell was appointed Chair of the Audit Committee
    effective March&#160;7, 2011.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Brandi was appointed Chair of the Compensation and
    Nominating Committee effective March&#160;7, 2011.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each committee member attended at least 75% of the meetings of
    each committee on which such member served.
</DIV>

<A name='D81255123'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Audit
    Committee</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We have an Audit Committee established in accordance with
    <FONT style="white-space: nowrap">Section&#160;10A-3</FONT>
    of the Exchange Act. Our Audit Committee is composed of Alan D.
    Bell, Chairman, James H. Brandi, James C. Crain and Christopher
    J. Whyte. Our Board has determined that all members of the Audit
    Committee satisfy the independence criteria applicable to Audit
    Committee members under NASDAQ and SEC rules and regulations.
    Additionally, the Board has determined that each member of the
    Audit Committee has accounting and related financial management
    expertise under NASDAQ rules. The Board has determined that Alan
    D. Bell, James C. Crain and Christopher J. Whyte are each
    &#147;audit committee financial experts&#148; as described in
    Item&#160;407(d)(5) of
    <FONT style="white-space: nowrap">Regulation&#160;S-K.</FONT>
</DIV>
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    <BR>
    18
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Audit Committee oversees the annual audit and recommends to
    our Board the independent public accountants who audit our
    financial statements. The Audit Committee also approves any
    other services provided by public accounting firms. The Audit
    Committee assists our Board in fulfilling the Board&#146;s
    oversight responsibility to the stockholders, the investment
    community and others relating to the integrity of our financial
    statements, our compliance with legal and regulatory
    requirements and the independent registered public accounting
    firm&#146;s qualifications and independence. The Audit Committee
    oversees our system of disclosure controls and procedures and
    system of internal controls regarding financial, accounting,
    legal compliance and ethics that management and our Board have
    established. In doing so, it is the responsibility of the Audit
    Committee to maintain free and open communication between the
    Audit Committee, our independent registered public accounting
    firm and our management. For ease of reference in this proxy
    statement we may refer to the independent registered public
    accounting firm as our &#147;accounting firm.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Principal responsibilities of the Audit Committee under its
    charter include the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    appoint, determine funding for and oversee our accounting firm;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    pre-approve all auditing services, internal control-related
    services and permitted non-audit services (including fees and
    terms) to be performed for us by our accounting firm;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review and discuss with management and our accounting firm our
    quarterly and annual financial statements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review and discuss quarterly reports from our accounting firm on
    critical accounting policies to be used, any alternative
    treatments of financial information within U.S.&#160;generally
    accepted accounting principles (&#147;GAAP&#148;) that have been
    discussed with management and other material written
    communications between the accounting firm and management;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    discuss with management our earnings press releases, including
    the use of &#147;pro forma&#148; or &#147;adjusted&#148;
    non-GAAP information, as well as financial information and
    earnings guidance provided to analysts;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    discuss with management our major financial risk exposures and
    the steps management has taken to monitor and control such
    exposures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review and discuss with management and our accounting firm our
    internal controls report and our accounting firm&#146;s
    attestation of the report before the filing of the
    Company&#146;s annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K;</FONT>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review and evaluate the lead partner of our accounting firm
    team;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    establish policies and procedures for the receipt, retention and
    treatment of complaints received by us regarding accounting,
    internal accounting controls or auditing matters, and the
    confidential, anonymous submission by employees of concerns
    regarding questionable accounting or auditing matters or alleged
    breaches of our Code of Conduct.
</TD>
</TR>

</TABLE>

<A name='D81255124'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation
    and Nominating Committee</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Compensation and Nominating Committee (&#147;Compensation
    Committee&#148;) oversees our executive and director
    compensation and the Board nominees for election by
    stockholders. Our Compensation Committee is composed of James H.
    Brandi, Chairman, James C. Crain and Sheldon B. Lubar. Our Board
    has determined that all members of the Compensation Committee
    satisfy the independence criteria applicable to compensation
    committee members under applicable SEC and NASDAQ rules and
    regulations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Principal responsibilities of the Compensation Committee under
    its charter include the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review and approve corporate goals and objectives relating to
    compensation for our CEO, evaluate the CEO&#146;s performance in
    light of these goals and objectives and recommend to the Board
    the CEO&#146;s annual compensation;
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    19
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review and approve the evaluation process and compensation
    structure for our executive officers and key employees and, in
    consultation with the CEO, recommend to the Board the annual
    compensation for such officers and key employees;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review and administer our incentive compensation and stock-based
    plans;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review director compensation and recommend to the Board the form
    and amount of director compensation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    meet with management to review and discuss the Compensation
    Discussion and Analysis required by the SEC&#146;s rules and
    regulations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    establish procedures for evaluating the suitability of potential
    director nominees;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    recommend to the Board the director nominees for election by the
    stockholders or appointment by the Board, as applicable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review the suitability for continued service as a director of
    each Board member;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    review periodically the size and composition of the Board and
    recommend to the Board any appropriate changes, subject to our
    bylaws.
</TD>
</TR>

</TABLE>

<A name='D81255125'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">CORPORATE
    GOVERNANCE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We are committed to sound corporate governance principles.
    Following such principles is essential to running our business
    efficiently and maintaining our integrity in the marketplace.
    Our corporate governance documents are available under the
    Corporate Governance section of our website at
    <I>www.approachresources.com</I>, and are available in print
    upon request by any stockholder to our Corporate Secretary,
    Approach Resources Inc., One Ridgmar Centre, 6500&#160;West
    Freeway, Suite&#160;800, Fort&#160;Worth, Texas&#160;76116. The
    information on our website is not part of this proxy statement.
</DIV>

<A name='D81255126'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Code of
    Conduct</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We have adopted a Code of Conduct that applies to all of our
    directors, officers and employees. The Code of Conduct is
    available under the Corporate Governance section of our website
    at <I>www.approachresources.com</I>. Any change to or waiver
    from our Code of Conduct may be made only by the Board or, in
    the case of any change in or waiver for any of our officers, by
    our independent directors. All changes and waivers will be
    disclosed as required by applicable SEC and NASDAQ rules and
    regulations.
</DIV>

<A name='D81255127'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Independence</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board has determined that Mr.&#160;Brandi, Mr.&#160;Bell,
    Mr.&#160;Crain, Mr.&#160;Lubar and Mr.&#160;Whyte are
    independent within the meaning of applicable SEC and NASDAQ
    rules and regulations. Furthermore, the Board has determined
    that each of the current members of both the Audit Committee and
    the Compensation Committee is independent within the meaning of
    applicable SEC and NASDAQ rules and regulations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In determining the independence of Board and committee members
    under applicable SEC and NASDAQ rules and regulations, the Board
    specifically considered Mr.&#160;Brandi&#146;s position as a
    Managing Director of BNP Paribas (&#147;Paribas&#148;).
    Mr.&#160;Brandi became a Managing Director of Paribas in May
    2010, after the acquisition by Paribas of Hill Street Capital, a
    financial advisory and private investment firm where
    Mr.&#160;Brandi was formerly a partner. In an unrelated
    transaction, Paribas became a party to our Credit Agreement in
    May 2010, after acquiring Fortis Capital Corp., a former member
    of our bank group. As a member of our bank group and party to
    our Credit Agreement, Paribas has committed to loan us 23.33% of
    our total borrowing base of $150&#160;million and indirectly
    receives a proportionate share of the interest and fees that we
    pay to the bank group for maintaining our revolving credit
    facility. Mr.&#160;Brandi has no direct or indirect material
    interest in this transaction. After reviewing all of the
    relevant facts and circumstances of Mr.&#160;Brandi&#146;s
    employment by Paribas and Paribas&#146;s relationship with the
    Company, the Board determined Mr.&#160;Brandi to be independent
    under applicable SEC and NASDAQ rules and regulations regarding
    independence. The Board also determined that
</DIV>
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    <BR>
    20
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Mr.&#160;Brandi would continue to qualify as an &#147;outside
    director&#148; under Section&#160;162(m) of the Code and
    applicable regulations.
</DIV>

<A name='D81255128'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Identifying
    and Evaluating Nominees for Directors</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The policy of the Compensation Committee is to consider properly
    submitted nominations for candidates for membership on the
    Board. The Compensation Committee and Board seek individuals who
    are of high ethical character and who share our values.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Compensation Committee and the Board also seek individuals
    with a diversity of professional experiences, including chief
    executive officers and other operating executives, investment
    and finance professionals, attorneys and individuals with
    experience or advanced degrees in public accounting. Other
    criteria that the committee will use to evaluate director
    nominees are:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a candidate&#146;s strength of character, independence of
    opinion and sound business judgment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the proportion of Board members who meet the criteria for
    independence required by NASDAQ;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a candidate&#146;s broad understanding of business, financial
    affairs and the complexities of a business organization;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a candidate&#146;s ability to work with our other directors and
    executives in accomplishing our objectives and representing
    stockholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a candidate&#146;s ability to devote sufficient time to
    effectively administer our affairs;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a candidate&#146;s educational background and expertise in areas
    significant to our operations.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Compensation Committee has no specific policy on diversity.
    However, the committee does not discriminate on the basis of
    race, gender, age or cultural background in identifying and
    nominating nominees for director. For purposes of consideration
    of diversity, the Compensation Committee and the Board include
    members with differences of viewpoint, professional experience,
    education, skills and other individual qualities and attributes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Compensation Committee may consider suggestions from many
    sources regarding possible candidates for nomination to the
    Board, including suggestions from management, directors and
    stockholders. For the deadlines for stockholder suggestions to
    the Compensation Committee of individuals to be considered for
    nomination as candidates to be elected at the 2011 annual
    meeting of stockholders, see &#147;Submission of Stockholder
    Proposals and Other Deadlines for the 2011 Annual Meeting of
    Stockholders.&#148; Any such suggestion should be sent to the
    Compensation Committee,
    <FONT style="white-space: nowrap">c/o&#160;our</FONT>
    Corporate Secretary, Approach Resources Inc., One Ridgmar
    Centre, 6500&#160;West Freeway, Suite&#160;800, Fort&#160;Worth,
    Texas 76116, together with the same information as that
    described in our bylaws for stockholder nominations made by the
    Board or management. The information should also include the
    name and address of the stockholder recommending the individual,
    the number of shares owned beneficially and of record by the
    stockholder, the suggested individual&#146;s name and address, a
    description of all arrangements or understandings (if any)
    between the stockholder and the individual being suggested for
    the committee&#146;s consideration, the information about the
    individual being suggested that would be required to be included
    in a proxy statement filed with the SEC and an indication of the
    individual&#146;s willingness to be named as a nominee and to
    serve as a director if nominated by the committee and the Board.
    Possible candidates who have been suggested by stockholders are
    evaluated by the committee in the same manner as are other
    possible candidates. The committee has not retained a
    third-party search firm to identify candidates at this time but
    may do so in the future in its discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Mr.&#160;Bell is our only nominee for director who is not a
    previously-elected director standing for re-election.
    Mr.&#160;Bell was introduced to the Company through the
    Company&#146;s independent accounting firm. The Compensation and
    Nominating Committee evaluated Mr.&#160;Bell&#146;s
    qualification to serve on the Company&#146;s Board pursuant to
    its director nomination guidelines. In August 2010,
    Mr.&#160;Bell was recommended by the independent directors of
    our Compensation and Nominating Committee, and subsequently was
    unanimously appointed by the Board, to serve as a director of
    the Company.
</DIV>
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    <BR>
    21
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='D81255129'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Communications
    with the Board</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Stockholders may send written communications to the Board,
    <FONT style="white-space: nowrap">c/o&#160;our</FONT>
    Corporate Secretary, Approach Resources Inc., One Ridgmar
    Centre, 6500&#160;West Freeway, Suite&#160;800, Fort&#160;Worth,
    Texas 76116. These communications will be compiled by the
    Corporate Secretary and promptly forwarded to the Board.
</DIV>

<A name='D81255130'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Director
    Attendance at Annual Meetings of Stockholders</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our Board expects directors to attend the annual meetings of our
    stockholders. We have formalized this expectation in a written
    policy that has been approved by the Compensation Committee and
    the Board. All directors attended the last annual meeting of
    stockholders either in person or by telephone.
</DIV>

<A name='D81255131'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">STOCK
    OWNERSHIP MATTERS</FONT></B>
</DIV>

</A>
<A name='D81255132'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Section&#160;16(a)
    Beneficial Ownership Reporting Compliance</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Section&#160;16(a) of the Exchange Act requires our directors,
    officers and persons who beneficially own more than 10% of our
    common stock to file initial reports of ownership on Form&#160;3
    and reports of changes of ownership on Forms&#160;4 and 5 with
    the SEC. These officers, directors and 10% beneficial owners are
    also required to furnish us with copies of all
    Section&#160;16(a) forms that they file. Specific due dates for
    these reports have been established by regulation, and we are
    required to report in this proxy statement any failure to file
    by these dates in 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We are aware that a Form&#160;4 was not timely filed on behalf
    of each of James H. Brandi, James C. Crain, Sheldon B. Lubar and
    Christopher J. Whyte for grants of restricted shares that they
    elected to receive as of April&#160;1, 2010, as part of their
    respective annual director compensation. A Form&#160;4 for each
    of these directors was filed on April&#160;30, 2010. Based
    solely on our review of reports and written representations that
    we have received during the year ended December&#160;31, 2010,
    we believe that all other required reports were timely filed.
</DIV>
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    <BR>
    22
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<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='D81255133'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Security
    Ownership of Management and Certain Beneficial Owners</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table sets forth, as of April&#160;13, 2011,
    beneficial ownership of our common stock by our directors, the
    executive officers named in the Summary Compensation Table in
    this proxy statement, all directors and executive officers as a
    group and all persons who were known to us to be the beneficial
    owners of more than 5% of our outstanding shares:
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="67%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="10%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of Shares of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Common Stock Owned(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percent(2)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Directors and Executive Officers:*</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    J. Ross Craft(3)(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    924,552
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.25
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Steven P. Smart(3)(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    324,967
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.14
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    J. Curtis Henderson(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    283,435
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Ralph P. Manoushagian(3)(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    253,754
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Qingming Yang(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    160,700
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Bryan H. Lawrence(5)(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,189,687
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11.21
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Alan D. Bell(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,798
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    James H. Brandi(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    32,924
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    James C. Crain(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Sheldon B. Lubar(3)(7)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    989,201
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.48
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Christopher J. Whyte(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33,266
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    All executive officers and directors as a group
    (12&#160;persons)(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,233,688
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21.90
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Other Beneficial Owners:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Yorktown Energy Partners&#160;V, L.P.(5)(8)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,082,567
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.80
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Janus Capital Management LLC(9)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,492,470
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.24
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    *&#160;</TD>
    <TD></TD>
    <TD valign="bottom">
    Less than one percent.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Unless otherwise indicated, all shares of stock are held
    directly with sole voting and investment power.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Based on 28,460,473&#160;shares of our common stock outstanding
    at April&#160;13, 2011.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    C/o Approach Resources Inc., One Ridgmar Centre, 6500&#160;West
    Freeway, Suite&#160;800, Fort&#160;Worth, Texas&#160;76116.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (4) </TD>
    <TD></TD>
    <TD valign="bottom">
    The number of shares beneficially owned includes the following
    shares that are subject to options that are currently
    exercisable or will become exercisable within 60&#160;days of
    the date of this proxy statement:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="77%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="19%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name of Beneficial Owners</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares Subject to Options</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    152,892
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,845
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,845
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    210,582
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The number of shares beneficially owned also includes
    4,154&#160;restricted shares issued to William S.
    Buckler,&#160;III, in connection with his employment as Vice
    President&#160;&#151; Engineering on April&#160;5, 2011.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (5) </TD>
    <TD></TD>
    <TD valign="bottom">
    Has a principal business address of 410 Park Avenue, 19th Floor,
    New York, New York 10022.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (6) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes attribution of shares held by Yorktown Energy
    Partners&#160;V, L.P. and its affiliates. Mr.&#160;Lawrence
    disclaims beneficial ownership of these securities except to the
    extent of his pecuniary interest therein.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (7) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes attribution of shares held by Lubar Equity Fund, LLC
    and Lubar Nominees. Mr.&#160;Lubar disclaims beneficial
    ownership of these securities except to the extent of his
    pecuniary interest therein.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (8) </TD>
    <TD></TD>
    <TD valign="bottom">
    Based on Form&#160;4 filed March&#160;16, 2011, reporting
    ownership as of March&#160;14, 2011. Yorktown V Company LLC is
    the sole general partner of Yorktown Energy Partners&#160;V,
    L.P. As a result, Yorktown V Company LLC may be deemed to have
    the power to vote or direct the vote or to dispose or direct the
    disposition of the shares owned by Yorktown Energy
    Partners&#160;V, L.P.</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    23
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (9) </TD>
    <TD></TD>
    <TD valign="bottom">
    Based on Schedule&#160;13G filed February&#160;14, 2011,
    reporting ownership as of December&#160;31, 2010. Janus Capital
    Management LLC (&#147;Janus&#148;), as an investment adviser,
    has the sole and shared power to vote 1,492,470 and
    0&#160;shares, respectively, and the sole and shared power to
    dispose of 1,492,470 and 0&#160;shares, respectively.
    Janus&#146;s principal business address is 151 Detroit Street,
    Denver, Colorado 80206.</TD>
</TR>

</TABLE>

<A name='D81255134'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">EXECUTIVE
    OFFICERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table sets forth the names, ages and positions of
    our executive officers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="32%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="63%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Age</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Position</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    54
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    President, Chief Executive Officer and Class&#160;III Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    56
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and Chief Financial Officer
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    48
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President, General Counsel and Secretary
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    48
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Business Development and
    Geosciences
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    59
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Land
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    William S. Buckler, III
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    49
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Vice President&#160;&#151; Engineering
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>J.&#160;Ross Craft</I> has been our President and Chief
    Executive Officer and a member of our Board since our inception
    in September 2002. For Mr.&#160;Craft&#146;s biographical
    information, please see &#147;Proposal&#160;One&#160;&#151;
    Election of Directors&#160;&#151; Directors.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Steven P. Smart </I>joined us as Treasurer at our inception
    in September 2002. Mr.&#160;Smart was named Vice
    President&#160;&#151; Finance in August 2005, and promoted to
    Executive Vice President and Chief Financial Officer in June
    2007. From 2000 to 2002, Mr.&#160;Smart was Controller and
    Treasurer of Prize Energy Corp., a public exploration and
    production company. From 1998 to 2000, Mr.&#160;Smart was a
    Senior Manager in the Energy Industry group at Arthur Andersen
    LLP. Prior to 1998, Mr.&#160;Smart served in senior executive
    financial positions with several public and private oil and gas
    companies, including Magnum Hunter Resources Inc. and Saxon Oil
    Co. Mr.&#160;Smart began his career in public accounting with
    Deloitte&#160;&#038; Touche (formerly Touche Ross).
    Mr.&#160;Smart has over 30&#160;years of experience with both
    public and private companies in the oil and gas industry.
    Mr.&#160;Smart holds a B.B.A. in Accounting from Angelo State
    University and is a licensed Certified Public Accountant in the
    State of Texas.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>J.&#160;Curtis Henderson </I>joined us in February 2007 as
    Executive Vice President, General Counsel and Secretary. From
    2005 to 2007, Mr.&#160;Henderson served as President and Chief
    Executive Officer of Coterie Capital Partners, Ltd., a private
    equity partnership in Dallas, Texas. From 1996 to 2005,
    Mr.&#160;Henderson served as General Counsel of Nucentrix
    Broadband Networks, Inc., a public, broadband wireless
    telecommunications company based in Dallas. While he was at
    Nucentrix, Mr.&#160;Henderson oversaw its sale to an affiliate
    of Nextel Communications Inc. under Section&#160;363 of the
    United States Bankruptcy Code in 2004. Mr.&#160;Henderson began
    his career as a lawyer in the corporate and securities section
    of Locke Lord Bissell&#160;&#038; Liddell (formerly Locke
    Purnell Rain Harrell). Mr.&#160;Henderson has over 23&#160;years
    of experience in public and private securities, mergers and
    acquisitions, corporate finance and regulatory affairs.
    Mr.&#160;Henderson holds a B.A. in Political Science from Austin
    College and a J.D. from Washington and Lee University School of
    Law, where he served as Articles&#160;Editor of the Washington
    and Lee Law Review. Mr.&#160;Henderson is the
    <FONT style="white-space: nowrap">brother-in-law</FONT>
    of J. Ross Craft, our CEO and President.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Qingming Yang </I>joined us in July 2009 as Vice
    President&#160;&#151; Exploration. In November 2010,
    Dr.&#160;Yang was named Executive Vice President&#160;&#151;
    Business Development and Geosciences. Dr.&#160;Yang has over
    25&#160;years of domestic and international exploration,
    technical and operating experience in the oil and gas industry.
    Before joining Approach, Dr.&#160;Yang was employed by Pioneer
    Natural Resources for 12&#160;years in a variety of positions,
    including Exploration Manager for Worldwide Exploration and
    Business Development, Geosciences Advisor and Technical Lead for
    Pioneer&#146;s Eagle Ford Shale team. Dr.&#160;Yang is a member
    of American Association of Petroleum Geologists (AAPG) and
    served as an Associate Editor for the AAPG Bulletin from
    <FONT style="white-space: nowrap">2003-2009.</FONT>
    In addition, Dr.&#160;Yang was Chairman of Dallas Geological
    Society International Committee in 2002. Dr.&#160;Yang earned
    his B.S. in Petroleum Geology from Chengdu University of
    Technology in the People&#146;s
</DIV>
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    Republic of China, his M.A. in Geology from George Washington
    University and his Ph.D. in Structural Geology from the
    University of Texas at Dallas.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Ralph P. Manoushagian </I>joined us in February 2004 as Land
    Manager. Mr.&#160;Manoushagian was named Senior Vice
    President&#160;&#151; Land in June 2007 and Executive Vice
    President&#160;&#151; Land in June 2008. In 2003,
    Mr.&#160;Manoushagian worked as an independent landman. From
    2001 to 2003, Mr.&#160;Manoushagian was the President of Hudco
    Fuels, a privately-owned fuel distributorship.
    Mr.&#160;Manoushagian has been an active landman and oil and gas
    operator for over 30&#160;years. Mr.&#160;Manoushagian holds a
    B.B.A. in Finance from the University of North Texas and has
    been a Certified Professional Landman since 1988.
    Mr.&#160;Manoushagian is a director of the First Financial Bank
    of Southlake, Texas. He previously served as a director and Vice
    President of the Texas Independent Producers and Royalty Owners
    and as a director of the Texas Alliance of Energy Producers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>William S. Buckler,&#160;III </I>joined us in April 2011 as
    Vice President&#160;&#151; Engineering. Mr.&#160;Buckler has
    over 26&#160;years of operating and engineering experience in
    the oil and gas industry. Before joining Approach,
    Mr.&#160;Buckler was employed by Chief Oil&#160;&#038; Gas LLC
    as Senior Vice President&#160;&#151; Operations and Engineering
    from 2008 to 2011. While at Chief, Mr.&#160;Buckler managed the
    engineering, operations and procurement departments for
    Chief&#146;s Barnett Shale and Marcellus Shale operations. From
    2003 to 2008, Mr.&#160;Buckler was employed by Quicksilver
    Resources Inc. as Vice President&#160;&#151;
    U.S.&#160;Operations. Prior to Quicksilver, Mr.&#160;Buckler
    served as Fort&#160;Worth Basin Operations and Engineering
    Supervisor for Mitchell Energy from 1997 to 2003.
    Mr.&#160;Buckler holds a B.S. in Petroleum Engineering from
    Texas A&#038;M University and is a registered Professional
    Engineer licensed in Texas. Mr.&#160;Buckler is a member of the
    Society of Petroleum Engineers and of the Board of Directors of
    the Fort&#160;Worth Petroleum Club.
</DIV>

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    <B><FONT style="font-family: 'Times New Roman', Times">COMPENSATION
    DISCUSSION AND ANALYSIS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>The following compensation discussion and analysis contains
    statements regarding future Company performance goals and
    measures. These goals and measures are disclosed in the limited
    context of the Company&#146;s incentive compensation program and
    are not statements of management&#146;s expectations or
    estimates of results or other guidance. The Company specifically
    cautions investors not to apply these statements to other
    contexts. Throughout this proxy statement, the individuals who
    serve as our CEO and Chief Financial Officer (&#147;CFO&#148;)
    as well as the other three most highly compensated individuals
    included in the Summary Compensation Table in this proxy
    statement, are referred to as our &#147;named executive
    officers&#148; or &#147;executive officers.&#148;</I>
</DIV>

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    <B><FONT style="font-family: 'Times New Roman', Times">Introduction
    and Overview</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following discussion and analysis is intended to assist you
    in understanding our compensation program. It is intended to
    cover all the elements of compensation paid to our named
    executive officers and the reasoning used by the Compensation
    Committee in structuring our executive compensation program,
    which is designed primarily to incentivize our named executive
    officers to build long-term stockholder value.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We believe our success depends on the continued contributions of
    our named executive officers. Our executive compensation
    programs are designed with the philosophy of attracting,
    motivating and retaining experienced and qualified executive
    officers and directors with compensation that is competitive
    with comparable public companies and that recognizes both
    overall business and individual performance. Our policies are
    also intended to support the achievement of our strategic
    objectives by aligning the interests of our executive officers
    with those of our stockholders through operational and financial
    performance goals and equity-based compensation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The three principal elements of our current executive
    compensation programs are annual base salary, annual incentive
    bonuses and long-term equity incentives in the form of
    stock-based awards under our 2007 Plan. Base salary is annual
    salary that pays for skill and experience and is required for
    market competitiveness. Annual incentive bonuses are annual,
    cash performance awards for achievement of then-current business
    goals. Long-term equity incentives are stock-based awards that
    provide a competitive, long-
</DIV>
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    term incentive to employees and named executive officers in
    direct alignment with stockholder interests. We also have
    employment agreements with our executive officers that contain
    employment terms, severance and change in control provisions. We
    believe these agreements are important to retain qualified
    executives in a competitive market for executive talent.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Executive
    Summary&#160;&#151; 2010 Executive Compensation
    Program</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We seek to pay our executive officers for performance, closely
    align the interests of our executive officers with the interests
    of our stockholders and attract, retain and motivate top
    executive talent. Below is a summary of our key performance
    results, achievements and compensation decisions in 2010. In
    reporting our financial and operating results, natural gas is
    converted at a rate of six thousand cubic feet (&#147;Mcf&#148;)
    of natural gas to one barrel of oil equivalent
    (&#147;BOE&#148;), natural gas liquids (&#147;NGLs&#148;) are
    converted at a rate of one barrel of NGLs to one BOE and oil and
    NGLs are converted at a rate of one barrel to six Mcf of gas
    equivalent (&#147;Mcfe&#148;). Amounts in $ per Boe are
    converted to amounts in $ per Mcfe at a rate of six to one
    ($0.06 per Boe equals $0.01 per Mcfe).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Our Performance in 2010.</I>&#160;&#160;We achieved strong
    operational and financial results and stockholder returns during
    2010. Our executive officers were instrumental in helping us
    achieve these results. Key 2010 financial and operational
    results and stockholder returns that were instrumental in our
    compensation decisions are included below. Comparisons are to
    the prior year 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We increased our total estimated proved reserves by
    14.3&#160;million BOE (&#147;MMBoe&#148;), or 39.3%, at a
    finding and development (&#147;F&#038;D&#148;) (non-GAAP) cost
    of $5.70 per BOE;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We increased production 6% to 1.6&#160;MMBoe;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We grew net income 243% to $0.34 per share;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We increased EBITDAX (non-GAAP) 17% to $1.94 per share;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We completed a detailed engineering, geological and
    petrophysical study of the Wolffork oil shale across our
    operating area in the Permian Basin;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We acquired approximately 34,800&#160;net acres in and around
    our core operating area that we believe will be prospective for
    multiple formations, increasing our net acreage position in the
    Permian Basin by approximately 51%;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We closed a $101.8&#160;million equity offering and used the
    proceeds to pay all outstanding long-term debt and help fund
    development of our Wolffork oil shale resource play;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We ended 2010 with a long-term debt to EBITDAX ratio of zero;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We began a pilot drilling program in the Wolffork oil shale
    resource play;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Total stockholder returns in 2010 were 199%.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    F&#038;D cost and EBITDAX are non-GAAP financial measures.
    Reconciliation to our audited financial statements and other
    information on non-GAAP financial measures used in this proxy
    statement can be found following our annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    that is being sent with this proxy statement. In addition, we
    describe how we calculate EBITDAX, F&#038;D costs and drill-bit
    F&#038;D costs from our audited financial statements and related
    notes on pages&#160;33, 36 and 33, respectively, of this proxy
    statement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Three-Year Stockholder Returns.</I>&#160;&#160;Our
    compensation policies are designed to focus our executive
    officers on the creation of long-term growth in stockholder
    value. The following graph compares the cumulative return on a
    $100 investment in our common stock from December&#160;31, 2007,
    through December&#160;31, 2010, to that of the cumulative,
    average return on a $100 investment in the Standard&#160;&#038;
    Poor&#146;s 500 (&#147;S&#038;P 500&#148;) index, the Dow Jones
    U.S.&#160;Exploration&#160;&#038; Production Total Stock Market
    (&#147;E&#038;P&#148;) index and a group of our peer companies
    for the same period. We discuss our peer group below under
    &#147;&#151;&#160;Use of Peer Group Comparisons.&#148; In
    addition to the peer group discussed below under
    &#147;&#151;&#160;Use of Peer Group Comparisons,&#148; and for
    purposes of comparing stockholder returns in the graph below, we
    also include the following peers based on their emphasis
</DIV>
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    on oil and NGL production: Berry Petroleum Company, Concho
    Resources Inc., Kodiak Oil&#160;&#038; Gas Corp., Northern
    Oil&#160;&#038; Gas, Inc., Oasis Petroleum Inc., Petroleum
    Development Corporation and Sandridge Energy, Inc. In
    calculating the cumulative return, reinvestment of dividends, if
    any, is assumed. This graph is not &#147;soliciting
    material,&#148; is not deemed filed with the SEC and is not to
    be incorporated by reference in any of our filings under the
    Securities Act of 1933 as amended (the &#147;Securities
    Act&#148;) or the Exchange Act, whether made before or after the
    date hereof and irrespective of any general incorporation
    language in any such filing. This historic stock performance is
    not indicative of future stock performance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <IMG src="d81255d8125501.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Annual Base Salaries.</I>&#160;&#160;Since we became a public
    company in 2007, we have attempted to provide our executive
    officers with annual base salaries that are competitive with
    industry peers, particularly in the Dallas&#160;&#151;
    Fort&#160;Worth, Texas area, and that are at levels that we
    believe will allow us to retain our executive officers, with the
    goal of growing stockholder value. After challenging economic
    and industry conditions in 2008 and 2009, we did not materially
    increase salaries for the majority of our executive officers in
    2009 and 2010. Annual base salaries for our named executive
    officers in 2010 ranged from $187,000 for Mr.&#160;Manoushagian
    to $312,500 for Mr.&#160;Craft. After strong operating and
    financial results and stockholder returns in 2010, we increased
    the range of annual base salaries for our executive officers to
    $200,000 for Mr.&#160;Manoushagian to $400,000 for
    Mr.&#160;Craft for 2011. More detailed information is provided
    below under &#147;&#151;&#160;Elements of the Company&#146;s
    Executive Officer Compensation Program&#160;&#151; Annual Base
    Salary.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Performance-Based Annual Cash Incentive
    Plan.</I>&#160;&#160;Since 2008, we have provided our executive
    officers with annual cash incentive bonus opportunities under
    which we make payments based on the Company&#146;s achievement
    of annual financial and operating measures that we believe are
    essential measurements of Company performance and cost control,
    and on each executive officer&#146;s individual performance. For
    2010, Company performance measures of production, reserves and
    EBITDAX per share growth, lease operating/general and
    administrative expense and drill-bit F&#038;D costs represented
    75% of each executive officer&#146;s total bonus opportunity.
    Individual performance represented 25% of total bonus
    opportunity. Threshold and maximum bonus targets ranged from
    35%&#160;&#151; 75% of annual salary for Mr.&#160;Manoushagian
    and Dr.&#160;Yang to 50%&#160;&#151; 150% of annual salary for
    Mr.&#160;Craft. Final incentive awards for 2010 ranged from
    $56,100 for Mr.&#160;Manoushagian to $187,500 for
    Mr.&#160;Craft. Consistent with our past practice, we have
    provided our executive officers with a cash incentive bonus
    opportunity based on substantially the same performance measures
    and target levels for 2011. More detailed information is
    provided below under &#147;&#151;&#160;Elements of the
    Company&#146;s Executive Officer Compensation
    Program&#160;&#151; Performance-Based Annual Incentive
    Awards.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Long-Term Equity Incentives.</I>&#160;&#160;In 2010, we
    changed the long-term equity incentive component of our
    compensation program to further link our executives&#146; pay to
    performance and align their interests with those
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    of our stockholders. In 2010, we granted our executive officers
    performance-based, long-term incentive restricted stock
    (&#147;LTI&#148;) awards, totaling 400,000&#160;shares of
    restricted stock, or 1.8% of our weighted average shares of
    common stock outstanding in 2010. The LTI awards must first be
    earned based on the Company&#146;s achievement of annual
    performance measures that we believe are strongly correlated to
    building stockholder value. The awards are then subject to
    multi-year, time-based vesting to encourage retention of our key
    executive officers. The applicable annual performance measures
    are reserves growth, F&#038;D cost and
    <FONT style="white-space: nowrap">debt-to-EBITDAX</FONT>
    ratio in the performance year of 2010. If all performance
    measures are met, then the earned LTI awards will vest ratably
    over four years following the performance year 2010. LTI awards
    in 2010 ranged from 60,000&#160;shares each for
    Mr.&#160;Manoushagian and Dr.&#160;Yang, to 120,000&#160;shares
    for Mr.&#160;Craft. Because of Dr.&#160;Yang&#146;s role in
    undertaking our study of the Wolffork oil shale under our
    Permian Basin acreage and beginning a pilot drilling program, as
    well as our goal of retaining Dr.&#160;Yang in a competitive
    market for executive and technical talent, we also granted
    Dr.&#160;Yang an additional award of 35,000&#160;shares of
    time-vesting, restricted stock in 2010. After strong operating
    and financial results and stockholder returns in 2010, in 2011
    we granted our executive officers LTI awards totaling
    204,000&#160;shares of restricted stock, or 0.9% of our weighted
    average shares of common stock outstanding in 2010, tied to
    substantially the same performance measures and vesting dates as
    the 2010 LTI awards. More detailed information is provided below
    under &#147;&#151;&#160;Elements of the Company&#146;s Executive
    Officer Compensation Program&#160;&#151; Long-Term Incentive
    Stock Compensation.&#148;
</DIV>

<A name='D81255138'>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation
    Program Objectives and Methodology</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As discussed above, the primary objectives of our executive
    compensation programs are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Pay for performance, whereby Company and individual performance
    substantially influence an executive officer&#146;s total
    compensation opportunity;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Align the interests of our executive officers and stockholders
    by motivating executive officers to increase stockholder value
    and rewarding executive officers when stockholder value
    increases;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Attract, retain and motivate talented and experienced executives
    in the highly competitive oil and gas industry, particularly in
    the Dallas&#160;&#151; Fort&#160;Worth, Texas area.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    To accomplish these objectives, we intend to provide a
    competitive total compensation package. Base salaries and total
    compensation are intended to be competitive with our industry
    peers, considering individual performance and experience, to
    ensure that each executive officer is appropriately compensated.
</DIV>

<A name='D81255139'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Setting
    Executive Officer Compensation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Role
    of the Compensation Committee</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our Compensation Committee is responsible for the approval,
    evaluation and oversight of all of our executive officer,
    director and stock incentive compensation plans, policies and
    programs. The Compensation Committee also reviews annual base
    salaries and bonuses for non-executive employees. For ease of
    reference in this Compensation Discussion and Analysis section
    of the proxy statement, we may sometimes refer to this committee
    simply as our Compensation Committee or the committee. The
    members of our Compensation Committee are James H. Brandi
    (Chairman), James C. Crain and Sheldon B. Lubar, each of whom is
    an independent director under applicable SEC and NASDAQ rules
    and regulations. The committee held six meetings in 2010. In
    addition, committee members speak frequently with each other
    concerning compensation matters outside of regularly-scheduled
    meetings. As Chairman of the committee, Mr.&#160;Brandi
    regularly reports to the full Board regarding compensation
    matters.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The committee meets outside the presence of all of our named
    executive officers to consider the appropriate compensation for
    our CEO. The committee analyzes the performance of our CEO and
    determines his base salary, individual performance portions of
    our annual incentive program and any grant of LTI or other
    equity-based awards. For all other executive officers, the
    committee meets outside the presence of all executive officers,
    except our CEO. Our CEO annually reviews the performance of each
    executive officer with the committee and makes recommendations
    to the committee on the appropriate base salary, payments to be
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    made under any individual performance portion of our annual
    incentive program and any grant of LTI or other equity-based
    awards. Our CEO has no role in determining his own compensation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Based in part on these recommendations from our CEO for non-CEO
    executive officers, and the other considerations discussed in
    this Compensation Discussion and Analysis, the committee
    recommends to the Board the annual compensation package of each
    of our named executive officers, including our CEO. Input or
    suggestions applicable to group or individual compensation from
    other executive officers may be solicited by the committee.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The function of the Compensation Committee is more fully
    described in its charter, which is available under the Corporate
    Governance section of our website at
    <I>www.approachresources.com</I>. The information on our website
    is not part of this proxy statement. The committee&#146;s duties
    and purpose also are discussed under &#147;Board of Directors,
    Board Meetings and Committees&#160;&#151; Compensation and
    Nominating Committee&#148; in this proxy statement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Use of
    Oil and Gas E&#038;P Compensation Survey</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In considering executive compensation matters for 2010 and 2011,
    the Compensation Committee consulted the Oil and Gas E&#038;P
    2009 and 2010 Compensation Surveys, respectively, prepared by
    Effective Compensation, Inc. (&#147;ECI&#148;). The 2009 ECI
    survey contains compensation information from 119 public and
    private E&#038;P companies in the United States from 2008 and
    2009. The 2010 ECI survey contains compensation information from
    121 public and private E&#038;P companies in the United States
    from 2009 and 2010. The 2009 and 2010 ECI surveys provide
    specific data on an aggregated basis within subcategories based
    on whether companies are public or private, revenues,
    exploration and production budget and geographic location, among
    others. In addition to the individual experience and performance
    of our executive officers, the committee considered compensation
    information in the 2009 and 2010 ECI surveys from public,
    independent oil and gas companies and public and private oil and
    gas companies that are headquartered in Texas, in making
    decisions regarding 2010 and 2011 compensation for our named
    executive officers. The committee considers ECI survey data
    relevant to, but not determinative of, the committee&#146;s
    consideration of overall executive compensation matters.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Use of
    Peer Group Comparisons</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For 2010 executive compensation matters, the Committee also
    considered compensation data from the following peer group of
    companies:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 01 -->
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    <TD width="50%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="48%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
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<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;&#160;&#160;Abraxas Petroleum Corporation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    &#149;&#160;&#160;&#160;Brigham Exploration Company
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Carrizo Oil&#160;&#038; Gas, Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    &#149;&#160;&#160;&#160;GeoMet, Inc.
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;GMX Resources Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    &#149;&#160;&#160;&#160;Goodrich Petroleum Corporation
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Gulfport Energy Corporation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    &#149;&#160;&#160;&#160;NGAS Resources, Inc.
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Panhandle Oil&#160;&#038; Gas Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    &#149;&#160;&#160;&#160;PetroQuest Energy, Inc.
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Rex Energy Corporation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    &#149;&#160;&#160;&#160;Rosetta Resources Inc.
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Compensation Committee reviews the peer group annually. For
    2010, the committee added peer group data provided by management
    from Carrizo Oil&#160;&#038; Gas, NGAS Resources, Rex Energy and
    Rosetta Resources. These companies were added to the 2010 peer
    group for consideration by the committee based on the
    companies&#146; positions in the upstream E&#038;P sector of the
    oil and gas business, reserve base, year-end reserves, capital
    budgets and market capitalizations. For 2010, the committee did
    not consider compensation data from previous peers Parallel
    Petroleum Corporation and TXCO Resources, Inc., as Parallel
    terminated its public filings and was sold in 2009, and TXCO
    filed for relief under Chapter&#160;11 of the
    U.S.&#160;Bankruptcy Code in 2009 and agreed to sell a
    substantial portion of its assets in 2010. The committee
    considers peer group data relevant to, but not determinative of,
    the committee&#146;s consideration of overall executive
    compensation matters.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Role
    of Compensation Consultant</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In February 2009, the Compensation Committee retained
    Longnecker&#160;&#038; Associates (&#147;L&#038;A&#148;) as an
    independent compensation consultant to review the Company&#146;s
    executive and director compensation programs
</DIV>
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    <BR>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    and the Company&#146;s compensation peer group. In January 2010,
    at management&#146;s request, L&#038;A provided the committee
    with supplemental information on the then-current E&#038;P
    compensation market and employment agreement trends. The
    committee considered the information provided by L&#038;A
    relevant, but not determinative, in the committee&#146;s
    evaluation and oversight of the compensation programs.
</DIV>

<A name='D81255140'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Elements
    of the Company&#146;s Executive Officer Compensation
    Program</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Annual
    Base Salary</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We provide our named executive officers with an annual base
    salary to compensate them for their services during the year.
    Although we have no written policies or guidelines for setting
    the base salaries of our executive officers within a specified
    range of the compensation levels of our industry peers, our
    executive officer salaries are intended to be competitive with
    our industry peers. Our Compensation Committee recognizes that a
    substantial amount of competition exists in the oil and gas
    industry for attracting and retaining qualified management
    teams, particularly in the Dallas&#160;&#151; Fort&#160;Worth,
    Texas area. Our philosophy is to set our executive
    officers&#146; base salaries at levels that we believe will
    enable us to retain them, with the goal of growing stockholder
    value going forward.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We review salary ranges and individual salaries for our
    executive officers annually. We establish the base salary for
    each executive officer based on consideration of pay levels of
    our industry peers and business requirements for certain skills,
    individual experience and contributions, the roles and
    responsibilities of the executive and other factors. We believe
    competitive base salaries are necessary to attract and retain an
    executive management team with the appropriate abilities and
    experience required to lead us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">2010
    Annual Base Salaries</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For 2010, the committee did not establish benchmarks. Rather,
    the committee reviewed comparable base salary levels and
    incentive bonus targets from both the ECI 2009 survey and peer
    company data to determine the relative competitiveness of the
    Company&#146;s compensation structure. As there was no material
    change in the annual base salaries from January 2008 through
    December 2009, effective January&#160;1, 2010, the committee
    approved a 3% increase in annual base salaries for the named
    executive officers for 2010, except for Mr.&#160;Manoushagian,
    who received an increase of 10%, and Dr.&#160;Yang, whose salary
    was held flat. Mr.&#160;Manoushagian&#146;s increase in annual
    base salary for 2010 was based on individual performance and the
    CEO&#146;s recommendation and committee&#146;s decision to make
    his salary more competitive with annual salaries of industry
    peers based on the 2009 ECI survey. Dr.&#160;Yang&#146;s 2010
    annual base salary was unchanged, as his salary had been
    recently set in July 2009 when he was initially hired. The
    Committee believed that a 3% increase in annual base salary for
    Mr.&#160;Craft, Mr.&#160;Smart and Mr.&#160;Henderson was
    appropriate as such an increase was slightly more than the
    cumulative rate of inflation of 2.3% from January 2008 through
    December 2009, based on the U.S.&#160;Department of Labor&#146;s
    Bureau of Labor Statistics Consumer Price Index. Annual base
    salaries for 2010 are set forth below:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 01 -->
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    <TD width="31%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
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    <TD width="49%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
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    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>2010 Base<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Salary<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Title</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Salary</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Increase</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    President and CEO
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    312,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and CFO
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    263,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and General Counsel
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    257,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Business Development and
    Geosciences
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    220,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Land
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    187,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">2011
    Annual Base Salaries</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For 2011 annual salaries, the committee considered peer data
    from the 2010 ECI survey and determined that an overall increase
    in the base salaries of our named executive officers was
    appropriate to achieve the committee&#146;s objective of
    retaining top executive talent in a competitive industry and
    geographic region. The
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    30
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    committee also considered past salary adjustments for the
    executive officers since 2008, stockholder returns in 2010, the
    Company&#146;s 2010 financial and operational results noted
    above in &#147;Our Performance in 2010,&#148; the contributions
    of individual executive officers to those results and the
    recommendations of the CEO for non-CEO named executive officers.
    The committee determined that the salaries of Mr.&#160;Craft and
    Dr.&#160;Yang required the largest percentage increases to move
    their salary levels to more competitive industry levels and as a
    result of their specific contributions to the Company&#146;s
    2010 operating results.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Accordingly, the committee recommended, and the Board approved,
    increases in 2011 annual base salaries for the Company&#146;s
    named executive officers as follows effective January&#160;1,
    2011:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="31%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="49%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>2011 Base<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Salary<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Title</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Salary</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Increase</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    President and CEO
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    400,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and CFO
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    275,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and General Counsel
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    275,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Business Development and
    Geosciences
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    275,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Land
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Performance-Based
    Annual Incentive Awards</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A core component of our executive compensation philosophy is
    that pay should be linked directly to performance and that a
    significant portion of total annual compensation should be
    placed at risk. In 2008, we began providing the opportunity for
    our executive officers to earn an annual, performance-based,
    cash incentive award. We plan to continue to provide this
    opportunity to attract and retain an appropriate caliber of
    talent for these positions and to motivate executives to achieve
    our annual business goals. We review annual incentive awards for
    our named executive officers annually in the first 90&#160;days
    of our fiscal year to determine award payments for the most
    recently completed fiscal year, and to establish award
    opportunities for the then-current fiscal year.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">2010
    Annual Incentive Plan Overview</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Consistent with our philosophy of linking pay directly to
    performance, our Compensation Committee adopted, and our Board
    ratified, a performance-based incentive award program for 2010
    pursuant to which cash performance awards were made under our
    2007 Plan. We refer to these cash performance awards as annual
    incentive awards.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Compensation Committee developed performance categories,
    relative weighting among the performance categories and targets
    to be used for the 2010 annual incentive plan, and reviewed them
    with our CEO, CFO and General Counsel, except for incentive
    targets for our CEO, which the committee determines independent
    from the CEO and other executive officers. The committee adopted
    the applicable metrics in January 2010. The 2010 annual
    incentive awards were expressed as a percentage of an executive
    officer&#146;s annual base salary and were paid to the executive
    officer upon the achievement of certain performance targets,
    plus an amount that, in the committee&#146;s discretion, was
    awarded to named executive officers based on individual
    performance, including overall duties, responsibilities and
    expertise.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The committee established a minimum, or &#147;threshold,&#148;
    and maximum, or &#147;excellent,&#148; performance target for
    each performance category. The Company is required to reach the
    threshold target in a performance category before a participant
    receives any credit for such category in the calculation of his
    annual incentive award. If the Company exceeds the threshold
    level for a performance category, the amount of the annual
    incentive award attributable to that category is capped at the
    excellent level. If actual results fall between the threshold
    and excellent performance levels, the percentile performance
    used to determine the payout percentage is proportionally
    adjusted in accordance with a predetermined formula that
    measures performance on a linear, pro-rata basis between the
    threshold and excellent levels.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    31
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The committee cannot increase payout amounts under performance
    categories that depend on the achievement of specific targets,
    as payments related to performance categories that are tied to
    the achievement of specific targets are capped once the highest
    target level is achieved. The committee can, in its reasonable
    discretion, reduce the payout amounts for these performance
    categories after taking into account special or unusual factors
    that may have contributed to the achievement of target
    performance measures such as acquisitions, commodity prices or
    other factors considered appropriate by the committee.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition to the performance categories tied to specific
    company targets, the committee approved an individual
    performance category for 2010 that allows the committee, in its
    discretion, to allocate a portion of an officer&#146;s annual
    incentive award based on the officer&#146;s individual
    performance, including overall duties, responsibilities and
    expertise.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">2010
    Annual Incentive Plan Targets and Performance
    Categories</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For 2010, the committee approved, after consultation with our
    CEO, a 2010 annual incentive plan with annual incentive targets
    (expressed as a percentage of an executive&#146;s annual salary)
    for each of our named executive officers except for our CEO, for
    whom the committee determined incentive targets without
    consultation with the CEO. As in 2009, the committee attempted
    to ensure that the payouts provided meaningful incentive to each
    of our executive officers. For 2010, the annual incentive
    targets for our named executive officers are as set forth in the
    following table. These incentive targets assume that the
    &#147;threshold&#148; or &#147;excellent&#148; targets, as
    applicable, are met for each of the six performance categories
    discussed below:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="76%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="8%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" nowrap align="center" valign="bottom">
    <B>2010 Annual Incentive Award<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>as a Percent of Annual Salary</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Position</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Threshold</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Excellent</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    President and CEO
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    150
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Executive Vice Presidents I
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Executive Vice Presidents&#160;II and Vice Presidents
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    75
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The six performance categories for the 2010 annual incentive
    plan are shown in the table below, together with the target
    levels of achievement, weight given to each category and actual
    results achieved in 2010 in each category. Five of the
    performance categories are Company-wide performance measures and
    the sixth performance category, individual performance, is
    personal to each executive officer and is determined in the
    committee&#146;s discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="38%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="7%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="8%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="8%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010 Performance Targets</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Performance Category</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="left" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Weight</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Threshold</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Excellent</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010 Actual Results</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    1.&#160;Production growth
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.99%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    2.&#160;Reserve volume growth
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    38.99%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    3.&#160;EBITDAX per share growth
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10.86%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    4.&#160;LOE and G&#038;A per Mcfe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1.75&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1.50&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2.14&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    5.&#160;Drill-bit F&#038;D per Mcfe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2.10&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1.85&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2.64&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    6.&#160;Individual performance(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.75% - 12.50%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18.75% - 37.50%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18.75% - 37.50%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Threshold and excellent percentiles for individual performance
    are expressed as a percentage of annual base salary. The
    threshold target for individual performance ranged from 8.75%
    for Dr.&#160;Yang and Mr.&#160;Manoushagian, to 12.5% for
    Mr.&#160;Craft, Mr.&#160;Smart and Mr.&#160;Henderson. The
    excellent target for individual performance ranged from 18.75%
    for Dr.&#160;Yang and Mr.&#160;Manoushagian, to 25% for
    Mr.&#160;Smart and Mr.&#160;Henderson and 37.5% for
    Mr.&#160;Craft.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Seventy-five percent of the amount of potential 2010 annual
    incentive bonuses continued to be determined by objective,
    Company performance results. However, growth and cost
    performance targets are based on forecasts that are subject to
    ongoing change depending on external factors such as commodity
    prices
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    32
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    and oilfield service costs. Therefore, the committee believes it
    was appropriate to also include a discretionary, individual
    performance measure representing 25% of the executive
    officers&#146; bonus opportunity. Each of the five Company-wide
    performance measures is described in greater detail below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Production and reserve volume growth are essential measurements
    of our performance. Production and reserves used in the
    calculation of these criteria are based on results we report in
    our annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We define EBITDAX per share as net (loss) income plus
    (i)&#160;exploration expense, (ii)&#160;impairment of unproved
    properties, (iii)&#160;depletion, depreciation and amortization
    expense, (iv)&#160;share-based compensation expense,
    (v)&#160;impairment of investment, (vi)&#160;unrealized (gain)
    loss on derivatives, (vii)&#160;interest expense and
    (viii)&#160;income taxes, divided by the weighted average number
    of shares of common stock outstanding for the applicable year,
    each as set forth in the audited financial statements of our
    annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K.</FONT>
    The committee has determined that EBITDAX per share is
    appropriate because it is widely accepted by the investment
    community as a financial indicator of a company&#146;s ability
    to internally fund development and exploration activities and it
    reflects a company&#146;s ability to adapt to the impact of
    changing commodity prices as well as oilfield service costs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    LOE and G&#038;A per Mcfe is the sum of our annual lease
    operating expense (&#147;LOE&#148;), plus general and
    administrative expense (&#147;G&#038;A&#148;), divided by our
    annual production as measured in Mcfe. LOE and G&#038;A are two
    financial measures under GAAP from our audited financial
    statements. Our committee believes that, in addition to
    performance measures for growth, it is critical to incentivize
    management to control costs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Drill-bit F&#038;D costs are calculated by dividing the sum of
    annual exploration and development costs by the total of reserve
    extensions and discoveries for the applicable year end, each as
    set forth in the notes to the audited financial statements of
    our annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K.</FONT>
    The committee believes this measure is important to evaluate how
    efficiently we can add proved reserves through our own drilling
    program.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The committee believes that these performance categories and
    targets, taken together, are objective indicators of our overall
    performance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The individual performance category is discretionary and allows
    the committee to recognize performance that is more difficult to
    quantify, such as successful supervision of significant company
    projects, cost reductions, demonstrated departmental leadership
    and other contributions to our Company. The committee is in
    regular contact with our CEO, is knowledgeable about Company
    operations and believes that it is in a position to accurately
    and fairly judge individual performance, with the specific
    recommendations of the CEO for the named executive officers
    other than the CEO, after year end.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">2010
    Annual Incentive Plan Awards</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For 2010, the actual annual incentive award amount paid to each
    executive officer was based upon the Company&#146;s performance
    in the five, Company-wide performance categories and the
    individual performance of each executive officer. As set forth
    above in the &#147;2010 Actual Results&#148; column of the table
    entitled &#147;2010 Performance Targets,&#148; the Company
    achieved the excellent target of the reserve volume growth
    performance category. No other threshold or excellent targets of
    Company performance categories were met and, as a result, no
    payments were made with respect to such categories. For
    individual performance, the committee determined to award the
    excellent targets of 18.75% to 37.5% of annual base salaries to
    the executive officers. In making this determination, the
    committee considered each of the named executive officer&#146;s
    overall duties, responsibilities, expertise and individual
    contributions to the Company&#146;s achievements in 2010
    discussed on page&#160;26 of this proxy statement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    After reviewing the above considerations, the Company&#146;s
    2010 results, performance of the CEO and the CEO&#146;s
    recommendations on the performance of the other executive
    officers, the committee awarded the 2010 award percentages as
    set forth in the table below. The 2010 award percentage is the
    sum of the percentage performance results calculated for each
    performance category plus individual performance. The 2010
    award
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    33
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    payments are also included in the Summary Compensation Table
    below under the &#147;Non-Equity Incentive Plan
    Compensation&#148; column for 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="77%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>2010 Award<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>2010 Award<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name and Position</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percent(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Payment($)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <I>President and CEO</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    60.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    187,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <I>Executive Vice Presidents I</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    105,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    103,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <I>Executive Vice Presidents&#160;II and Vice Presidents</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    66,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    56,100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    As a percent of annual base salary.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">2011
    Annual Incentive Plan</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For 2011, the Compensation Committee has established an annual
    incentive plan with annual incentive targets and performance
    measures that are substantially similar to the 2010 annual
    incentive plan. Threshold and excellent annual incentive targets
    (as a percentage of annual base salary) for 2011 are 50% and
    150%, respectively, for Mr.&#160;Craft, and 50% and 100%,
    respectively, for each of our other named executive officers. As
    in the 2010 annual incentive plan, the committee established a
    minimum, or &#147;threshold,&#148; and maximum, or
    &#147;excellent,&#148; performance target for each performance
    category. The Company is required to reach the threshold target
    in a performance category before a participant receives any
    credit for such category in the calculation of his annual
    incentive award. If the Company exceeds the threshold level for
    a performance category, the amount of the annual incentive award
    attributable to that category is capped at the excellent level.
    If actual results fall between the threshold and excellent
    performance levels, the percentile performance used to determine
    the payout percentage is proportionally adjusted in accordance
    with a predetermined formula that measures performance on a
    linear, pro-rata basis between the threshold and excellent
    levels.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For 2011, the distinction between Executive Vice Presidents I
    and&#160;II and Vice Presidents was eliminated for our named
    executive officers in setting threshold and excellent levels for
    performance. In making this decision, the committee considered
    the promotion of Dr.&#160;Yang from Vice President to Executive
    Vice President&#160;&#151; Business Development and Geosciences,
    the individual contributions of Dr.&#160;Yang and
    Mr.&#160;Manoushagian to Company achievements in 2010 discussed
    at page&#160;26 of this proxy statement and issues of internal
    pay equity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The six performance categories and relative weighting among the
    categories for 2011 are substantially the same as 2010, with
    adjustments for then-current business projections and our
    current reporting in BOE rather than Mcfe due to the increasing
    percentage of oil and NGLs in our production and reserve base.
    Compared to the 2010 incentive plan, the committee adjusted the
    2011 plan performance measures by:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    revising the performance category EBITDAX per share growth from
    15%&#160;&#151; 25% in 2010, to 12.5%&#160;&#151; 22.5% in 2011;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    revising the performance category LOE and G&#038;A from
    $1.50&#160;&#151; $1.75 per Mcfe in 2010, to $9.75&#160;&#151;
    $13.00 per Boe in 2011;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    revising the performance category Drill-Bit F&#038;D from
    $1.85&#160;&#151; $2.10 per Mcfe in 2010,&#160;to
    $12.00&#160;&#151; $15.00 per Boe in 2011.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    These adjustments reflect the Company&#146;s focus on balancing
    cost control with growing oil and NGLs reserves and production
    during a time of escalating service costs and competition in the
    Permian Basin. The
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    34
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    six performance categories selected for the 2011 annual
    incentive plan are shown in the table below, together with the
    target levels of achievement and weight given to each category.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="52%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="15%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2011 Performance Targets</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Performance Category</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="left" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Weight</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Threshold</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Excellent</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    1.&#160;Production growth
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    2.&#160;Reserve volume growth
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    3.&#160;EBITDAX per share growth
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12.50
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    22.50
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    4.&#160;LOE and G&#038;A per Boe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;13.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    9.75&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    5.&#160;Drill-bit F&#038;D per Boe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    12.00&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    6.&#160;Individual performance(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12.50
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25.00% - 37.50
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100.00%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Threshold and excellent percentiles for individual performance
    are expressed as a percentage of annual base salary. The
    threshold target for individual performance is 12.5% for all
    named executive officers. The excellent target for individual
    performance for named executive officers ranges from 25% for
    Executive Vice Presidents to 37.5% for our CEO.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The committee&#146;s general policy is to determine any payout
    amounts for annual incentive awards before March 15 of the
    following year based upon our performance against the
    performance measures established by the committee and the
    committee&#146;s determinations with respect to the individual
    performance component of the awards, subject to the
    committee&#146;s discretion to reduce the payout amounts after
    taking into account special or unusual factors that may have
    contributed to the achievement of target performance measures
    such as acquisitions, commodity prices or other factors
    considered appropriate by the committee.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Long-Term
    Incentive Stock Compensation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We use LTI equity grants to attract, retain and motivate our
    executive officers as part of our total compensation package.
    Stock incentive awards are granted under our 2007 Plan. The 2007
    Plan allows for the grant of restricted stock, stock options,
    stock appreciation rights, restricted stock units, stock awards
    and other incentive awards. The primary purpose of the 2007 Plan
    is to attract and retain highly qualified officers, directors,
    key employees and other persons, and to motivate these persons
    to improve our business results by providing an opportunity to
    acquire or increase a direct, proprietary interest in our
    operations and future success. We expense stock awards under
    FASB ASC Topic 718, formerly Statement of Financial Accounting
    Standards No.&#160;123(R), Share-Based Payments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Since our IPO in 2007, the committee has generally used
    restricted stock that vests over three to four years to align
    the compensation of our executive officers with an increase in
    long-term stockholder value. We believe awards of restricted
    stock can effectively balance our objective of focusing the
    recipient of the award on delivering long-term value to our
    stockholders with our objective of providing value to the
    recipient with the equity awards. Restricted stock awards offer
    recipients the opportunity to receive shares of our common stock
    that are subject to a risk of forfeiture and other restrictions
    until certain specified service or performance requirements are
    satisfied. In this regard, we believe that restricted stock
    serves both to reward and retain the recipients. Restricted
    stock awards also allow the Company to budget for charges to
    earnings under FASB ASC Topic 718 with greater certainty than
    other types of awards such as stock options. Recipients of
    restricted stock awards are entitled to receive and retain all
    cash dividends that may be paid with respect to the shares. The
    committee does not make, nor has the committee in the past made,
    incentive stock grants in coordination with the release of
    material, non-public information. Instead, the committee will
    grant equity awards at the time or times dictated by our normal
    compensation process as that process is developed by the
    committee.
</DIV>
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    <BR>
    35
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">2010 LTI
    Performance-Based Stock Awards</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In February 2010, in keeping with its philosophy of linking pay
    to performance, the committee began meeting to consider an
    annual, performance-based, time-vesting LTI stock award program.
    The committee met several times through July 2010 to discuss
    appropriate performance measures and vesting requirements for
    these awards.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In determining whether, and in what amounts, to grant a 2010
    award, the committee considered stock ownership and award data
    from the 2010 ECI survey, committee members&#146; own experience
    and knowledge of executive compensation matters at other public
    E&#038;P companies (including such experience and knowledge with
    respect to grant date fair value of stock awards as a multiple
    of base salary), the potential dilutive effect of stock awards,
    the charge to Company earnings under FASB ASC Topic 718,
    internal pay equity among our executives and the then-current
    economic and market environment. The committee also considered
    existing stock ownership of our executive officers and the
    importance of retention and alignment of objectives with
    stockholders&#146; interests as goals of any effective long-term
    incentive stock award grant. The committee also reviewed the
    number of shares available for grant under the 2007 Plan and the
    Company&#146;s prior annual &#147;burn rate,&#148; or percentage
    of weighted average shares outstanding granted under the Plan in
    each of the Plan&#146;s prior years. At the time of the 2010
    grant in August 2010, there were approximately
    1,135,842&#160;shares available for grant under the 2007 Plan,
    or 54.2% of the total shares available for grant under the 2007
    Plan, and the Company&#146;s average three-year annual burn rate
    was 2.23%. The committee also considered the individual
    performance of the CEO and the recommendations of the CEO
    regarding the individual performance of the executive officers
    other than the CEO. In determining the amounts of the 2010 LTI
    awards, the committee did not establish benchmarks. Rather, the
    committee took into consideration all of the above factors to
    determine the appropriate levels of LTI stock awards.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In determining performance and vesting measures appropriate for
    the award, the committee considered a number of potential
    measures and vesting schedules, including the proportion of any
    award that should be tied to performance compared to time
    vesting. In determining performance measures, the committee
    sought to achieve a balance of measures that would encourage
    growth, cost control and financial stability.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    After considering all of the factors discussed above, the
    committee decided on a total 2010 LTI stock award of
    400,000&#160;shares of restricted stock to our executive
    officers, subject to the following performance measures and time
    vesting restrictions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>First trigger:</I>&#160;&#160;Satisfaction of the following
    performance measures during the applicable performance period
    (fiscal year 2010):
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Company proved reserves increase a minimum of 10% from the prior
    year period;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    F&#038;D costs for 2010 must not exceed $2.50 per Mcfe;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Long-term debt must not exceed 2.75 x EBITDAX.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Second trigger:</I>&#160;&#160;If <I>all </I>of the
    performance measures in the first trigger are met during the
    performance period (fiscal year 2010), then
    <FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">3</FONT>
    of each individual&#146;s restricted shares will ratably vest on
    December&#160;31, 2012, 2013, and 2014, provided the executive
    officer is employed by the Company on the applicable vesting
    dates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Performance measures defined.</I>&#160;&#160;Proved reserves
    are estimated proved reserves as determined by the
    Company&#146;s independent reserve engineering firm. F&#038;D
    costs are calculated by dividing the sum of property
    acquisition, exploration and development costs by extensions,
    discoveries, acquisitions and revisions (excluding price
    revisions), each as set forth in the notes to the audited
    financial statements of our annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K.</FONT>
    The committee determined to exclude price revisions from
    F&#038;D cost to mitigate the risk of volatile commodity price
    swings, which are outside the executives&#146; control.
    Long-term debt is calculated under GAAP and included in the
    Company&#146;s balance sheet. EBITDAX is described on
    page&#160;33 of this proxy statement. The committee may also
    include other non-recurring items that the committee in its sole
    discretion deems appropriate to be added back to GAAP net income.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    36
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<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The LTI stock awards will vest in full upon a Change in Control,
    Disability (each as defined in the 2007 Plan) or death of the
    executive, and all performance criteria and other conditions
    will be deemed to be achieved to the maximum extent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Committee believes that the performance metrics and target
    values for the 2010 LTI stock awards strongly correlate with our
    long-term business objectives and, specifically, with increasing
    stockholder value. If one of the performance measures is not
    satisfied, the entire award is forfeited and the award shares
    are returned to the 2007 Plan. The committee also decided that
    the award should be subject to a time-based vesting period
    longer than three years, which the committee previously had
    adopted as a practice for time vesting for prior restricted
    share grants under the 2007 Plan, to strengthen the retention
    component of the 2010 award.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The table below summarizes the number of restricted shares
    subject to LTI stock awards made to each of our named executive
    officers for 2010. The aggregate grant date fair value of the
    awards under FASB ASC Topic 718 is set forth in the Summary
    Compensation Table on page&#160;41 of this proxy statement under
    the column &#147;Stock Awards.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="28%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="54%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="6%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Executive Officer</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Title</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Restricted Shares</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    President, CEO and Class&#160;III Director
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    120,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and CFO
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and General Counsel
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Business Development and
    Geosciences
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    60,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Land
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    60,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The table below summarizes the performance measures required to
    be achieved for the 2010 LTI award and actual 2010 results.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="82%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="16%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>2010 LTI Stock Awards&#160;&#151;<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>2010 Actual<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Performance Measures</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Results</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Company proved reserves increase a minimum of 10%
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    38.99% Increase
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    F&#038;D costs must not exceed $2.50 per Mcfe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="bottom">
    $1.02 per Mcfe
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Long-term debt must not exceed 2.75x EBITDAX
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="bottom">
    0x EBITDAX
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Based on these results, all of the performance measures
    applicable to the 2010 awards were satisfied and the awards are
    eligible for time-based vesting based on the schedule described
    above under &#147;&#151;&#160;2010 LTI Performance-Based Stock
    Awards.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">2011 LTI
    Stock Program</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For 2011, the committee recommended, and the Board approved in
    March 2011, an LTI stock award with a combination of performance
    measures and time vesting restrictions substantially similar to
    the 2010 LTI award. In determining the number of shares to be
    awarded, the committee considered all of the factors described
    above under &#147;&#151;&#160;2010 LTI Performance-Based Stock
    Awards&#148; for the 2010 awards. At the time of the 2011 grant
    in March 2011, there were approximately 1,412,911&#160;shares
    available for grant under the 2007 Plan, or 50.1% of the total
    shares available for grant under the 2007 Plan, and the
    Company&#146;s three-year average annual burn rate was 1.51%.
    The committee also gave significant weight to the individual
    contributions of each of the executive officers to strong total
    stockholder returns in 2010 in making its decisions on 2011 LTI
    awards.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    After considering all of the factors noted above, the committee
    decided on a total 2011 LTI stock award of 204,000&#160;shares
    of restricted stock to our named executive officers, subject to
    the performance measures and time vesting restrictions set forth
    below. The primary reason for the decrease in the number of
    shares from the 2010 LTI award was the increase in value of the
    Company&#146;s common stock and, therefore, the increase in
    value of the 2011 award and charge to earnings under FASB ASC
    Topic 718, compared to 2010.
</DIV>
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    <BR>
    37
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>First trigger:</I>&#160;&#160;Satisfaction of the following
    performance measures during the applicable performance period
    (fiscal year 2011):
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Company proved reserves increase a minimum of 10% from the prior
    year period;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Finding and development costs for 2011 must not exceed $15.00
    per Boe;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Long-term debt must not exceed 2.75 x EBITDAX.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Second trigger:</I>&#160;&#160;If <I>all </I>of the
    performance measures in the first trigger are met during the
    performance period (fiscal year 2011), then 1/3 of each
    individual&#146;s restricted shares will ratably vest on
    December&#160;31, 2012, 2013, and 2014, provided the executive
    officer is employed by the Company on the applicable vesting
    dates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The table below summarizes the number of restricted shares
    subject to LTI stock awards made to each of our named executive
    officers for 2011:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="28%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="54%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="6%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Executive Officer</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Title</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Restricted Shares</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    President, CEO and Class&#160;III Director
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    61,200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and CFO
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,700
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and General Counsel
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,700
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Business Development and
    Geosciences
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,700
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President&#160;&#151; Land
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,700
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Other
    Named Executive Officer Grants&#160;&#151; 2010</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In May 2010, our Compensation Committee authorized the grant of
    a restricted stock award under the 2007 Plan covering
    35,000&#160;shares of restricted stock to Dr.&#160;Yang. This
    stock award reflects (i)&#160;the importance of
    Dr.&#160;Yang&#146;s role in helping lead our study of the
    Wolffork oil shale under our Permian Basin acreage,
    (ii)&#160;beginning a pilot Wolffork drilling program,
    (iii)&#160;our goal of retaining Dr.&#160;Yang in a competitive
    market for executive and technical talent and (iv)&#160;our goal
    of a more internally-balanced level of equity ownership among
    our executive officers. This additional restricted stock award
    to Dr.&#160;Yang is subject to time-based vesting conditions and
    will vest in three equal annual installments beginning on the
    first anniversary of the date of grant of the award, as long as
    Dr.&#160;Yang remains employed by the Company through the
    applicable vesting dates.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Stock
    Ownership Guidelines</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The committee has not established minimum stock ownership
    requirements for our named executive officers or directors.
    However, the committee believes that meaningful stock ownership
    by our officers and directors is critical in aligning
    management&#146;s interests with the interests of our
    stockholders. For 2010, the Board changed the $85,000 annual
    retainer under our director compensation plan from cash, stock
    or a combination of both, to $50,000 in mandatory common stock
    and $35,000 in cash, common stock or a combination of both. The
    committee will continue to consider whether minimum stock
    ownership requirements may be necessary to achieve our goal of
    aligning management&#146;s interests with those of our
    stockholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In general, prior compensation, such as gains from prior stock
    options or stock awards, is not taken into account in setting
    other elements of compensation, such as base pay or annual
    incentive bonuses. However, the committee will generally
    consider prior stock purchases by, and prior stock and stock
    option awards to, our named executive officers when considering
    additional stock award grants. For new executive officers, we
    expect to take into account their prior base salary, annual cash
    incentives, the value of any equity compensation or other
    benefits that the new officer would forfeit to accept employment
    with us, as well as the contributions expected to be made by the
    new officer, our business needs and the role of the officer with
    us.
</DIV>
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    <BR>
    38
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Employment
    Agreements</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In January 2011, the Company entered into amended and restated
    employment agreements with Mr.&#160;Craft and Mr.&#160;Smart and
    new employment agreements with Mr.&#160;Henderson, Dr.&#160;Yang
    and Mr.&#160;Manoushagian. The agreements provide for potential
    severance payments upon the termination of the officers&#146;
    employment in certain situations. The agreements were designed
    so that the officers would all have employment agreements with
    the same employment term and similar severance and change in
    control provisions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    After the initial term of the agreements through January&#160;1,
    2013, the agreements are automatically renewed for additional
    one year terms unless either party elects not to renew an
    agreement or an agreement is otherwise terminated in accordance
    with its terms. The agreements provide for annual base salaries
    beginning in 2011 as described on page&#160;31 of this proxy
    statement, subject to annual review and adjustment by the Board;
    provided, that for Mr.&#160;Craft, once established at an
    increased amount, his base salary will not be reduced below that
    increased amount during the term.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The severance and change in control provisions contained in the
    employment agreements are described in greater detail below
    under &#147;&#151;&#160;Potential Payments Upon a Termination or
    Change in Control.&#148; The Company believes that these
    severance and change in control arrangements mitigate some of
    the risk that exists for executives working in a publicly-owned
    company. The amended and restated agreements for Mr.&#160;Craft
    and Mr.&#160;Smart, as well as the new agreements for
    Mr.&#160;Henderson, Mr.&#160;Yang and Mr.&#160;Manoushagian, are
    intended to retain qualified executives in a competitive market
    for executive talent. The committee believes that the severance
    and change in control arrangements in these agreements provide
    important protection to the Company&#146;s executive officers,
    are consistent with the practices of peer companies and are
    appropriate for the retention of executive talent.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Benefits
    and Perquisites</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Named executive officers receive the same health and welfare
    benefits, including medical, prescription drug, dental and
    vision, that are offered to all employees. The same contribution
    amounts and plan design provisions apply to all employees. The
    named executive officers also participate in the same qualified
    401(k) plan as other employees. Under the plan, the Company
    currently matches 100% of an employee&#146;s elective deferrals
    up to 3% of annual base salary, plus an additional 50% of
    elective deferrals on the next 2% of annual base salary. All
    matching contributions are subject to applicable federal
    limitations under the Internal Revenue Code and
    U.S.&#160;Treasury regulations. These benefits are part of our
    overall pay program and are designed to encourage continuity in
    employment and executive leadership and to remain competitive in
    the market for talent and experience in the E&#038;P business.
    In addition to the above benefits, we provide Mr.&#160;Craft
    with a long-term disability plan, for which we pay a monthly
    premium of approximately $355 per month, and reimbursement of
    club membership dues and expenses. Please see the Summary
    Compensation Table for all compensation received by our named
    executive officers.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Deductibility
    of Executive Compensation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Section&#160;162(m) of the Code, as clarified by the Internal
    Revenue Service and applicable regulations, generally disallows
    a federal income tax deduction to public companies for
    compensation in excess of $1,000,000 paid for any fiscal year to
    each of the company&#146;s Covered Employees as of the end of
    any fiscal year. However, the regulations currently exempt
    qualified, performance-based compensation from the $1,000,000
    deduction limit if certain requirements are met.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Newly-public companies are not subject to the deduction
    limitations of Section&#160;162(m) of the Code until the first
    meeting of stockholders occurring after the close of the third
    calendar year following the calendar year in which the
    company&#146;s initial public offering occurred. Therefore, the
    Company will become subject to the limitations and requirements
    of Section&#160;162(m) as of the 2011 annual meeting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our policy is to have compensation programs that recognize and
    reward performance that increases stockholder value, and, to the
    extent consistent with this policy, to seek to maintain the
    favorable tax treatment of that compensation. We believe,
    however, that under some circumstances, such as to attract or
    retain key
</DIV>
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    <BR>
    39
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    executives or to recognize outstanding performance, it is in the
    Company&#146;s and our stockholders&#146; best interests to
    provide compensation to selected executives even if it is not
    deductible.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We designed our performance-based, cash incentive award program
    for executive officers for 2010 and 2011 so that incentive
    compensation based on our company-wide performance measures will
    be exempt from the Section&#160;162(m) $1,000,000 deduction
    limitation as qualified performance-based compensation.
    Incentive compensation based on individual performance will not
    be exempt from the $1,000,000 deduction limitation as qualified
    performance-based compensation. Therefore, if the $1,000,000
    deduction limitation is exceeded, the tax deductibility of
    incentive compensation based on individual performance will be
    limited.
</DIV>

<A name='D81255141'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">COMPENSATION
    COMMITTEE REPORT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Compensation Committee has reviewed and discussed the
    Compensation Discussion and Analysis with our management. Based
    on this review and discussion, the Compensation Committee
    recommended to the Board that the Compensation Discussion and
    Analysis be included in this proxy statement and incorporated by
    reference in the Company&#146;s annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the fiscal year ended December&#160;31, 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Respectfully submitted by the Compensation Committee of the
    Board,
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    James H. Brandi, Chairman
</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    James C. Crain
</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Sheldon B. Lubar
</DIV>

<A name='D81255170'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">COMPENSATION
    PRACTICES AS THEY RELATE TO RISK MANAGEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Compensation Committee believes that an appropriate part of
    total compensation is fixed for our executive officers, while
    another, equally appropriate portion is variable and linked to
    performance. Although the majority of the compensation provided
    to the named executive officers is performance-based, we believe
    our compensation programs do not encourage excessive and
    unnecessary risk taking by our executive officers (or other
    employees) because these programs are designed to encourage our
    officers and other employees to remain focused on both our near-
    and long-term operational and financial goals.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    While annual cash incentive awards play an appropriate role in
    our executive compensation program, the committee believes that
    awards should be determined based on Company performance on a
    wide variety of measures, including both growth and cost control
    measures, which the committee believes mitigates excessive
    risk-taking that could produce unsustainable gains in one area
    of performance at the expense of our overall long-term
    interests. In addition, the committee sets performance goals
    that it believes are reasonable in light of our past
    performance, then-current business projections and market
    conditions. A portion of the variable compensation we provide is
    composed of performance-based, time-vesting LTI awards, which
    can retain value even in a depressed market, so executives are
    less likely to take unreasonable risks. Similar to our annual
    cash incentive awards, the committee believes that the LTI
    awards should be subject to measures of both growth and debt
    control, to build stockholder value while preserving a
    sustainable capital structure.
</DIV>

<A name='D81255142'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">COMPENSATION
    COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    None of our executive officers serves as a member of the board
    or compensation committee of any entity that has one or more of
    its executive officers serving as a member of our Board or
    Compensation Committee.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    40
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='D81255143'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">EXECUTIVE
    COMPENSATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As explained in our Compensation Discussion and Analysis, set
    forth below is the compensation awarded to, earned by or paid to
    our named executive officers for services rendered for 2008,
    2009 and 2010 in all capacities, consisting of base salaries,
    cash bonuses, long-term equity incentives and other compensation.
</DIV>

<A name='D81255144'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Summary
    Compensation Table</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="48%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=08 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=08 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=08 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=08 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Non-Equity<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Stock<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Incentive Plan<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>All Other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Salary<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Bonus<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Awards<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Compensation<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Compensation<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Total<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name and Principal Position</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)(2)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)(3)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(a)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(b)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(c)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(d)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(e)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(g)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(i)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(j)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    312,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    810,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    187,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,163
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,329,163
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 9pt">
    <I>Director, President and</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    303,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    504,002
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    182,040
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18,925
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,008,367
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 9pt">
    <I>Chief Executive Officer</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    297,100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    331,875
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26,935
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    655,910
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    263,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    540,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    105,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,800
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    918,700
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 9pt">
    <I>Executive Vice President </I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    256,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    287,998
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    102,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,800
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    656,198
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 9pt">
    <I>and Chief Financial Officer</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    251,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    190,625
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    456,625
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    257,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    540,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    103,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,800
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    910,300
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 9pt">
    <I>Executive Vice President,</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    250,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    287,998
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,800
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    647,798
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 9pt">
    <I>General Counsel and Secretary</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    250,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    190,625
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14,276
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    454,901
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    220,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    665,050
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,800
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    960,850
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 9pt">
    <I>Executive Vice President&#160;&#151; </I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    95,898
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    209,700
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,570
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,273
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    377,440
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 9pt">
    <I>Business Development and Geosciences</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    187,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    405,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    56,100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    648,100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 9pt">
    <I>Executive Vice President&#160;&#151; Land</I>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    170,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    144,003
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    365,003
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    170,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    121,125
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    291,125
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Stock awards represent the aggregate grant date fair value for
    stock awards granted under the 2007 Plan, calculated in
    accordance with FASB ASC Topic 718 based on the closing price of
    our common stock on NASDAQ on the grant date. The amounts
    reflect the Company&#146;s accounting expense for the awards and
    do not necessarily correspond to the actual value that will be
    recognized by the named executive officers. Additional
    information on the assumptions used in the computation of our
    share-based compensation is included in Note&#160;5 to our
    consolidated financial statements in our annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended December&#160;31, 2010. For 2010, the
    &#147;Stock Awards&#148; column includes (i)&#160;the grant of
    performance-based, restricted stock awards to our named
    executive officers in August 2010 covering 400,000&#160;shares
    of common stock, and (ii)&#160;the grant of a restricted stock
    award to Dr.&#160;Yang in May 2010 covering 35,000&#160;shares
    of common stock. See pages&#160;27-28 and 35-38 of this proxy
    statement for additional information regarding the 2010 equity
    awards.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Represents cash awards earned under the Company&#146;s annual
    performance-based incentive plans. The awards were paid to the
    named executive officers in the first quarter of the year
    following the year in which the awards were earned.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    The &#147;All Other Compensation&#148; column includes the
    following: (i)&#160;Company matching contributions to the 401(k)
    retirement accounts of all of the named executive officers
    except for Mr.&#160;Manoushagian; and (ii)&#160;for
    Mr.&#160;Craft only, disability insurance premiums and
    reimbursement for club dues.</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    41
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='D81255145'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Grants of
    Plan-Based Awards for Year Ended December&#160;31,
    2010</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The table below sets forth the range of potential annual cash
    incentive awards for 2010 performance as a dollar amount for
    each of the named executive officers under the Company&#146;s
    2010 annual incentive plan. The table also sets forth the number
    of shares and grant date fair value of restricted stock awarded
    during 2010 to the Company&#146;s named executive officers under
    the 2007 Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="6%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>All Other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Stock<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Awards:<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" nowrap align="center" valign="bottom">
    <B>Estimated Future Payouts<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Shares of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Grant Date<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" nowrap align="center" valign="bottom">
    <B>Under Non-Equity Incentive<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Stock or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Fair Value of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Plan Awards(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Units<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Stock Awards<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Grant Date</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Threshold&#160;($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Maximum&#160;($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)(2)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)(3)</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>(a)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(b)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(c)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(e)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(i)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(l)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    156,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    468,750
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    August 2, 2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    120,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    810,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    131,750
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    263,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    August 2, 2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    540,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    128,750
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    257,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    August 2, 2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    540,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    77,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    165,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    August 2, 2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    60,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    405,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    May 7, 2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    260,050
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    65,450
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    140,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    August 2, 2010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    60,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    405,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    These columns show the range of potential values for the payout
    of the annual cash incentive awards for 2010 performance for
    each named executive officer. The potential payout is determined
    by Company and individual performance. Amounts included in the
    threshold column assume that the &#147;threshold&#148; level of
    all Company and individual performance measures were met under
    the 2010 incentive plan. Amounts included in the maximum column
    assume that the &#147;excellent&#148; levels of all Company and
    individual performance measures were met under the 2010
    incentive plan. The actual amount of the annual cash incentive
    award paid for 2010 performance is set forth above in this proxy
    statement in the Summary Compensation Table in the
    &#147;Non-Equity Incentive Plan Compensation&#148; column. For a
    detailed description of the 2010 annual incentive plan, see
    &#147;Compensation Discussion Analysis&#160;&#151; Elements of
    the Company&#146;s Executive Officer Compensation
    Program&#160;&#151; Performance-Based Annual Incentive
    Awards.&#148;</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Other than the 35,000 restricted shares granted to Dr.&#160;Yang
    in May 2010, these shares of restricted stock were subject to
    performance conditions in the year of grant (fiscal year 2010).
    All of the applicable performance measures were achieved as of
    December&#160;31, 2010; however, these awards remain subject to
    time-based vesting restrictions through December&#160;31, 2014.
    See pages&#160;35-37 of this proxy statement for a more detailed
    discussion of the 2010 LTI grant. The 35,000 restricted shares
    granted to Dr.&#160;Yang are only subject to time-based vesting
    conditions and will vest in 1/3 annual increments on each of the
    first, second and third anniversaries of the grant date,
    provided Dr.&#160;Yang remains continuously employed by the
    Company.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    This column represents the aggregate grant date fair value
    calculated in accordance with FASB ASC Topic 718 and is based on
    the closing price of our common stock on NASDAQ on the
    respective dates of grant. The amounts reflect the
    Company&#146;s accounting expense for the awards and do not
    necessarily correspond to the actual value that will be
    recognized by the named executive officers.</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    42
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='D81255146'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Outstanding
    Equity Awards at Fiscal Year End</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table summarizes the number of securities
    underlying outstanding equity plan awards for each named
    executive officer as of December&#160;31, 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="36%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="6%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="15" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Option Awards</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Stock Awards</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Securities<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Securities<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Market Value<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Underlying<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Underlying<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Shares of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>of Shares of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Unexercised<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Unexercised<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Stock That<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Stock That<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Options<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Options<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Have Not<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Have Not<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Exercisable<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Unexercisable<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Price<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Vested<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Vested<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Expiration Date</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)(2)</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>(a)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(b)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(c)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(e)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(f)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(g)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(h)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    152,892
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.33
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    August 16, 2014
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    158,182
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,654,004
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,845
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.33
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    August 16, 2014
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    101,818
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,351,996
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    101,818
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,351,996
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    115,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,656,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,845
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.33
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    August 16, 2014
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    70,910
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,638,021
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    For each executive officer, the number of shares of stock that
    have not vested is composed of:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="66%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="14%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="7%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of Shares<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>of Stock That Have<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Grant Date(a)</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Not Vested</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    June&#160;3,&#160;2009
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    38,182
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    August&#160;2,&#160;2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    120,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    June&#160;3,&#160;2009
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21,818
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    August&#160;2,&#160;2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    June&#160;3, 2009
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21,818
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    August&#160;2,&#160;2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    July&#160;27,&#160;2009
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    May&#160;7,&#160;2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    August&#160;2,&#160;2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    60,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    June&#160;3,&#160;2009
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,910
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    August&#160;2,&#160;2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    60,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 3%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="6%"></TD>
    <TD width="1%"></TD>
    <TD width="93%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (a) </TD>
    <TD></TD>
    <TD valign="bottom">
    Awards granted on June&#160;3, 2009, July&#160;27, 2009, and
    May&#160;7, 2010, vest in 1/3 annual increments on each of the
    first, second and third anniversaries of the respective date of
    grant of the awards. The vesting schedule applicable to the
    awards granted on August&#160;2, 2010, is described above on
    <FONT style="white-space: nowrap">pages&#160;35-37</FONT>
    of this proxy statement. The treatment of these awards under
    certain termination and change in control events is described
    below under &#147;&#151;&#160;Potential Payments Upon a
    Termination or Change in Control.&#148;</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Based on the closing price of our common stock on NASDAQ of
    $23.10 per share on December&#160;31, 2010.</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    43
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='D81255147'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Option
    Exercises and Stock Vested</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table reflects option awards actually exercised
    <FONT style="white-space: nowrap">and/or</FONT> stock
    awards that vested for each of our named executive officers
    during 2010:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="35%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="8%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="7%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Option Awards</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Stock Awards</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Value Realized<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Number of Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Value Realized<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Acquired on Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>on Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Acquired on Vesting<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>on Vesting<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)(1)</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>(a)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(b)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(c)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(d)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(e)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,091
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    142,801
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,909
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81,599
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,909
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81,599
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    70,100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,454
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,796
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Based on the closing price of our common stock on NASDAQ of
    $7.48 per share on the date of vesting, June&#160;3, 2010, for
    Mr.&#160;Craft, Mr.&#160;Smart, Mr.&#160;Henderson and
    Mr.&#160;Manoushagian. Based on the closing price of our common
    stock on NASDAQ of $7.01 per share on the date of vesting,
    July&#160;27, 2010, for Dr.&#160;Yang.</TD>
</TR>

</TABLE>

<A name='D81255148'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Pension
    Benefits</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We do not have any plan that provides for payments or other
    benefits at, following or in connection with retirement, other
    than our 401(k) plan.
</DIV>

<A name='D81255149'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Non-Qualified
    Deferred Compensation</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We do not have any plan that provides for the deferral of
    compensation on a basis that is not tax qualified.
</DIV>

<A name='D81255150'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Potential
    Payments upon Termination or Change in Control</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Employment
    Agreements</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We entered into employment agreements with each of our named
    executive officers in January 2011. Mr.&#160;Craft&#146;s and
    Mr.&#160;Smart&#146;s employment agreements restated and
    replaced existing employment agreements originally entered into
    on January&#160;1, 2003, and previously amended on
    December&#160;31, 2008. These agreements, and the employment
    agreement with Mr.&#160;Henderson, are included as exhibits to a
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    dated January&#160;1, 2011, and filed with the SEC on
    January&#160;6, 2011. We entered into employment agreements with
    each of Dr.&#160;Yang and Mr.&#160;Manoushagian on
    January&#160;24, 2011. These agreements are included as exhibits
    to a
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    dated January&#160;24, 2011, and filed with the SEC on
    January&#160;28, 2011.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The employment agreements provide for potential severance
    payments upon the termination of the officers&#146; employment
    in certain situations, including in connection with a change in
    control, without &#147;cause&#148; by the Company or for
    &#147;good reason&#148; by the executive officer, upon proper
    notice of nonrenewal by either party and upon the death or
    permanent disability of the executive officer. Other than the
    prior employment agreements with Mr.&#160;Craft and
    Mr.&#160;Smart and our stock-based incentive awards, there were
    no arrangements with other named executive officers providing
    severance or change in control benefits during 2010. In order to
    provide our stockholders with an understanding of the severance
    and change in control arrangements currently in effect, the
    discussion below is of the benefits payable under the 2011
    employment agreements, assuming such arrangements were in place
    as of December&#160;31, 2010. Additional information regarding
    the employment agreements is included above under
    &#147;Compensation Discussion and Analysis&#160;&#151; Elements
    of the Company&#146;s Executive Officer Compensation
    Program&#160;&#151; Employment Agreements.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Under the terms of the employment agreements, in the event of an
    executive&#146;s death or if he becomes &#147;permanently
    disabled,&#148; as defined in the agreements, the agreements
    will terminate and we will pay the executive or his estate a
    lump sum severance payment equal to (i)&#160;100% of the
    executive&#146;s then-current annual
</DIV>
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    <BR>
    44
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    base salary, and (ii)&#160;100% of the average of any bonuses
    received by the executive in the two years immediately before
    the separation from service.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If the agreements are terminated by the Company without
    &#147;cause,&#148; as defined in the agreements, by the
    executive for &#147;good reason,&#148; as defined in the
    agreements, or by the Company&#146;s proper notice of nonrenewal
    of the agreement, the Company will pay each named executive
    officer a lump sum severance payment equal to (i)&#160;150% of
    the greater of the executive officer&#146;s then-current base
    salary or the executive officer&#146;s base salary at any time
    within two years immediately before the separation from service
    (200% in the case of Mr.&#160;Craft) and (ii)&#160;100% of the
    bonus that the named executive officer would have received based
    on achievement of applicable performance goals in the year of
    termination (prorated for any partial year of service in the
    case of the named executive officers other than Mr.&#160;Craft
    and in the case of the Company&#146;s prior notice of nonrenewal
    for any of the named executive officers). The Company will also
    reimburse the named executive officers for certain premiums paid
    under the Consolidated Omnibus Reconciliation Act of 1985
    (&#147;COBRA&#148;), for up to 18&#160;months (24&#160;months in
    the case of Mr.&#160;Craft and, for all named executive
    officers, 12&#160;months if the executive terminates his
    employment for good reason), depending on the executive&#146;s
    eligibility for continuation of coverage under COBRA.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If Mr.&#160;Craft is employed by the Company at the time of a
    &#147;change in control,&#148; as defined in the agreements,
    Mr.&#160;Craft&#146;s agreement will terminate, regardless of
    whether Mr.&#160;Craft experiences a separation from service,
    and Mr.&#160;Craft will receive payments equal to (i)&#160;200%
    of the greater of Mr.&#160;Craft&#146;s then-current base salary
    and Mr.&#160;Craft&#146;s base salary at any time within the two
    years before the change in control, and (ii)&#160;200% of the
    average of any bonuses received by Mr.&#160;Craft in the two
    years before the change in control. We will also reimburse
    Mr.&#160;Craft for certain premiums paid under COBRA for up to
    24&#160;months following his separation from service, depending
    on Mr.&#160;Craft&#146;s eligibility for continuation of
    coverage under COBRA.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If one of the other named executive officers is employed by us
    at the time of a change in control and his agreement is
    terminated without cause or by the executive for good reason
    within one year of the change in control, the executive will
    receive severance payments equal to (i)&#160;150% of the greater
    of the executive&#146;s then-current base salary and his base
    salary at any time within the two years immediately before the
    change in control, and (ii)&#160;100% of the average of bonuses
    received by the executive in the two years before the change in
    control. We will also reimburse the executive for certain
    premiums paid under COBRA for a period of up to 18&#160;months,
    depending on the executive&#146;s eligibility for continuation
    of coverage under COBRA.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If a named executive officer is terminated by the Company
    without cause or if he terminates his employment for good
    reason, in either case, within 120&#160;days before the
    occurrence of a change in control, then the named executive
    officer will be entitled to receive, in addition to the benefits
    described above for termination without cause or for good
    reason, a lump sum equal to the excess, if any, of the change in
    control benefits he would have received if he had been employed
    on the date of the change in control over the severance benefits
    he actually received in connection with his termination of
    employment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    All payments and benefits due under the employment agreements
    are conditioned upon the execution and non-revocation by the
    executive officer of a release for the Company&#146;s benefit.
    Under the agreements, the executive officers have also agreed to
    certain confidentiality, non-competition and non-solicitation
    covenants with respect to the Company. The confidentiality
    covenants apply during the term of the agreement and for a one
    year period following the executive officer&#146;s termination
    of employment. The non-competition and non-solicitation
    covenants apply during the term of the agreement and for one
    year following the executive officer&#146;s termination of
    employment (for six months following termination of employment
    (i)&#160;in the case of Mr.&#160;Craft, in the event of his
    termination from employment for good reason or in connection
    with a change in control, or (ii)&#160;in the case of the other
    named executive officers, if the executive officer is terminated
    without cause or for good reason within one year following a
    change in control). Violation of these restrictive covenants
    entitles us to complete relief, including restitution. Further,
    in the event of a breach of the restrictive covenants during the
    executive officer&#146;s employment with us, the executive could
    be terminated for cause (provided the breach constituted a
    material violation of the employment agreement). The employment
    agreements do not prohibit the waiver of a breach of these
    covenants.
</DIV>
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    <BR>
    45
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<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If amounts payable to an executive officer under his employment
    agreement (together with any other amounts that are payable by
    us as a result of a change in ownership or control)
    (collectively, the &#147;Payments&#148;) exceed the amount
    allowed under Section&#160;280G of the Code for such executive
    (thereby subjecting the executive to an excise tax), then the
    Payments due to the executive officer under the employment
    agreement will either (i)&#160;be reduced (but not below zero)
    so that the aggregate present value of the Payments fall within
    the amount allowed by Section&#160;280G, or (ii)&#160;be paid in
    full, whichever produces the better, net, after-tax result for
    the executive officer (taking into account any applicable excise
    or income taxes).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Employment Agreement Terms.</I>&#160;&#160;For purposes of
    the employment agreements, the following terms have been given
    the meanings set forth below:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    &#147;Change in control&#148; is generally defined as
    (i)&#160;any consolidation or merger of the Company in which the
    Company is not the continuing or surviving corporation or under
    which shares of the Company&#146;s common stock would be
    converted into cash, securities or other property, other than a
    merger of the Company in which the holders of the Company&#146;s
    common stock immediately before the merger have the same
    proportionate ownership of common stock of the surviving
    corporation immediately after the merger, (ii)&#160;any sale,
    lease, exchange or other transfer (in one transaction or a
    series of related transactions) of all or substantially all, of
    the assets of the Company and the its subsidiaries to any other
    person or entity (other than an affiliate of the Company),
    (iii)&#160;the stockholders of the Company approve any plan or
    proposal for liquidation or dissolution of the Company,
    (iv)&#160;any person or entity (other than Yorktown Energy
    Partners&#160;V, L.P., or any of its affiliated funds),
    including a &#147;group&#148; as contemplated by
    Section&#160;13(d)(3) of the Exchange Act, acquires or gains
    ownership or control (including, without limitation, power to
    vote) of more than 50% of the outstanding shares of the
    Company&#146;s voting stock (based upon voting power) or
    (v)&#160;as a result of or in connection with a contested
    election of directors, the persons who were directors of the
    Company before such election shall cease to constitute a
    majority of the Board. A change in control does not include a
    public offering of the Company&#146;s common stock or a
    transaction with its sole purpose to change the state of the
    Company&#146;s incorporation or to create a holding company that
    will be owned in substantially the same proportions by the
    persons who held the Company&#146;s securities immediately
    before such transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    &#147;Cause&#148; is generally defined as (i)&#160;the willful
    and continued failure by the executive substantially to perform
    his duties, responsibilities or authorities (other than any such
    failure resulting from the executive becoming permanently
    disabled), (ii)&#160;the willful engaging by the executive in
    misconduct that is materially injurious to the Company,
    (iii)&#160;any misconduct by the executive in the course and
    scope of the executive&#146;s employment, including but not
    limited to dishonesty, disloyalty, disorderly conduct,
    insubordination, harassment of other employees or third parties,
    abuse of alcohol or controlled substances or other violations of
    the Company&#146;s personnel policies, rules or Code of Conduct,
    (iv)&#160;any material violation by the executive of his
    employment agreement or (v)&#160;any violation by the executive
    of any fiduciary duty owed by the executive to the Company or
    its affiliates. For these purposes, no act, or failure to act,
    on the executive&#146;s part shall be considered
    &#147;willful&#148; unless done, or omitted to be done, by him
    not in good faith and without reasonable belief that his action
    or omission was in the best interest of the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    &#147;Good reason&#148; is generally defined as, without the
    executive&#146;s consent, (i)&#160;a material diminution in the
    executive&#146;s annual base salary, duties, responsibilities or
    authorities, (ii)&#160;a requirement that the executive report
    to an officer or employee other than the Board (or, in the case
    of executive officers other than Mr.&#160;Craft, to an officer
    or employee other than the president or the Board), (iii)&#160;a
    material relocation of the executive&#146;s primary work
    location more than 25&#160;miles away from the Company&#146;s
    corporate headquarters for the Mr.&#160;Craft, and 50&#160;miles
    for the other named executive officers or (iv)&#160;any other
    material breach by the Company of its obligations under the
    employment agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    An executive will be deemed to have become &#147;permanently
    disabled&#148; when (i)&#160;he receives disability benefits
    under either Social Security or the Company&#146;s long-term
    disability plan, if any, (ii)&#160;the Board, upon the written
    report of a qualified physician designated by the Board or its
    insurers, shall have determined (after a complete physical
    examination of the executive at any time after he has been
    absent from the Company for a total period of 180 or more
    calendar days in any
    <FONT style="white-space: nowrap">12-month</FONT>
    period) that the executive has become physically
    <FONT style="white-space: nowrap">and/or</FONT>
    mentally incapable of performing his essential job functions
    with or without reasonable accommodation
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    46
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    as required by law or (iii)&#160;he is otherwise unable for a
    continuous period of 120 calendar days to perform his essential
    job functions with or without reasonable accommodation as
    required by law due to injury, illness or other incapacity
    (90&#160;days in the case of executive officers other than
    Mr.&#160;Craft).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Potential Severance Benefits.</I>&#160;&#160;The following
    table summarizes the potential severance payments payable to our
    executive officers under their employment agreements. The table
    is only intended to summarize various terms of the employment
    agreements and is qualified in its entirety by reference to the
    full text of the actual agreements, copies of which are on file
    with the SEC as discussed above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="20%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=06 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>By Company<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Change in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Without Cause<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Notice of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Death or<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Control or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>or by Executive<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Nonrenewal by<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Permanent<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Title</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>CIC(1)</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>For Good Reason</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Company</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Disability</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    President &#038; CEO
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    (a) 200% of base salary, (b) 200% of average bonus during two
    years before CIC and (c) COBRA premiums for up to 24&#160;months.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    (a) 200% of base salary, (b) 100% of bonus and (c) COBRA
    premiums for up to 24&#160;months (12&#160;months if executive
    terminates for good reason).
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    (a) 200% of base salary, (b) 100% of bonus, prorated for partial
    year of service and (c) COBRA premiums for up to 24&#160;months.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    (a) 100% of base salary and (b) 100% of average bonus during two
    years before separation of service.
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Executive Vice President &#038; CFO
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    150% of base salary, (b) 100% of average bonus during two years
    before CIC and (c) COBRA premiums for up to 18&#160;months.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    (a) 150% of base salary, (b) 100% of bonus, prorated for partial
    year of service and (c) COBRA premiums for up to 18&#160;months
    (12&#160;months if executive terminates for good reason).
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    (a) 150% of base salary, (b) 100% of bonus, prorated for partial
    year of service and (c) COBRA premiums for up to 18&#160;months.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    (a) 100% of base salary and (b) 100% of average bonus during two
    years before separation of service.
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Executive Vice President &#038; General Counsel
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Executive Vice President&#160;&#151; Business Development &#038;
    Geosciences
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Executive Vice President&#160;&#151; Land
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Same as Mr. <BR>
    Smart.
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Change in control must be followed by termination of employment
    by the Company without cause or by the executive for good
    reason, each within one year of the change in control, for
    severance to be payable to the named executive officers other
    than Mr.&#160;Craft. Amounts due to Mr.&#160;Craft are payable
    upon change in control regardless of termination of employment.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Stock
    Incentive Plan</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition to potential severance payments under the executive
    employment agreements discussed above, certain restricted stock
    awards granted under the 2007 Plan provide for the accelerated
    vesting of such awards in the event of a change in control or
    certain termination events. Specifically, the 2007 Plan provides
    that restricted shares will vest in full upon the occurrence of
    a change in control. In addition, the stock award agreements for
    restricted shares granted to executive officers after
    August&#160;1, 2010, provide that restricted shares will vest in
    full upon termination of employment by reason of death or
    disability. The definitions for change in control in the 2007
    Plan and applicable restricted stock award agreements are the
    same as in the employment agreements and are discussed above
    under &#147;&#151;&#160;Employment Agreement Terms.&#148; The
    definition of disability in the restricted stock award
    agreements is the same as in the 2007 Plan: (i)&#160;the
    executive is unable to engage in any substantial gainful
    activity by reason of any medically determinable physical or
    mental
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    47
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    impairment that can be expected to result in death or can be
    expected to last for a continuous period of not less than
    12&#160;months, or (ii)&#160;the executive is, by reason of any
    medically determinable physical or mental impairment that can be
    expected to result in death or can be expected to last for a
    continuous period of not less than 12&#160;months, receiving
    income replacement benefits for a period of not less than three
    months under an accident or health plan covering employees of
    the Company or an affiliate.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Quantification
    of Payments</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The table below summarizes the dollar amounts of potential
    payments to each named executive officer assuming that one of
    the events described in the table below occurs and assuming that
    the employment agreements with all the named executive officers
    were in effect on December&#160;31, 2010. The table assumes that
    each specified event occurred on December&#160;31, 2010, when
    the closing price of the Company&#146;s common stock was $23.10.
    The values below are our best estimate of the severance payments
    and benefits the executives would receive upon a termination of
    employment or a change in control as of December&#160;31, 2010,
    and we believe the amounts below have been calculated using
    reasonable assumptions. All amounts are before taxes, which
    would reduce amounts ultimately due to our named executive
    officers. Any actual payments that may be made pursuant to the
    agreements described above are dependent on various factors,
    which may or may not exist at the time a change in control
    actually occurs
    <FONT style="white-space: nowrap">and/or</FONT> the
    named executive officer is actually terminated. Therefore, such
    amounts and disclosures should be considered &#147;forward
    looking statements.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>By Company<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Without Cause or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Notice of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Death or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Change in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>by Executive For<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Nonrenewal by<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Permanent<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Control or CIC(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Good Reason</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Company</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Disability</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Ross Craft
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Salary
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    625,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    625,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    625,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    312,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Bonus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    513,915
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    187,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    187,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    256,958
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Accelerated Equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,654,004
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,772,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Continued Medical (COBRA)(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    47,509
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    47,509
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    47,509
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,840,428
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    860,009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    860,009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,341,458
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Steven P. Smart
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Salary
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    395,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    395,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    395,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    263,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Bonus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    146,513
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    105,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    105,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    146,513
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Accelerated Equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,351,996
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,848,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Continued Medical (COBRA)(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17,261
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17,261
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17,261
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,911,020
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    517,911
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    517,911
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,258,013
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J. Curtis Henderson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Salary
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    386,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    386,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    386,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    257,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Bonus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    145,313
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    103,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    103,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    145,313
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Accelerated Equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,351,996
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,848,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Continued Medical (COBRA)(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,241
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,241
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,241
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,912,800
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    518,491
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    518,491
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,250,813
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Qingming Yang
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Salary
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    330,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    330,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    330,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    220,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Bonus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,570
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,570
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Accelerated Equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,656,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,386,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Continued Medical (COBRA)(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,241
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,241
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,241
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,044,311
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    425,241
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    425,241
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,634,570
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    48
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>By Company<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Without Cause or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Notice of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Death or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Change in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>by Executive For<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Nonrenewal by<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Permanent<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Control or CIC(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Good Reason</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Company</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Disability</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ralph P. Manoushagian
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Salary
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    280,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    280,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    280,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    187,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Bonus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    86,063
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    56,100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    56,100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    86,063
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Accelerated Equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,638,021
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,386,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Continued Medical (COBRA)(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,518
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,518
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,518
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,024,102
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    356,118
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    356,118
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,659,063
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    For the named executive officers other than Mr.&#160;Craft, the
    change in control must be followed by a termination of
    employment by the Company without cause or by the executive for
    good reason, in either case within one year of the change in
    control, in order for the &#147;Salary,&#148; &#147;Bonus&#148;
    and &#147;Continued Medical (COBRA)&#148; amounts reported above
    to become payable. Accelerated vesting of equity awards and all
    payments due to Mr.&#160;Craft are triggered upon the occurrence
    of a change in control regardless of termination of employment.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Based on assumptions used for financial reporting purposes under
    GAAP. In the event of a termination by the executive for good
    reason, the duration of continued medical benefits would only
    last up to 12&#160;months; however, for purposes of quantifying
    amounts in this table, the &#147;By Company Without Cause or by
    Executive For Good Reason&#148; column reports up to
    18&#160;months of continued coverage (24&#160;months in the case
    of Mr.&#160;Craft) in the event of a termination without cause
    or for good reason.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    &#147;Total&#148; amounts are calculated without regard to the
    potential 280G cutback limitation described above under
    &#147;&#151;&#160;Employment Agreements.&#148;</TD>
</TR>

</TABLE>

<A name='D81255151'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DIRECTOR
    COMPENSATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our directors received an annual retainer of $50,000 in common
    stock for services rendered in 2010 under our director
    compensation plan. Our directors also received an annual
    retainer of $35,000 in cash, stock or a combination of both at
    the election of the director and payable in four equal
    installments on the first trading day of each quarter. In
    addition, the Chairmen of the Audit and Compensation Committees
    received $15,000 and $5,000, respectively, in cash, stock or a
    combination of both, also at the election of the Chairman and
    payable in four equal installments on the first trading day of
    each quarter. Further, directors and committee members received
    cash meeting fees of $1,000 for each Board meeting attended,
    $1,000 for each Audit Committee meeting attended and $500 for
    each Compensation Committee meeting attended.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Additionally, each director is reimbursed for travel and
    miscellaneous expenses to attend meetings and activities of the
    Board or its committees, and travel and miscellaneous expenses
    related to such director&#146;s participation in general
    education and programs for directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table sets forth a summary of the compensation we
    paid to our directors in 2010. The calculation of the amounts
    elected to be received in common stock was calculated in
    accordance with FASB ASC Topic 718 and based on the NASDAQ
    closing price of our common stock on the date of grant.
    Mr.&#160;Craft,
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    49
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    who is a full-time employee, and Mr.&#160;Lawrence, who is
    affiliated with Yorktown Energy Partners, do not receive
    compensation for serving as directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>


<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="69%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Fees Earned<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>or Paid in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Stock<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Cash ($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Awards ($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total ($)</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>&#160;&#160;(a)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(b)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(c)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(h)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Alan D. Bell(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,805
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,805
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James H. Brandi
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    85,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    104,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James C. Crain
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    85,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    119,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Sheldon B. Lubar
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    90,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    103,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Christopher J. Whyte
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    85,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    98,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Alan D. Bell became a member of the Board in August 2010.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For 2011, upon the recommendation of the Compensation Committee
    and in light of the complexity of compensation issues considered
    by the Compensation Committee and time spent on these issues, as
    well as additional governance matters required to be overseen as
    a result of the Dodd-Frank Act and related SEC regulations, the
    Board raised the annual chair fee for the Compensation Committee
    from $5,000 to $7,500 and meeting fee from $500 per meeting to
    $1,000 per meeting.
</DIV>

<A name='D81255171'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">EQUITY
    COMPENSATION PLAN TABLE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table summarizes information about our long-term
    incentive compensation plans as of December&#160;31, 2010:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="15%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="15%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of Shares to<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>be Issued Upon<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Weighted-Average<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Exercise of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Exercise Price of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Remaining Available<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Outstanding<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Outstanding<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>for Future Issuance<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Options, Warrants<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Options, Warrants<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Under Equity<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>and Rights(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>and Rights</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Compensation Plans</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Equity compensation plans approved by stockholders
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    334,329
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7.01
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    691,080
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Equity compensation plans not approved by stockholders
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    334,329
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7.01
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    691,080
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For more information about our 2007 Plan, see
    &#147;Proposal&#160;4&#160;&#151; Reapproval of Material Terms
    of Our 2007 Stock Incentive Plan to Comply with
    Section&#160;162(m) of the Internal Revenue Code&#148; and
    &#147;Compensation Discussion and Analysis&#160;&#151; Elements
    of the Company&#146;s Executive Officer Compensation
    Program&#160;&#151; Long-Term Incentive Stock Compensation.&#148;
</DIV>

<A name='D81255152'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">CERTAIN
    RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our Board has approved a written policy that requires our Audit
    Committee to review on an annual basis all transactions with
    related parties, or in which a related party has a direct or
    indirect interest, and to determine whether to ratify or approve
    the transaction after consideration of the related party&#146;s
    interest in the transaction. For these purposes, a related-party
    transaction is a transaction between the Company and any related
    party, such as an officer, director or 5% stockholder of the
    Company, other than transactions available to all employees
    generally or transactions involving less than $5,000 when
    combined with all similar transactions. We had no related-party
    transactions in 2010.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    50
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='D81255153'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">INDEPENDENT
    REGISTERED PUBLIC ACCOUNTANTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Audit Committee has appointed Hein&#160;&#038; Associates
    LLP as our independent registered public accounting firm to
    audit our consolidated financial statements and internal control
    over financial reporting as of and for the fiscal year ending
    December&#160;31, 2011. Stockholders are being asked to ratify
    the appointment of Hein at the 2011 annual meeting of
    stockholders, under Proposal&#160;5.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Representatives of Hein are expected to be present at the annual
    meeting. Hein representatives will have an opportunity to make a
    statement if they desire and are expected to be available to
    respond to appropriate questions at the annual meeting.
</DIV>

<A name='D81255154'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Audit
    Fees</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our independent registered public accounting firm for 2010 and
    2009 was Hein&#160;&#038; Associates LLP. The fees billed to us
    by Hein are shown in the table below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="79%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Audit fees
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    402,550
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    380,973
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Audit-related fees
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,525
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    405,075
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    380,973
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Audit fees consist of fees billed for professional services for
    the audit of our annual financial statements, reviews of the
    financial statements included in our quarterly reports and
    services that are normally provided in connection with statutory
    and regulatory filings. For 2010, these services include the
    review of our prospectus for our 2010 equity offering and the
    audit of our internal controls over financial reporting. For
    2009, these services included the review of our registration
    statement on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    and the audit of our internal controls over financial reporting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Audit-related fees consist of fees billed for assurance and
    related services that are reasonably related to the performance
    of the audit or review of our consolidated financial statements
    and are not reported under &#147;Audit Fees.&#148; These
    services consisted of consultations concerning financial
    accounting and reporting standards.
</DIV>

<A name='D81255155'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Pre-Approval
    Policy and Procedures</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Audit Committee must give prior approval to any management
    request for any amount or type of service (audit, audit-related
    and tax services or to the extent permitted by law, non-audit
    services) our independent registered public accounting firm
    provides. All audit and audit-related services rendered by
    Hein&#160;&#038; Associates LLP in 2010 and 2009 were approved
    by the Audit Committee before Hein was engaged for such
    services. No services of any kind were approved pursuant to a
    waiver permitted under 17&#160;CFR 210.2-01(c)(7)(i)(C).
</DIV>

<A name='D81255156'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">AUDIT
    COMMITTEE REPORT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>The following statement is furnished by our Audit Committee
    and is not incorporated by reference into any document that we
    file with the SEC.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This statement is being provided to inform stockholders of the
    Audit Committee&#146;s oversight with respect to our financial
    reporting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Audit Committee has reviewed and discussed the audited
    financial statements as of and for the year ended
    December&#160;31, 2010, and related notes with management and
    the independent registered public accounting firm. In addition,
    the Audit Committee has discussed with the independent
    registered public accounting firm the matters required to be
    discussed by Statement of Auditing Standards No.&#160;61,
    <I>&#147;Communications with Audit Committees&#148;</I> as
    amended (AICPA, Professional Standards, Vol. 1. AU
    Section&#160;380), as adopted by the Public Company Accounting
    Oversight Board (United States) (the &#147;PCAOB&#148;)
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    51
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    in Rule&#160;3200T. The Audit Committee discussed with our
    independent registered public accounting firm the independence
    of such firm from our management, including a review of audit
    and non-audit fees, and received the written disclosures and the
    letter from the independent registered public accounting firm
    required by applicable requirements of the PCAOB regarding the
    independent registered public accounting firm&#146;s
    communications with the Audit Committee concerning independence.
    The Audit Committee has also discussed with our management and
    the independent registered public accounting firm such other
    matters and received such assurance from them, as the Audit
    Committee deemed appropriate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Management is responsible for the preparation and presentation
    of the Company&#146;s audited financial statements, the
    establishment and maintenance of our disclosure controls and
    procedures and the establishment, maintenance and evaluation of
    the effectiveness of our internal controls over financial
    reporting. The independent registered public accounting firm is
    responsible for performing an independent audit of our financial
    statements and internal control over financial reporting in
    accordance with the standards of the PCAOB and issuing reports
    thereon. The Audit Committee&#146;s responsibility is to monitor
    and oversee this process.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Based on the foregoing review and discussions with management
    and the independent registered public accounting firm, and
    relying thereon, we have recommended to the Company and the
    Board the inclusion of the audited financial statements in the
    Company&#146;s annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended December&#160;31, 2010, for filing with the
    SEC.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The members of the Audit Committee are not professionally
    engaged in the practice of auditing or accounting for the
    Company and are not experts in auditor independence standards.
    Members of the Audit Committee rely without independent
    verification on the information provided to them and on the
    representations made by management and the Company&#146;s
    independent registered public accounting firm. Accordingly, the
    Audit Committee&#146;s oversight does not provide an independent
    basis to determine that management has maintained appropriate
    accounting and financial reporting principles or appropriate
    internal controls and procedures designed to assure compliance
    with accounting standards and applicable laws and regulations.
    Furthermore, the Audit Committee&#146;s considerations and
    discussions referred to above do not assure that the audit of
    the Company&#146;s financial statements and internal control
    over financial reporting has been carried out in accordance with
    the standards of the PCAOB, that the financial statements are
    presented in accordance with GAAP standards, or that
    Hein&#160;&#038; Associates LLP is in fact independent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Respectfully submitted by the Audit Committee of the Board,
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Alan D. Bell, Chairman<BR>
    James H. Brandi<BR>
    James C. Crain<BR>
    Christopher J. Whyte
</DIV>

<A name='D81255157'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">OTHER
    MATTERS</FONT></B>
</DIV>

</A>
<A name='D81255158'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Other
    Proposals at the Annual Meeting of Stockholders</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our Board does not know of any other matters that are to be
    presented for action at the annual meeting. However, if any
    other matters properly come before the annual meeting or any
    adjournment(s) or postponement(s) thereof, it is intended that
    the enclosed proxy will be voted in accordance with the judgment
    of the persons voting the proxy.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The information contained in this proxy statement in the
    sections entitled &#147;Compensation Committee Report&#148; and
    &#147;Audit Committee Report&#148; shall not be deemed to be
    &#147;soliciting material&#148; or to be &#147;filed&#148; with
    the SEC, nor shall such information be incorporated by reference
    into any future filings with the SEC, or subject to the
    liabilities of Section&#160;18 of the Exchange Act, except to
    the extent that we specifically incorporate it by reference into
    a document filed under the Securities Act or the Exchange Act.
</DIV>
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<A name='D81255159'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Submission
    of Stockholder Proposals and Other Deadlines for the 2012 Annual
    Meeting of Stockholders</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Pursuant to
    <FONT style="white-space: nowrap">Rule&#160;14a-8</FONT>
    under the Exchange Act, some stockholder proposals may be
    eligible for inclusion in our 2012 proxy statement. Under the
    SEC&#146;s rules and regulations, stockholders interested in
    submitting proposals in our proxy materials and for presentation
    at our 2012 annual meeting of stockholders may do so by
    following the procedures set forth in
    <FONT style="white-space: nowrap">Rule&#160;14a-8</FONT>
    under the Exchange Act. In general, stockholder proposals must
    be received by our Corporate Secretary at Approach Resources
    Inc., One Ridgmar Centre, 6500&#160;West Freeway,
    Suite&#160;800, Fort&#160;Worth, Texas 76116 no later than
    December&#160;24, 2011, to be eligible for inclusion in our
    proxy materials.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Alternatively, as more specifically provided for in our bylaws,
    a stockholder making a nomination for election to our Board or a
    proposal of business (other than proposals to be included in our
    proxy statement and proxy as discussed in the previous
    paragraph) for our 2011 annual meeting of stockholders must
    deliver proper notice to our Corporate Secretary at Approach
    Resources Inc., One Ridgmar Centre, 6500&#160;West Freeway,
    Suite&#160;800, Fort&#160;Worth, Texas 76116 not less than 90
    and no more than 120 calendar days before the one year
    anniversary of the date of this proxy statement. As a result,
    for a stockholder nomination for election to our Board or a
    proposal of business to be considered at the 2012 annual meeting
    of stockholders, it must be properly submitted to our Corporate
    Secretary no earlier than December&#160;23, 2011, and no later
    than January&#160;22, 2012.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Pursuant to
    <FONT style="white-space: nowrap">Rule&#160;14a-4(c)</FONT>
    of the Exchange Act, our Board may exercise discretionary voting
    authority under proxies solicited by it with respect to any
    matter properly presented by a stockholder at the 2011 annual
    meeting that the stockholder does not seek to have included in
    our proxy statement if (except as described in the following
    sentence) the proxy statement discloses the nature of the matter
    and how our Board intends to exercise its discretion to vote on
    such matter, unless we are notified of the proposal on or before
    January&#160;22, 2012, and the stockholder satisfies the other
    requirements of
    <FONT style="white-space: nowrap">Rule&#160;14a-4(c)(2).</FONT>
    If we first receive notice of such matter after January&#160;22,
    2012, and the matter nonetheless is permitted to be presented at
    the 2012 annual meeting of stockholders, our Board may exercise
    discretionary voting authority with respect to any such matter
    without including any discussion of the matter in the proxy
    statement for the 2012 annual meeting of stockholders. We
    reserve the right to reject, rule out of order or take other
    appropriate action with respect to any proposal that does not
    comply with the requirements described above and other
    applicable requirements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For each individual that a stockholder proposes to nominate as a
    director and for each matter of business proposed to be
    considered, the stockholder must provide notice to our Corporate
    Secretary within the time limits described above for delivering
    notice of such stockholder proposal and comply with the
    information requirements in our bylaws relating to stockholder
    nominations. See &#147;Corporate Governance&#160;&#151;
    Identifying and Evaluating Nominees for Directors&#148; for
    additional information about stockholder nominations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Detailed information for submitting stockholder proposals is
    available upon written request to our Corporate Secretary at
    Approach Resources Inc., One Ridgmar Centre, 6500&#160;West
    Freeway, Suite&#160;800, Fort&#160;Worth, Texas 76116. These
    requirements are separate from, and in addition to, the
    SEC&#146;s rules and regulations that a stockholder must meet to
    have a stockholder proposal included in our proxy statement for
    the 2012 annual meeting of stockholders.
</DIV>

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<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">2010
    Annual Report to Stockholders</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our 2010 annual report to stockholders accompanies this proxy
    statement. The 2010 annual report to stockholders is not a part
    of the proxy soliciting material.
</DIV>

<A name='D81255172'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Stockholder
    List</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In accordance with the Delaware General Corporation Law, we will
    maintain at our corporate offices in Fort&#160;Worth, Texas a
    list of the stockholders entitled to vote at the annual meeting.
    The list will be open to the examination of any stockholder, for
    purposes relevant to the annual meeting, during ordinary
    business hours for 10&#160;days before the annual meeting.
</DIV>
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<A name='D81255161'>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Additional
    Information About Approach Resources Inc.</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you would like to receive information about Approach
    Resources Inc., please visit our website at
    <I>www.approachresources.com</I>. A link to our investor
    relations site can be found at
    <I><FONT style="white-space: nowrap">http://ir.approachresources.com/.</FONT>
    </I>Our investor relations site contains, among other things,
    management presentations, financial information, stock quotes
    and links to our filings with the SEC.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    To have information such as our latest quarterly earnings
    release, annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    or quarterly reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    mailed to you, please contact investor relations at
    <FONT style="white-space: nowrap">(817)&#160;989-9000</FONT>
    or via our website at
    <I><FONT style="white-space: nowrap">http://ir.approachresources.com/.</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    You may read without charge, and copy at prescribed rates, all
    or any portion of the proxy statement or any reports, statements
    or other information in the files at the public reference
    facilities of the SEC&#146;s principal office at Room&#160;1580,
    100&#160;F&#160;Street, N.E., Washington,&#160;D.C., 20549. You
    can request copies of these documents upon payment of a
    duplicating fee by writing to the SEC. You may call the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330</FONT>
    for further information on the operation of its public reference
    rooms. Our filings are also available to you on the Internet web
    site maintained by the SEC at <I>www.sec.gov</I>.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In this proxy statement, we state that information and documents
    are available on our web site. These references are merely
    intended to suggest where our stockholders may obtain additional
    information. The materials and other information presented on
    our web site are not incorporated in and should not otherwise be
    considered part of this proxy statement.
</DIV>

<DIV style="margin-top: 15pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    BY ORDER OF THE BOARD OF DIRECTORS,
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <IMG src="d81255d8125502.gif" alt="-s- J. Curtis Henderson">
</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    J. Curtis Henderson
</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Executive Vice President, General Counsel
</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    and Secretary
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Fort&#160;Worth, Texas
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    April&#160;21, 2011
</DIV>
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    <BR>
    54
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Appendix 1</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>APPROACH RESOURCES INC.<BR>
2007 STOCK INCENTIVE PLAN</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>ARTICLE I. ESTABLISHMENT AND PURPOSE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.1 Establishment. </B>Approach Resources Inc. (&#147;Approach&#148;) hereby establishes the Approach
Resources Inc. 2007 Stock Incentive Plan, as set forth in this document, as an amendment and
restatement of the Approach Resources Inc. 2003 Stock Option Plan. Awards granted pursuant to the
Approach Resources Inc. 2003 Stock Option Plan shall continue to be governed by the terms of such
plan as in effect at the time of the award and the terms of the related award agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.2 Purpose. </B>The purposes of this Plan are to attract and retain highly qualified individuals
to perform services for the Company, to further align the interests of those individuals with those
of the stockholders of Approach, and to more closely link compensation with Company performance.
Approach is committed to creating long-term stockholder value. Approach&#146;s compensation philosophy
is based on the belief that Approach can best create stockholder value if key employees, officers,
directors and others performing services for Approach and its Affiliates act and are rewarded as
business owners. Approach believes that an equity stake through equity compensation programs
effectively aligns service provider and stockholder interests by motivating and rewarding
performance that will enhance stockholder value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.3 Effectiveness and Term. </B>This Plan shall become effective on June&nbsp;28, 2007 (the &#147;Effective
Date&#148;), the date of its approval by the holders of at least a majority of the shares of Common
Stock either (a)&nbsp;present or represented and entitled to vote at a special meeting of the
stockholders of Approach duly held in accordance with applicable law or (b)&nbsp;by written action in
lieu of a meeting in accordance with applicable law. Unless terminated earlier by the Board
pursuant to Section&nbsp;14.1, this Plan shall terminate on the day prior to the tenth anniversary of
the Effective Date.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE II. DEFINITIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.1 </B>&#147;<B>Affiliate</B>&#148; means any corporation, partnership, limited liability company or partnership,
association, trust or other organization which, directly or indirectly, controls, is controlled by,
or is under common control with, Approach. For purposes of the preceding sentence, &#147;control&#148;
(including, with correlative meanings, the terms &#147;controlled by&#148; and &#147;under common control with&#148;),
as used with respect to any entity or organization, shall mean the possession, directly or
indirectly, of the power (a)&nbsp;to vote more than 50% of the securities having ordinary voting power
for the election of directors of the controlled entity or organization, or (b)&nbsp;to direct or cause
the direction of the management and policies of the controlled entity or organization, whether
through the ownership of voting securities or by contract or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.2 </B>&#147;<B>Approach</B>&#148; means Approach Resources Inc., a Delaware corporation, or any successor
thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.3 </B>&#147;<B>Award</B>&#148; means an award granted to a Participant in the form of Options, SARs, Restricted
Stock, Restricted Stock Units, Performance Awards, Stock Awards or Other Incentive Awards, whether
granted singly or in combination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.4 </B>&#147;<B>Award Agreement</B>&#148; means a written agreement between Approach and a Participant that sets
forth the terms, conditions, restrictions and limitations applicable to an Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.5 </B>&#147;<B>Board</B>&#148; means the Board of Directors of Approach.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.6 &#147;Cash Dividend Right&#148; </B>means a contingent right, granted in tandem with a specific
Restricted Stock Unit Award, to receive an amount in cash equal to the cash distributions made by
Approach with respect to a share of Common Stock during the period such Award is outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.7 </B>&#147;<B>Cause</B>&#148; means any of the following: (a)&nbsp;a Participant&#146;s conviction of, or plea of nolo
contendere to, any felony or to any crime or offense causing substantial harm to Approach or its
Affiliates or involving acts of theft, fraud, embezzlement, moral turpitude or similar conduct; (b)
a Participant&#146;s repeated intoxication by alcohol or drugs during the performance of his duties in a
manner that materially and adversely affects the Participant&#146;s performance of such duties; (c)
malfeasance in the conduct of the Participant&#146;s duties, including, but not limited to (i)&nbsp;willful
and intentional misuse or diversion of funds of Approach or its Affiliates, (ii)&nbsp;embezzlement or
(iii)&nbsp;fraudulent or willful and material misrepresentations or concealments on any written reports
submitted to Approach or its Affiliates; (d)&nbsp;a Participant&#146;s material violation of any provision of
any employment, nonsolicitation, noncompetition or other agreement with Approach or any of its
Affiliates; or (e)&nbsp;a Participant&#146;s material failure to perform the duties of the Participant&#146;s
employment or material failure to follow or comply with the reasonable and lawful written
directives of the Board or senior officers of Approach, in any case under clause (d)&nbsp;or (e)&nbsp;only
after the Participant shall have been informed in writing of such material failure and given a
period of not more than 30&nbsp;days to remedy same.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.8 </B>&#147;<B>Change of Control</B>&#148; means (a)&nbsp;any consolidation or merger of Approach in which Approach is
not the continuing or surviving corporation or pursuant to which shares of Approach&#146;s Common Stock
would be converted into cash, securities or other property, other than a merger of Approach in
which the holders of Approach&#146;s Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately after the merger,
(b)&nbsp;any sale, lease, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all, of the assets of Approach and its subsidiaries to any
other person or entity (other than an Affiliate of Approach), (c)&nbsp;the stockholders of Approach
approve any plan or proposal for liquidation or dissolution of Approach, (d)&nbsp;any person or entity
(other than Yorktown Energy Partners V, L.P., or any of its affiliated funds), including a &#147;group&#148;
as contemplated by section 13(d)(3) of the Exchange Act acquires or gains ownership or control
(including, without limitation, power to vote) of more than 50% of the outstanding shares of
Approach&#146;s voting stock (based upon voting power) or (e)&nbsp;as a result of or in connection with a
contested election of Directors, the persons who were Directors of Approach before such election
shall cease to constitute a majority of the Board. Notwithstanding the foregoing, a Change of
Control shall not include the initial public offering of the Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.9 </B>&#147;<B>Code</B>&#148; means the Internal Revenue Code of 1986, as amended from time to time, including
regulations thereunder and successor provisions and regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.10 </B>&#147;<B>Committee</B>&#148; means the Compensation Committee of the Board or such other committee of the
Board as may be designated by the Board to administer the Plan, which committee shall consist of
two or more members of the Board; provided, however, that with respect to the application of the
Plan to Awards made to Outside Directors, the &#147;Committee&#148; shall be the Board. During such time as
the Common Stock is registered under Section&nbsp;12 of the Exchange Act, each member of the Committee
shall be an Outside Director. To the extent that no Committee exists that has the authority to
administer the Plan, the functions of the Committee shall be exercised by the Board. If for any
reason the appointed Committee does not meet the requirements of Rule&nbsp;16b-3 or Section 162(m) of
the Code, such noncompliance with such requirements shall not affect the validity of Awards,
grants, interpretations or other actions of the Committee.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.11 </B>&#147;<B>Common Stock</B>&#148; means the common stock of Approach, $0.01 par value per share, or any
stock or other securities hereafter issued or issuable in substitution or exchange for the Common
Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.12 </B>&#147;<B>Company</B>&#148; means Approach and any Affiliate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.13 </B>&#147;<B>Disability</B>&#148; means (a)&nbsp;the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than 12&nbsp;months or
(b)&nbsp;the Participant is, by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous period of not less
than 12&nbsp;months, receiving income replacement benefits for a period of not less than three months
under an accident or health plan covering employees of Approach or an Affiliate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.14 </B>&#147;<B>Dividend Unit Right</B>&#148; means a contingent right, granted in tandem with a specific
Restricted Stock Unit Award, to have an additional number of Restricted Stock Units credited to a
Participant in respect of the Award equal to the number of shares of Common Stock that could be
purchased at Fair Market Value with the amount of each cash distribution made by Approach with
respect to a share of Common Stock during the period such Award is outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.15 </B>&#147;<B>Effective Date</B>&#148; means the date this Plan becomes effective as provided in Section&nbsp;1.3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.16 </B>&#147;<B>Employee</B>&#148; means an employee of the Company; provided, however, that the term &#147;Employee&#148;
does not include an Outside Director or an individual performing services for the Company who is
treated for tax purposes as an independent contractor at the time of performance of services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.17 </B>&#147;<B>Exchange Act</B>&#148; means the Securities Exchange Act of 1934, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.18 </B>&#147;<B>Fair Market Value</B>&#148; means (a)&nbsp;if the Common Stock is listed on any established stock
exchange or a national market system, including without limitation Nasdaq Global Select Market,
Nasdaq Global Market, Nasdaq Capital Market and the New York Stock Exchange, the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or
system for the date of the determination (or if there was no quoted price for such date, then for
the last preceding business day on which there was a quoted price), as reported in <I>The Wall Street
Journal </I>or such other source as the Committee deems reliable, (b)&nbsp;if the Common Stock is regularly
quoted by a recognized securities dealer but selling prices are not reported, the mean between the
high bid and low asked prices for the Common stock for the date of the determination, as reported
in <I>The Wall Street Journal </I>or such other source as the Committee deems reliable or (c)&nbsp;if the
Common Stock is not reported or quoted by any such organization, (i)&nbsp;with respect to Incentive
Stock Options, the fair market value of the Common Stock as determined in good faith by the
Committee within the meaning of Section&nbsp;422 of the Code or (ii)&nbsp;with respect to other Awards, fair
market value of the Common Stock as determined in good faith by the Committee using a &#147;reasonable
application of a reasonable valuation method&#148; within the meaning of Section&nbsp;409A of the Code and
the regulations and other guidance thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.19 </B>&#147;<B>Grant Date</B>&#148; means the date an Award is determined to be effective by the Committee upon
the grant of such Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.20 </B>&#147;<B>Inability to Perform</B>&#148; means and shall be deemed to have occurred if the Participant has
been determined under the Company&#146;s or any co-employer&#146;s long-term disability plan to be eligible
for long-term disability benefits. In the absence of the Participant&#146;s participation in,
application for
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">benefits under, or existence of such a plan, &#147;Inability to Perform&#148; means a finding by the
Committee in its sole judgment that the Participant is, despite any reasonable accommodation
required by law, unable to perform the essential functions of his position because of an illness or
injury for (a)&nbsp;60% or more of the normal working days during six consecutive calendar months or (b)
40% or more of the normal working days during twelve consecutive calendar months.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.21 </B>&#147;<B>Incentive Stock Option</B>&#148; means an Option that is intended to meet the requirements of
Section 422(b) of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.22 </B>&#147;<B>NASDAQ</B>&#148; means The NASDAQ Stock Market, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.23 </B>&#147;<B>Nonqualified Stock Option</B>&#148; means an Option that is not an Incentive Stock Option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.24 </B>&#147;<B>Option</B>&#148; means an option to purchase shares of Common Stock granted to a Participant
pursuant to Article&nbsp;VII. An Option may be either an Incentive Stock Option or a Nonqualified Stock
Option, as determined by the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.25 </B>&#147;<B>Other Incentive Award</B>&#148; means an incentive award granted to a Participant pursuant to
Article&nbsp;XII.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.26 </B>&#147;<B>Outside Director</B>&#148; means a member of the Board who (a)&nbsp;meets the independence
requirements of the principal exchange or quotation system upon which the shares of Common Stock
are listed or quoted, (b)&nbsp;from and after the date on which the remuneration paid (or Awards made)
pursuant to the Plan becomes subject to the deduction limitation under Section 162(m) of the Code,
qualifies as an &#147;outside director&#148; under Section 162(m) of the Code, (c)&nbsp;qualifies as a
&#147;non-employee director&#148; of Approach under Rule&nbsp;16b-3 and (d)&nbsp;satisfies independence criteria under
any other applicable laws or regulations relating to the issuance of shares of Common Stock to
Employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.27 </B>&#147;<B>Participant</B>&#148; means an Employee, Outside Director or other individual or entity
performing services for the Company that has been granted an Award; provided, however, that no
Award that may be settled in Common Stock may be issued to a Participant that is not a natural
person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.28 </B>&#147;<B>Performance Award</B>&#148; means an Award granted to a Participant pursuant to Article&nbsp;XI to
receive cash or Common Stock conditioned in whole or in part upon the satisfaction of specified
performance criteria.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.29 </B>&#147;<B>Permitted Transferee</B>&#148; shall have the meaning given such term in Section&nbsp;15.4.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.30 </B>&#147;<B>Plan</B>&#148; means the Approach Resources Inc. 2007 Stock Incentive Plan, as in effect from
time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.31 </B>&#147;<B>Prior Plan</B>&#148; means the Approach Resources Inc. 2003 Stock Option Plan, as in effect prior
to the Effective Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.32 </B>&#147;<B>Restricted Period</B>&#148; means the period established by the Committee with respect to an
Award of Restricted Stock or Restricted Stock Units during which the Award remains subject to
forfeiture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.33 </B>&#147;<B>Restricted Stock</B>&#148; means a share of Common Stock granted to a Participant pursuant to
Article&nbsp;IX that is subject to such terms, conditions and restrictions as may be determined by the
Committee.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.34 </B>&#147;<B>Restricted Stock Unit</B>&#148; means a fictional share of Common Stock granted to a Participant
pursuant to Article&nbsp;X that is subject to such terms, conditions and restrictions as may be
determined by the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.35 </B>&#147;<B>Rule&nbsp;16b-3</B>&#148; means Rule&nbsp;16b-3 promulgated by the SEC under the Exchange Act, or any
successor rule or regulation that may be in effect from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.36 </B>&#147;<B>SEC</B>&#148; means the United States Securities and Exchange Commission, or any successor agency
or organization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.37 </B>&#147;<B>Securities Act</B>&#148; means the Securities Act of 1933, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.38 </B>&#147;<B>Stock Appreciation Right</B>&#148; or &#147;<B>SAR</B>&#148; means a right granted to a Participant pursuant to
Article&nbsp;VIII with respect to a share of Common Stock to receive upon exercise cash, Common Stock or
a combination of cash and Common Stock, equal to the appreciation in value of a share of Common
Stock.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE III. PLAN ADMINISTRATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.1 Plan Administrator and Discretionary Authority. </B>The Plan shall be administered by the
Committee. The Committee shall have total and exclusive responsibility to control, operate, manage
and administer the Plan in accordance with its terms. The Committee shall have all the authority
that may be necessary or helpful to enable it to discharge its responsibilities with respect to the
Plan. Without limiting the generality of the preceding sentence, the Committee shall have the
exclusive right to (a)&nbsp;interpret the Plan and the Award Agreements executed hereunder, (b)&nbsp;decide
all questions concerning eligibility for, and the amount of, Awards granted under the Plan, (c)
construe any ambiguous provision of the Plan or any Award Agreement, (d)&nbsp;prescribe the form of
Award Agreements, (e)&nbsp;correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award Agreement, (f)&nbsp;issue administrative guidelines as an aid to administering the
Plan and make changes in such guidelines as the Committee from time to time deems proper, (g)&nbsp;make
regulations for carrying out the Plan and make changes in such regulations as the Committee from
time to time deems proper, (h)&nbsp;determine whether Awards should be granted singly or in combination,
(i)&nbsp;to the extent permitted under the Plan, grant waivers of Plan terms, conditions, restrictions
and limitations, (j)&nbsp;accelerate the exercise, vesting or payment of an Award when such action or
actions would be in the best interests of the Company, (k)&nbsp;require Participants to hold a stated
number or percentage of shares of Common Stock acquired pursuant to an Award for a stated period
and (l)&nbsp;take any and all other actions the Committee deems necessary or advisable for the proper
operation or administration of the Plan. The Committee shall have authority in its sole discretion
with respect to all matters related to the discharge of its responsibilities and the exercise of
its authority under the Plan, including without limitation its construction of the terms of the
Plan and its determination of eligibility for participation in, and the terms of Awards granted
under, the Plan. The decisions of the Committee and its actions with respect to the Plan shall be
final, conclusive and binding on all persons having or claiming to have any right or interest in or
under the Plan, including without limitation Participants and their respective Permitted
Transferees, estates, beneficiaries and legal representatives. In the case of an Award intended to
be eligible for the performance-based compensation exemption under section 162(m) of the Code, the
Committee shall exercise its discretion consistent with qualifying the Award for such exemption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.2 Liability; Indemnification. </B>No member of the Committee, nor any person to whom it has
delegated authority, shall be personally liable for any action, interpretation or determination
made in good faith with respect to the Plan or Awards granted hereunder, and each member of the
Committee (or delegatee of the Committee) shall be fully indemnified and protected by Approach with
respect to any
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">liability he may incur with respect to any such action, interpretation or determination, to
the maximum extent permitted by applicable law.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE IV. SHARES SUBJECT TO THE PLAN</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>4.1 Available Shares</B>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to adjustment as provided in Sections&nbsp;4.2, the maximum number of shares of
Common Stock that shall be available for grant of Awards under the Plan shall be (i)&nbsp;ten
percent of the outstanding shares of Common Stock, as adjusted on the first business day
after the closing of the initial public offering of the Common Stock and thereafter on the
first business day of each calendar year, plus (ii)&nbsp;all shares of Common Stock that, as of
the Effective Date, remain available for grant of awards under the Prior Plan, plus (iii)
shares of Common Stock subject to outstanding awards under the Prior Plan on the Effective
Date, that later cease to be subject to such awards for any reason other than such awards
having been exercised. In addition, subject to adjustment as provided in Section&nbsp;4.2,
115,385 shares of Common Stock covered by awards granted under the Prior Plan and
outstanding as of the Effective Date, shall be available for issuance under this Plan, but
shall available for grant of Awards under this Plan only as provided in (iii)&nbsp;above. If an
Award granted under this Plan expires, is forfeited or becomes unexercisable for any reason
without having been exercised in full, the undelivered shares of Common Stock which were
subject to the Award shall, unless the Plan shall have been terminated, become available for
future Awards under the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The maximum number of shares of Common Stock that may be subject to Incentive Stock
Options granted under the Plan is 1,100,000. The maximum number of shares of Common Stock
that may be subject to all Awards granted under the Plan to any one Participant each fiscal
year is 330,000 shares. The maximum number of shares of Common Stock that may be subject to
Nonqualified Stock Options and SARs granted under the Plan to any one Participant during a
fiscal year is 330,000. The limitations provided in this Section&nbsp;4.1(b) shall be subject to
adjustment as provided in Section&nbsp;4.2.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Shares of Common Stock issued pursuant to the Plan may be original issue or
treasury shares or a combination of the foregoing, as the Committee, in its sole discretion,
shall from time to time determine. During the term of this Plan, Approach will at all times
reserve and keep available such number of shares of Common Stock as shall be sufficient to
satisfy the requirements of the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding any provision of this Plan to the contrary, the Board or the
Committee shall have the right to substitute or assume awards in connection with mergers,
reorganizations, separations or other transactions to which Section 424(a) of the Code
applies, provided such substitutions or assumptions are permitted by Section&nbsp;424 of the Code
(or, if applicable, Section&nbsp;409A of the Code) and the regulations promulgated thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.2 Adjustments for Recapitalizations and Reorganizations. </B>Subject to Article&nbsp;XIII, if there
is any change in the number or kind of shares of Common Stock outstanding (a)&nbsp;by reason of a stock
dividend, spin-off, recapitalization, stock split or combination or exchange of shares, (b)&nbsp;by
reason of a merger, reorganization or consolidation, (c)&nbsp;by reason of a reclassification or change
in par value or (d)&nbsp;by reason of any other extraordinary or unusual event affecting the outstanding
Common Stock as a class without Approach&#146;s receipt of consideration, or if the value of outstanding
shares of Common Stock is reduced as a result of a spin-off or Approach&#146;s payment of an
extraordinary cash dividend, or distribution or dividend or distribution consisting of any assets
of Approach other than cash, the maximum number
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and kind of shares of Common Stock available for issuance under the Plan, the maximum number
and kind of shares of Common Stock for which any individual may receive Awards in any fiscal year
or under the Plan, the number and kind of shares of Common Stock covered by outstanding Awards, and
the price per share or the applicable market value or performance target of such Awards will be
appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or
change in the kind or value of, issued shares of Common Stock to preclude, to the extent
practicable, the enlargement or dilution of rights under such Awards; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated; provided, further, that the
number and kind of shares of Common Stock available for issuance as Incentive Stock Options under
the Plan shall be adjusted only in accordance with Sections&nbsp;422 and 424 of the Code and the
regulations thereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.3 Adjustments for Awards. </B>The Committee shall have sole discretion to determine the manner
in which shares of Common Stock available for grant of Awards under the Plan are counted. Without
limiting the discretion of the Committee under this Section&nbsp;4.3, unless otherwise determined by the
Committee, the following rules shall apply for the purpose of determining the number of shares of
Common Stock available for grant of Awards under the Plan:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <B>Options, Restricted Stock and Stock Awards. </B>The grant of Options, Restricted Stock
or Stock Awards shall reduce the number of shares of Common Stock available for grant of
Awards under the Plan by the number of shares of Common Stock subject to such an Award.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <B>SARs. </B>The grant of SARs that may be paid or settled (i)&nbsp;only in Common Stock or
(ii)&nbsp;in either cash or Common Stock shall reduce the number of shares available for grant of
Awards under the Plan by the number of shares subject to such an Award; provided, however,
that upon the exercise of SARs, the excess of the number of shares of Common Stock with
respect to which the Award is exercised over the number of shares of Common Stock issued
upon exercise of the Award shall again be available for grant of Awards under the Plan. The
grant of SARs that may be paid or settled only for cash shall not affect the number of
shares available for grant of Awards under the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <B>Restricted Stock Units. </B>The grant of Restricted Stock Units (including those
credited to a Participant in respect of a Dividend Unit Right) that may be paid or settled
(i)&nbsp;only in Common Stock or (ii)&nbsp;in either cash or Common Stock shall reduce the number of
shares available for grant of Awards under the Plan by the number of shares subject to such
an Award; provided, however, that upon settlement of the Award, the excess, if any, of the
number of shares of Common Stock that had been subject to such Award over the number of
shares of Common Stock issued upon its settlement shall again be available for grant of
Awards under the Plan. The grant of Restricted Stock Units that may be paid or settled only
for cash shall not affect the number of shares available for grant of Awards under the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <B>Performance Awards and Other Incentive Awards. </B>The grant of a Performance Award or
Other Incentive Award in the form of Common Stock or that may be paid or settled (i)&nbsp;only in
Common Stock or (ii)&nbsp;in either Common Stock or cash shall reduce the number of shares
available for grant of Awards under the Plan by the number of shares subject to such an
Award; provided, however, that upon settlement of the Award, the excess, if any, of the
number of shares of Common Stock that had been subject to such Award over the number of
shares of Common Stock issued upon its settlement shall again be available for grant of
Awards under the Plan. The grant of a Performance Award or Other Incentive Award that may
be paid or settled only for cash shall not affect the number of shares available for grant
of Awards under the Plan.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <B>Cancellation, Forfeiture and Termination. </B>If any Award referred to in Sections
4.3(a), (b), (c)&nbsp;or (d) (other than an Award that may be paid or settled only for cash) is
canceled or forfeited, or terminates, expires or lapses, for any reason, the shares then
subject to such Award shall again be available for grant of Awards under the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <B>Payment of Exercise Price and Withholding Taxes. </B>If shares of Common Stock are
used to pay the exercise price of an Award, the number of shares available for grant of
Awards under the Plan shall be increased by the number of shares delivered as payment of
such exercise price. If shares of Common Stock are used to pay withholding taxes payable
upon exercise, vesting or payment of an Award, or shares of Common Stock that would be
acquired upon exercise, vesting or payment of an Award are withheld to pay withholding taxes
payable upon exercise, vesting or payment of such Award, the number of shares available for
grant of Awards under the Plan shall be increased by the number of shares delivered or
withheld as payment of such withholding taxes.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE V. ELIGIBILITY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall select Participants from those Employees, Outside Directors and other
individuals or entities providing services to the Company that, in the opinion of the Committee,
are in a position to make a significant contribution to the success of the Company. Once a
Participant has been selected for an Award by the Committee, the Committee shall determine the type
and size of Award to be granted to the Participant and shall establish in the related Award
Agreement the terms, conditions, restrictions and limitations applicable to the Award, in addition
to those set forth in the Plan and the administrative guidelines and regulations, if any,
established by the Committee.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE VI. FORM OF AWARDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.1 Form of Awards. </B>Awards may be granted under the Plan, in the Committee&#146;s sole discretion,
in the form of Options pursuant to Article&nbsp;VII, SARs pursuant to Article&nbsp;VIII, Restricted Stock
pursuant to Article&nbsp;IX, Restricted Stock Units pursuant to Article&nbsp;X, Performance Awards pursuant
to Article&nbsp;XI and Stock Awards and Other Incentive Awards pursuant to Article&nbsp;XII, or a combination
thereof. All Awards shall be subject to the terms, conditions, restrictions and limitations of the
Plan. The Committee may, in its sole discretion, subject any Award to such other terms,
conditions, restrictions and/or limitations (including without limitation the time and conditions
of exercise, vesting or payment of an Award and restrictions on transferability of any shares of
Common Stock issued or delivered pursuant to an Award), provided they are not inconsistent with the
terms of the Plan. The Committee may, but is not required to, subject an Award to such conditions
as it determines are necessary or appropriate to ensure than an Award constitutes &#147;qualified
performance based compensation&#148; within the meaning of Section 162(m) of the Code and the
regulations thereunder. Awards under a particular Article of the Plan need not be uniform, and
Awards under more than one Article of the Plan may be combined in a single Award Agreement. Any
combination of Awards may be granted at one time and on more than one occasion to the same
Participant. Subject to compliance with applicable tax law, an Award Agreement may provide that a
Participant may elect to defer receipt of income attributable to the exercise or vesting of an
Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.2 No Repricing or Reload Rights. </B>Except for adjustments made pursuant to Section&nbsp;4.2, no
Award may be repriced, replaced, regranted through cancellation or otherwise modified without
stockholder approval, if the effect would be to reduce the exercise price for the shares underlying
such Award. The Committee may not cancel an outstanding Option that is under water for the purpose
of granting a replacement Award of a different type.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.3 Loans. </B>The Committee may, in its sole discretion, approve the extension of a loan by the
Company to a Participant who is an Employee to assist the Participant in paying the exercise price
or purchase price of an Award; provided, however, that no loan shall be permitted if the extension
of such loan would violate any provision of applicable law. Any loan will be made upon such terms
and conditions as the Committee shall determine.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE VII. OPTIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.1 General. </B>Awards may be granted in the form of Options that may be Incentive Stock Options
or Nonqualified Stock Options, or a combination of both; provided, however, that Incentive Stock
Options may be granted only to employees of Approach or a &#147;parent corporation&#148; or a &#147;subsidiary
corporation&#148; of Approach, as those terms are defined in Sections 424(e) and (f)&nbsp;of the Code,
respectively. Nonqualified Stock Options may be granted only to Employees, Outside Directors or
other individuals or entities performing services for a corporation or other type of entity in a
chain of corporations or other entities, starting with Approach, in which each corporation or other
entity has a &#147;controlling interest&#148; in another corporation or entity in the chain, but not
corporations or other entities in the chain below the corporation or other entity for which the
Employees, Outside Directors or other individuals or entities are providing services on the date of
grant of the Nonqualified Stock Options. For purposes of this Section, &#147;controlling interest&#148;
means (i)&nbsp;in the case of a corporation, ownership of stock possessing at least 50% of total
combined voting power of all classes of stock entitled to vote of such corporation or at least 50%
of the total value of shares of all classes of stock of such corporation; (ii)&nbsp;in the case of a
partnership, ownership of at least 50% of the profits interest or capital interest of such
partnership; (iii)&nbsp;in the case of a sole proprietorship, ownership of the sole proprietorship; or
(iv)&nbsp;in the case of a trust or estate, ownership of an actuarial interest (as defined in Treasury
Regulation&nbsp;Section&nbsp;1.414(c)-2(b)(2)(ii)) of at least 50% of such trust or estate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.2 Terms and Conditions of Options. </B>An Option shall be exercisable in whole or in such
installments and at such times as may be determined by the Committee. The price at which a share
of Common Stock may be purchased upon exercise of an Option shall be determined by the Committee,
but such exercise price shall not be less than 100% of the Fair Market Value per share of Common
Stock on the Grant Date unless the Option is granted through the assumption of, or in substitution
for, outstanding awards previously granted to individuals who became Employees (or other service
providers) as a result of a merger, consolidation, acquisition or other corporate transaction
involving the Company and complies with Section&nbsp;409A of the Code. Except as otherwise provided
in Section&nbsp;7.3, the term of each Option shall be as specified by the Committee; provided, however,
that no Options shall be exercisable later than 10&nbsp;years after the Grant Date. Options may be
granted with respect to Restricted Stock or shares of Common Stock that are not Restricted Stock,
as determined by the Committee in its sole discretion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>7.3 Restrictions Relating to Incentive Stock Options.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Options granted in the form of Incentive Stock Options shall, in addition to being
subject to the terms and conditions of Section&nbsp;7.2, comply with Section 422(b) of the Code.
To the extent the aggregate Fair Market Value (determined as of the dates the respective
Incentive Stock Options are granted) of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an individual during any calendar year under
all incentive stock option plans of Approach and its parent and subsidiary corporations
exceeds $100,000, such excess Incentive Stock Options shall be treated as options that do
not constitute Incentive Stock Options. The Committee shall determine, in accordance with
the applicable provisions of the Code, which of a Participant&#146;s Incentive Stock Options will
not constitute Incentive Stock Options because of such limitation and shall notify the
Participant of such determination as soon
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">as practicable after such determination. The price at which a share of Common Stock may be
purchased upon exercise of an Incentive Stock Option shall be determined by the Committee,
but such exercise price shall not be less than 100% of the Fair Market Value of a share of
Common Stock on the Grant Date. No Incentive Stock Option shall be granted to an Employee
under the Plan if, at the time such Option is granted, such Employee owns stock possessing
more than 10% of the total combined voting power of all classes of stock of Approach or of
its parent or subsidiary corporations, within the meaning of Section&nbsp;422(b)(6) of the Code,
unless (i)&nbsp;on the Grant Date of such Option, the exercise price of such Option is at least
110% of the Fair Market Value of the Common Stock subject to the Option and (ii)&nbsp;such Option
by its terms is not exercisable after the expiration of five years from the Grant Date of
the Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Participant awarded an Incentive Stock Option shall notify Approach in writing
immediately after the date he or she makes a disqualifying disposition of any shares of
Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A
disqualifying disposition is any disposition (including any sale) of such Common Stock
before the later of (i)&nbsp;two years after the Grant Date of the Incentive Stock Option or (ii)
one year after the date of exercise of the Incentive Stock Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>7.4 Exercise of Options.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the terms and conditions of the Plan, Options shall be exercised by the
delivery of a written notice of exercise to Approach, setting forth the number of whole
shares of Common Stock with respect to which the Option is to be exercised, accompanied by
full payment for such shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon exercise of an Option, the exercise price of the Option shall be payable to
Approach in full either (i)&nbsp;in cash or an equivalent acceptable to the Committee, (ii)&nbsp;in
the sole discretion of the Committee and in accordance with any applicable administrative
guidelines established by the Committee, (A)&nbsp;by tendering one or more previously acquired
nonforfeitable, unrestricted shares of Common Stock having an aggregate Fair Market Value at
the time of exercise equal to the total exercise price or (B)&nbsp;by surrendering a sufficient
portion of the shares with respect to which the Option is exercised having an aggregate Fair
Market Value at the time of exercise equal to the total exercise price or (iii)&nbsp;in a
combination of the forms specified in (i)&nbsp;or (ii)&nbsp;of this subsection; provided, however,
that payment of the exercise price by means of tendering or surrendering shares of Common
Stock shall not be permitted when the same may, in the reasonable opinion of the Committee,
cause Approach to record a loss or expense as a result thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) During such time as the Common Stock is registered under Section&nbsp;12 of the Exchange
Act, to the extent permissible under applicable law, payment of the exercise price of an
Option may also be made, in the absolute discretion of the Committee, by delivery to
Approach or its designated agent of an executed irrevocable option exercise form together
with irrevocable instructions to a broker-dealer to sell or margin a sufficient portion of
the shares with respect to which the Option is exercised and deliver the sale or margin loan
proceeds directly to Approach to pay the exercise price and any required withholding taxes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) As soon as reasonably practicable after receipt of written notification of exercise
of an Option and full payment of the exercise price and any required withholding taxes,
Approach shall (i)&nbsp;deliver to the Participant, in the Participant&#146;s name or the name of the
Participant&#146;s designee, a stock certificate or certificates in an appropriate aggregate
amount based upon the number of shares of Common Stock purchased under the Option or (ii)
cause to be issued in the
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Participant&#146;s name or the name of the Participant&#146;s designee, in book-entry form, an
appropriate number of shares of Common Stock based upon the number of shares purchased under
the Option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.5 Termination of Employment or Service. </B>Each Award Agreement embodying the Award of an
Option shall set forth the extent to which the Participant shall have the right to exercise the
Option following termination of the Participant&#146;s employment or service with the Company. Such
provisions shall be determined by the Committee in its absolute discretion, need not be uniform
among all Options granted under the Plan and may reflect distinctions based on the reasons for
termination of employment or service. In the event a Participant&#146;s Award Agreement embodying the
award of an Option does not set forth such termination provisions, the following termination
provisions shall apply with respect to such Award:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <B>Termination For Cause. </B>If the employment or service of a Participant shall
terminate for Cause, each outstanding Option held by the Participant shall automatically
terminate as of the date of such termination of employment or service, and the right to
exercise the Option shall immediately terminate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <B>Termination By Reason of Death or Disability. </B>In the event of a Participant&#146;s
death or Disability while employed by or in the service of Approach or an Affiliate, each
outstanding Option shall remain outstanding and may be exercised by the person who acquires
the Option by will or the laws of descent and distribution, or by the Participant, as the
case may be, but only (i)&nbsp;within the one year period following the date of death or
Disability (if otherwise prior to the date of expiration of the Option), and not thereafter,
and (ii)&nbsp;to purchase the number of shares of Common Stock that were subject to purchase upon
exercise of the Option at the time of such death or Disability, plus the number of shares of
Common Stock that would have become purchasable upon the next vesting date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <B>Termination For Reasons Other Than Cause, Death or Disability. </B>If a Participant&#146;s
employment or service with Approach and its Affiliates is terminated voluntarily by the
Participant or by action of Approach or an Affiliate for reasons other than for Cause, an
Option may be exercised, but only (i)&nbsp;within three months after such termination (if
otherwise prior to the date of expiration of the Option), and not thereafter, and (ii)&nbsp;to
purchase the number of shares of Common Stock, if any, that could be purchased upon exercise
of the Option at the date of termination of the Participant&#146;s employment or service.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notwithstanding the foregoing, an Option will not be treated as an Incentive Stock Option unless at
all times beginning on the Grant Date and ending on the day three months (one year in the case of a
Participant who is &#147;disabled&#148; within the meaning of Section&nbsp;22(e)(3) of the Code) before the date
of exercise of the Option, the Participant is an employee of Approach or a &#147;parent corporation&#148; or
a &#147;subsidiary corporation&#148; of Approach, as those terms are defined in Sections 424(e) and (f)&nbsp;of
the Code, respectively (or a corporation or a parent or subsidiary corporation of such corporation
issuing or assuming an option in a transaction to which Section 424(a) of the Code applies).
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE VIII. STOCK APPRECIATION RIGHTS</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>8.1 General.</B>
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Committee may grant Awards in the form of SARs in such numbers and at such
times as it shall determine. SARs shall vest and be exercisable in whole or in such
installments and at such times as may be determined by the Committee. The price at which
SARs may be exercised shall be determined by the Committee but shall not be less than 100%
of the Fair Market Value per share of Common Stock on the Grant Date unless the SARs are
granted through the assumption of, or in substitution for, outstanding awards previously
granted to individuals who became Employees (or other service providers) as a result of a
merger, consolidation, acquisition or other corporate transaction involving the Company and
comply with Section&nbsp;409A of the Code. The term of each SAR shall be as specified by the
Committee; provided, however, that no SARs shall be exercisable later than 10&nbsp;years after
the Grant Date. At the time of an Award of SARs, the Committee may, in its sole discretion,
prescribe additional terms, conditions, restrictions and limitations applicable to the SARs,
including without limitation rules pertaining to the termination of employment or service
(by reason of death, permanent and total disability, or otherwise) of a Participant prior to
exercise of the SARs, as it determines are necessary or appropriate, provided they are not
inconsistent with the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) SARs may be granted only to an Employee, Outside Director or other individual or
entity performing services for a corporation or other type of entity in a chain of
corporations or other entities, starting with Approach, in which each corporation or other
entity has a &#147;controlling interest&#148; in another corporation or entity in the chain, but not
corporations or other entities in the chain below the corporation or other entity for which
the Employee, Outside Director or other individual or entity is providing services on the
date of grant of the SARs. For purposes of this subsection, &#147;controlling interest&#148; means
(i)&nbsp;in the case of a corporation, ownership of stock possessing at least 50% of total
combined voting power of all classes of stock entitled to vote of such corporation or at
least 50% of the total value of shares of all classes of stock of such corporation; (ii)&nbsp;in
the case of a partnership, ownership of at least 50% of the profits interest or capital
interest of such partnership; (iii)&nbsp;in the case of a sole proprietorship, ownership of the
sole proprietorship; or (iv)&nbsp;in the case of a trust or estate, ownership of an actuarial
interest (as defined in Treasury Regulation&nbsp;Section&nbsp;1.414(c)-2(b)(2)(ii)) of at least 50% of
such trust or estate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.2 Exercise of SARs. </B>SARs shall be exercised by the delivery of a written notice of exercise
to Approach, setting forth the number of whole shares of Common Stock with respect to which the
Award is being exercised. Upon the exercise of SARs, the Participant shall be entitled to receive
an amount equal to the excess of the aggregate Fair Market Value of the shares of Common Stock with
respect to which the Award is exercised (determined as of the date of such exercise) over the
aggregate exercise price of such shares. Such amount shall be payable to the Participant in cash
or in shares of Common Stock, as provided in the Award Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE IX. RESTRICTED STOCK</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.1 General. </B>Awards may be granted in the form of Restricted Stock in such numbers and at
such times as the Committee shall determine. The Committee shall impose such terms, conditions and
restrictions on Restricted Stock as it may deem advisable, including without limitation providing
for vesting upon the achievement of specified performance goals pursuant to a Performance Award and
restrictions under applicable Federal or state securities laws. A Participant shall not be
required to make any payment for Restricted Stock unless required by the Committee pursuant to
Section&nbsp;9.2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.2 Purchased Restricted Stock. </B>The Committee may in its sole discretion require a
Participant to pay a stipulated purchase price for each share of Restricted Stock.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.3 Restricted Period. </B>At the time an Award of Restricted Stock is granted, the Committee
shall establish a Restricted Period applicable to such Restricted Stock. Each Award of Restricted
Stock may have a different Restricted Period in the sole discretion of the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.4 Other Terms and Conditions. </B>Restricted Stock shall constitute issued and outstanding
shares of Common Stock for all corporate purposes. Restricted Stock awarded to a Participant under
the Plan shall be registered in the name of the Participant or, at the option of Approach, in the
name of a nominee of Approach, and shall be issued in book-entry form or represented by a stock
certificate. Subject to the terms and conditions of the Award Agreement, a Participant to whom
Restricted Stock has been awarded shall have the right to receive dividends thereon during the
Restricted Period, to vote the Restricted Stock and to enjoy all other stockholder rights with
respect thereto, except that (a)&nbsp;Approach shall retain custody of any certificates evidencing the
Restricted Stock during the Restricted Period and (b)&nbsp;the Participant may not sell, transfer,
pledge, exchange, hypothecate or otherwise dispose of the Restricted Stock during the Restricted
Period. A breach of the terms and conditions established by the Committee pursuant to the Award of
the Restricted Stock may result in a forfeiture of the Restricted Stock. At the time of an Award
of Restricted Stock, the Committee may, in its sole discretion, prescribe additional terms,
conditions, restrictions and limitations applicable to the Restricted Stock, including without
limitation rules pertaining to the termination of employment or service (by reason of death,
permanent and total disability, retirement, cause or otherwise) of a Participant prior to
expiration of the Restricted Period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.5 Miscellaneous. </B>Nothing in this Article shall prohibit the exchange of shares of
Restricted Stock pursuant to a plan of merger or reorganization for stock or other securities of
Approach or another corporation that is a party to the reorganization, provided that the stock or
securities so received in exchange for shares of Restricted Stock shall, except as provided in
Article&nbsp;XIII, become subject to the restrictions applicable to such Restricted Stock. Any shares
of Common Stock received as a result of a stock split or stock dividend with respect to shares of
Restricted Stock shall also become subject to the restrictions applicable to such Restricted Stock.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE X. RESTRICTED STOCK UNITS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.1 General. </B>Awards may be granted in the form of Restricted Stock Units in such numbers and
at such times as the Committee shall determine. The Committee shall impose such terms, conditions
and restrictions on Restricted Stock Units as it may deem advisable, including without limitation
prescribing the period over which and the conditions upon which a Restricted Stock Unit may become
vested or be forfeited, and providing for vesting upon the achievement of specified performance
goals pursuant to a Performance Award. Upon the lapse of restrictions with respect to each
Restricted Stock Unit, the Participant shall be entitled to receive one share of Common Stock or an
amount of cash equal to the Fair Market Value of one share of Common Stock, as provided in the
Award Agreement. A Participant shall not be required to make any payment for Restricted Stock
Units.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.2 Restricted Period. </B>At the time an Award of Restricted Stock Units is granted, the
Committee shall establish a Restricted Period applicable to such Restricted Stock Units. Each
Award of Restricted Stock Units may have a different Restricted Period in the sole discretion of
the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.3 Cash Dividend Rights and Dividend Unit Rights. </B>To the extent provided by the Committee
in its sole discretion, a grant of Restricted Stock Units may include a tandem Cash Dividend Right
or Dividend Unit Right grant. A grant of Cash Dividend Rights may provide that such Cash Dividend
Rights shall be paid directly to the Participant at the time of payment of related dividend, be
credited to a bookkeeping account subject to the same vesting and payment provisions as the tandem
Award (with or without interest in the sole discretion of the Committee), or be subject to such
other
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">provisions or restrictions as determined by the Committee in its sole discretion. A grant of
Dividend Unit Rights may provide that such Dividend Unit Rights shall be subject to the same
vesting and payment provisions as the tandem Award or be subject to such other provisions and
restrictions as determined by the Committee in its sole discretion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.4 Other Terms and Conditions. </B>At the time of an Award of Restricted Stock Units, the
Committee may, in its sole discretion, prescribe additional terms, conditions, restrictions and
limitations applicable to the Restricted Stock Units, including without limitation rules pertaining
to the termination of employment or service (by reason of death, Disability, retirement, Cause or
otherwise) of a Participant prior to expiration of the Restricted Period.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE XI. PERFORMANCE AWARDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.1 General. </B>Awards may be granted in the form of Performance Awards that may be payable in
the form of cash, shares of Common Stock or a combination of both, in such amounts and at such
times as the Committee shall determine. Performance Awards shall be conditioned upon the level of
achievement of one or more stated performance goals over a specified performance period that shall
not be shorter than one year. Performance Awards may be combined with other Awards to impose
performance criteria as part of the terms of such other Awards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.2 Terms and Conditions. </B>Each Award Agreement embodying a Performance Award shall set forth
(a)&nbsp;the amount, including a target and maximum amount if applicable, a Participant may earn in the
form of cash or shares of Common Stock or a formula for determining such amount, (b)&nbsp;the
performance criteria and level of achievement versus such criteria that shall determine the amount
payable or number of shares of Common Stock to be granted, issued, retained and/or vested, (c)&nbsp;the
performance period over which performance is to be measured, (d)&nbsp;the timing of any payments to be
made, (e)&nbsp;restrictions on the transferability of the Award and (f)&nbsp;such other terms and conditions
as the Committee may determine that are not inconsistent with the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.3 Code </B><B>Section 162(m)</B><B> Requirements. </B>From and after the date on which remuneration paid (or
Awards granted) pursuant to the Plan becomes subject to the deduction limitation of Section 162(m)
of the Code, the Committee shall determine in its sole discretion whether all or any portion of a
Performance Award shall be intended to satisfy the requirements for &#147;performance-based
compensation&#148; under Section 162(m) of the Code (the &#147;162(m) Requirements&#148;). The performance
criteria for any Performance Award that is intended to satisfy the 162(m) Requirements shall be
established in writing by the Committee based on one or more performance goals as set forth in
Section&nbsp;11.4 not later than 90&nbsp;days after commencement of the performance period with respect to
such Award, provided that the outcome of the performance in respect of the goals remains
substantially uncertain as of such time. The maximum amount that may be paid in cash pursuant to
Performance Awards granted to a Participant with respect to a Approach&#146;s fiscal year that are
intended to satisfy the 162(m) Requirements is $5,000,000; provided, however, that such maximum
amount with respect to a Performance Award that provides for a performance period longer than one
fiscal year shall be the foregoing limit multiplied by the number of full fiscal years in the
performance period. At the time of the grant of a Performance Award and to the extent permitted
under Code Section 162(m) and regulations thereunder for a Performance Award intended to satisfy
the 162(m) Requirements, the Committee may provide for the manner in which the performance goals
will be measured in light of specified corporate transactions, extraordinary events, accounting
changes and other similar occurrences.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.4 Performance Goals. </B>The performance measure(s) to be used for purposes of Performance
Awards may be described in terms of objectives that are related to the individual Participant or
objectives that are Company-wide or related to a subsidiary, division, department, region, function
or
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">business unit of the Company in which the Participant is employed or with respect to which the
Participant performs services, and may consist of one or more or any combination of the following
criteria: (a)&nbsp;earnings or earnings per share (whether on a pre-tax, after-tax, operational or
other basis), (b)&nbsp;return on equity, (c)&nbsp;return on assets or net assets, (d)&nbsp;return on capital or
invested capital and other related financial measures, (e)&nbsp;cash flow or EBITDA or EBITDAX, (f)
revenues, (g)&nbsp;income or operating income, (h)&nbsp;expenses or costs or expense levels or cost levels
(absolute or per unit), (i)&nbsp;one or more operating ratios, (j)&nbsp;stock price, (k)&nbsp;total stockholder
return, (l)&nbsp;operating profit, (m)&nbsp;profit margin, (n)&nbsp;capital expenditures, (o)&nbsp;net borrowing, debt
leverage levels, credit quality or debt ratings, (p)&nbsp;the accomplishment of mergers, acquisitions,
dispositions, public offerings or similar extraordinary business transactions, (q)&nbsp;net asset value
per share, (r)&nbsp;economic value added, (s)&nbsp;individual business objectives, (t)&nbsp;growth in production,
(u)&nbsp;growth in reserves, (v)&nbsp;reserve replacement ratio and/or (w)&nbsp;finding and development cost per
unit. The performance goals based on these performance measures may be made relative to the
performance of other business entities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.5 Certification and Negative Discretion. </B>Prior to the payment of any compensation pursuant
to a Performance Award that is intended to satisfy the 162(m) Requirements, the Committee shall
certify the extent to which the performance goals and other material terms of the Award have been
achieved or satisfied. The Committee in its sole discretion shall have the authority to reduce,
but not to increase, the amount payable and the number of shares to be granted, issued, retained or
vested pursuant to a Performance Award.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE XII. STOCK AWARDS AND OTHER INCENTIVE AWARDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.1 Stock Awards. </B>Stock Awards may be granted to Participants upon such terms and conditions
as the Committee may determine. Shares of Common Stock issued pursuant to Stock Awards may be
issued for cash consideration or for no cash consideration. The Committee shall determine the
number of shares of Common Stock to be issued pursuant to a Stock Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.2 Other Incentive Awards. </B>Other Incentive Awards may be granted in such amounts, upon such
terms and at such times as the Committee shall determine. Other Incentive Awards may be granted
based upon, payable in or otherwise related to, in whole or in part, shares of Common Stock if the
Committee, in its sole discretion, determines that such Other Incentive Awards are consistent with
the purposes of the Plan. Each grant of an Other Incentive Award shall be evidenced by an Award
Agreement that shall specify the amount of the Other Incentive Award and the terms, conditions,
restrictions and limitations applicable to such Award. Payment of Other Incentive Awards shall be
made at such times and in such form, which may be cash, shares of Common Stock or other property
(or a combination thereof), as established by the Committee, subject to the terms of the Plan.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE XIII. CHANGE OF CONTROL</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.1 Vesting of Awards. </B>Except as provided otherwise in an Award Agreement at the time an
Award is granted, notwithstanding any provision of this Plan to the contrary, in the event of a
Change of Control, any time periods, conditions or contingencies relating to the exercise or
realization of, or lapse of restrictions under, an Award granted hereunder shall be accelerated or
waived (assuming with respect to any Performance Awards, all performance criteria and other
conditions are achieved or fulfilled to the maximum extent possible) so that:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) if no exercise of the Award is required, the Award may be realized in full at the
time of the occurrence of the Change of Control (the &#147;Change Effective Time&#148;) or
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if exercise of the Award is required, the Award may be exercised in full at the
Change Effective Time;
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">provided, however, that with respect to any Award that consists of deferred compensation within the
meaning of Section&nbsp;409A of the Code, in the event of a Change of Control that does not satisfy the
requirements for a change in the ownership or effective control of Approach or a change in the
ownership of a substantial portion of the assets of Approach within the meaning of Section&nbsp;409A of
the Code and Treasury guidance and regulations thereunder, then delivery of payment with respect to
such Award as provided herein shall be made upon the earliest of (i)&nbsp;the Participant&#146;s &#147;separation
from service&#148; (within the meaning of Code Section&nbsp;409A and the regulations thereunder), (ii)&nbsp;the
Participant&#146;s becoming disabled (within the meaning of Code Section&nbsp;409A(a)(2)(C)), (iii)&nbsp;the
Participant&#146;s death or (iv)&nbsp;a Change of Control that does satisfy the requirements for a change in
the ownership or effective control of Approach or a change in the ownership of a substantial
portion of the assets of Approach within the meaning of Section&nbsp;409A of the Code and Treasury
guidance and regulations thereunder; provided, however, that delivery of payment upon separation
from service to a Participant who is a &#147;specified employee&#148; (as defined in Code Section&nbsp;409A and
the regulations thereunder) as of the date of his or her separation from service shall be delayed
for a period of six months after the Participant&#146;s separation from service (or, if earlier than the
end of the six-month period, the date of death of the Participant).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.2 Assumption of Awards. </B>Upon a Change of Control where Approach is not the surviving
corporation (or survives only as a subsidiary of another corporation), unless the Committee
determines otherwise, all outstanding Options that are not exercised before the Change of Control
will be assumed by or replaced with comparable options or rights in the surviving corporation (or a
parent of the surviving corporation) in accordance with Section 424(a) of the Code and the
regulations thereunder, and other outstanding Awards will be converted into similar awards of the
surviving corporation (or a parent of the surviving corporation).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.3 Cancellation of Awards. </B>Notwithstanding the foregoing, in the event of a Change of
Control of Approach, then the Committee, in its discretion, may, no later than the effective time
of such Change of Control, require any Participant holding an Award to surrender such Award in
exchange for (a)&nbsp;with respect to each share of Common Stock subject to an Option or SAR (whether or
not vested), payment by the Company (or a successor), in cash, of an amount equivalent to the
excess of the value of the consideration received for each share of Common Stock by holders of
Common Stock in connection with such Change of Control (the &#147;Change of Control Consideration&#148;) over
the exercise price or grant price per share, (b)&nbsp;with respect to each share of Common Stock subject
to an Award of Restricted Stock Units or Other Incentive Awards, and related Cash Dividend Rights
and Dividend Unit Rights (if applicable), payment by the Company (or a successor), in cash, of an
amount equivalent to the value of any such Cash Dividend Rights and Dividend Unit Rights plus the
value of the Change of Control Consideration for each share covered by the Award, assuming all
restrictions or limitations (including risks of forfeiture) have lapsed and (c)&nbsp;with respect to a
Performance Award, payment by the Company (or a successor), in cash, of an amount equivalent to the
value of such Award, as determined by the Committee, taking into account, to the extent applicable,
the Change of Control Consideration, and assuming all performance criteria and other conditions to
payment of such Awards are achieved or fulfilled to the maximum extent possible. Payments made
upon a Change of Control pursuant to this Section shall be made no later than the date on which the
Change of Control occurs. Notwithstanding the foregoing, with respect to any Award that consists
of deferred compensation within the meaning of Section&nbsp;409A of the Code, in the event of a Change
of Control that does not satisfy the requirements for a change in the ownership or effective
control of Approach or a change in the ownership of a substantial portion of the assets of Approach
within the meaning of Section&nbsp;409A of the Code and Treasury guidance and regulations thereunder,
then delivery of payment with respect to such Award as provided herein shall be made upon the
earliest of (i)&nbsp;the Participant&#146;s &#147;separation from service&#148; (within the meaning of Code
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Section&nbsp;409A and the regulations thereunder), (ii)&nbsp;the Participant&#146;s becoming disabled (within the
meaning of Code Section&nbsp;409A(a)(2)(C)), (iii)&nbsp;the Participant&#146;s death or (iv)&nbsp;a Change of Control
that does satisfy the requirements for a change in the ownership or effective control of Approach
or a change in the ownership of a substantial portion of the assets of Approach within the meaning
of Section&nbsp;409A of the Code and Treasury guidance and regulations thereunder; provided, however,
that delivery of payment upon separation from service to a Participant who is a &#147;specified
employee&#148; (as defined in Code Section&nbsp;409A and the regulations thereunder) as of the date of his or
her separation from service shall be delayed for a period of six months after the Participant&#146;s
separation from service (or, if earlier than the end of the six-month period, the date of death of
the Participant).
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE XIV. AMENDMENT AND TERMINATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.1 Plan Amendment and Termination. </B>The Board may at any time suspend, terminate, amend or
modify the Plan, in whole or in part; provided, however, that no amendment or modification of the
Plan shall become effective without the approval of such amendment or modification by the holders
of at least a majority of the shares of Common Stock if (a)&nbsp;such amendment or modification
increases the maximum number of shares subject to the Plan (except as provided in Article&nbsp;IV) or
changes the designation or class of persons eligible to receive Awards under the Plan or (b)
counsel for Approach determines that such approval is otherwise required by or necessary to comply
with applicable law or the listing requirements of NASDAQ or such other exchange or association on
which the Common Stock is then listed or quoted. An amendment to the Plan shall not require
stockholder approval if it curtails rather than expands the scope of the Plan, nor if it is made to
conform the Plan to statutory or regulatory requirements, such as, without limitation, Code Section
409A, or regulations issued thereunder. Upon termination of the Plan, the terms and provisions of
the Plan shall, notwithstanding such termination, continue to apply to Awards granted prior to such
termination. Except as otherwise provided herein, no suspension, termination, amendment or
modification of the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the consent of the Participant (or the Permitted Transferee) holding such
Award. Notwithstanding the foregoing, Approach may amend any Award Agreement to be exempt from
Code Section&nbsp;409A or to comply with the requirements of Code Section&nbsp;409A or to modify any
provision that causes an Award that is intended to be classified as an &#147;equity instrument&#148; under
FAS 123R to be classified as a liability on Approach&#146;s financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.2 Award Amendment and Cancellation. </B>The Committee may amend the terms of any outstanding
Award granted pursuant to the Plan, but except as otherwise provided herein, no such amendment
shall adversely affect in any material way the Participant&#146;s (or a Permitted Transferee&#146;s) rights
under an outstanding Award without the consent of the Participant (or the Permitted Transferee)
holding such Award.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE XV. MISCELLANEOUS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.1 Award Agreements. </B>After the Committee grants an Award under the Plan to a Participant,
Approach and the Participant shall enter into an Award Agreement setting forth the terms,
conditions, restrictions and limitations applicable to the Award and such other matters as the
Committee may determine to be appropriate. The Committee may permit or require a Participant to
defer receipt of the payment of cash or the delivery of shares of Common Stock that would otherwise
be due to the Participant in connection with any Award. Awards that are not paid currently shall
be recorded as payable on Approach&#146;s records for the Plan. The terms and provisions of the
respective Award Agreements need not be identical. All Award Agreements shall be subject to the
provisions of the Plan, and in the event of any conflict between an Award Agreement and the Plan,
the terms of the Plan shall govern.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>15.2 Listing; Suspension.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) As long as the Common Stock is listed on a national securities exchange or system
sponsored by a national securities association, the issuance of any shares of Common Stock
pursuant to an Award shall be conditioned upon such shares being listed on such exchange or
system. Approach shall have no obligation to issue such shares unless and until such shares
are so listed, and the right to exercise any Option or other Award with respect to such
shares shall be suspended until such listing has been effected.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If at any time counsel to Approach or its Affiliates shall be of the opinion that
any sale or delivery of shares of Common Stock pursuant to an Award is or may in the
circumstances be unlawful or result in the imposition of excise taxes on Approach or its
Affiliates under the laws of any applicable jurisdiction, Approach or its Affiliates shall
have no obligation to make such sale or delivery, or to make any application or to effect or
to maintain any qualification or registration under the Securities Act, or otherwise, with
respect to shares of Common Stock or Awards, and the right to exercise any Option or other
Award shall be suspended until, in the opinion of such counsel, such sale or delivery shall
be lawful or will not result in the imposition of excise taxes on Approach or its
Affiliates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Upon termination of any period of suspension under this Section, any Award affected
by such suspension that shall not then have expired or terminated shall be reinstated as to
all shares available before such suspension and as to shares that would otherwise have
become available during the period of such suspension, but no such suspension shall extend
the term of any Award unless otherwise determined by the Committee in its sole discretion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.3 Additional Conditions. </B>Notwithstanding anything in the Plan to the contrary (a)&nbsp;the
Committee may, if it shall determine it necessary or desirable in its sole discretion, at the time
of grant of any Award or the issuance of any shares of Common Stock pursuant to any Award, require
the recipient of the Award or such shares of Common Stock, as a condition to the receipt thereof,
to deliver to Approach a written representation of present intention to acquire the Award or such
shares of Common Stock for his own account for investment and not for distribution, (b)&nbsp;the
certificate for shares of Common Stock issued to a Participant may include any legend that the
Committee deems appropriate to reflect any restrictions on transfer and (c)&nbsp;all certificates for
shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the rules, regulations and other
requirements of the SEC, any stock exchange or association upon which the Common Stock is then
listed or quoted, any applicable federal or state securities law, and any applicable corporate law,
and the Committee may cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>15.4 Transferability.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All Awards granted to a Participant shall be exercisable during his lifetime only
by such Participant, or if applicable, a Permitted Transferee as provided in subsection (c)
of this Section; provided, however, that in the event of a Participant&#146;s legal incapacity,
an Award may be exercised by his guardian or legal representative. When a Participant dies,
the personal representative, beneficiary, or other person entitled to succeed to the rights
of the Participant may acquire the rights under an Award. Any such successor must furnish
proof satisfactory to Approach of the successor&#146;s entitlement to receive the rights under an
Award under the Participant&#146;s will or under the applicable laws of descent and distribution.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Except as otherwise provided in this Section, no Award shall be subject to
execution, attachment or similar process, and no Award may be sold, transferred, pledged,
exchanged, hypothecated or otherwise disposed of, other than by will or pursuant to the
applicable laws of descent and distribution. Any attempted sale, transfer, pledge,
exchange, hypothecation or other disposition of an Award not specifically permitted by the
Plan or the Award Agreement shall be null and void and without effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If provided in the Award Agreement, Nonqualified Stock Options may be transferred
by a Participant to a Permitted Transferee. For purposes of the Plan, &#147;Permitted
Transferee&#148; means (i)&nbsp;a member of a Participant&#146;s immediate family, (ii)&nbsp;any person sharing
the Participant&#146;s household (other than a tenant or employee of the Participant), (iii)
trusts in which a person listed in (i)&nbsp;or (ii)&nbsp;above has more than 50% of the beneficial
interest, (iv)&nbsp;a foundation in which the Participant or a person listed in (i)&nbsp;or (ii)&nbsp;above
controls the management of assets, (v)&nbsp;any other entity in which the Participant or a person
listed in (i)&nbsp;or (ii)&nbsp;above owns more than 50% of the voting interests, provided that in the
case of the preceding clauses (i)&nbsp;through (v), no consideration is provided for the transfer
and (vi)&nbsp;any transferee permitted under applicable securities and tax laws as determined by
counsel to Approach. In determining whether a person is a &#147;Permitted Transferee,&#148; immediate
family members shall include a Participant&#146;s child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including
adoptive relationships.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Incident to a Participant&#146;s divorce, the Participant may request that Approach
agree to observe the terms of a domestic relations order which may or may not be part of a
qualified domestic relations order (as defined in Code Section&nbsp;414(p)) with respect to all
or a part of one or more Awards made to the Participant under the Plan. Approach&#146;s decision
regarding such a request shall be made by the Committee, in its sole and absolute
discretion, based upon the best interests of Approach. The Committee&#146;s decision need not be
uniform among Participants. As a condition of participation, a Participant agrees to hold
Approach harmless from any claim that may arise out of Approach&#146;s observance of the terms of
any such domestic relations order.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.5 Withholding Taxes. </B>The Company shall be entitled to deduct from any payment made under
the Plan, regardless of the form of such payment, the amount of all applicable income and
employment taxes required by law to be withheld with respect to such payment, may require the
Participant to pay to the Company such withholding taxes prior to and as a condition of the making
of any payment or the issuance or delivery of any shares of Common Stock under the Plan, and shall
be entitled to deduct from any other compensation payable to the Participant any withholding
obligations with respect to Awards. In accordance with any applicable administrative guidelines it
establishes, the Committee may allow a Participant to pay the amount of taxes required by law to be
withheld from or with respect to an Award by (a)&nbsp;withholding shares of Common Stock from any
payment of Common Stock due as a result of such Award, or (b)&nbsp;permitting the Participant to deliver
to the Company previously acquired shares of Common Stock, in each case having an aggregate Fair
Market Value equal to the amount of such required withholding taxes. No payment shall be made and
no shares of Common Stock shall be issued pursuant to any Award unless and until the applicable tax
withholding obligations have been satisfied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.6 No Fractional Shares. </B>No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan or any Award granted hereunder, provided that the Committee in its sole
discretion may round fractional shares down to the nearest whole share or settle fractional shares
in cash.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.7 Notices. </B>All notices required or permitted to be given or made under the Plan or
pursuant to any Award Agreement (unless provided otherwise in such Award Agreement) shall be in
writing and shall be deemed to have been duly given or made if (a)&nbsp;delivered personally, (b)
transmitted by first class registered or certified United States mail, postage prepaid, return
receipt requested, (c)&nbsp;sent by prepaid overnight courier service or (d)&nbsp;sent by telecopy or
facsimile transmission, with confirmation receipt, to the person who is to receive it at the
address that such person has theretofore specified by written notice delivered in accordance
herewith. Such notices shall be effective (a)&nbsp;if delivered personally or sent by courier service,
upon actual receipt by the intended recipient, (b)&nbsp;if mailed, upon the earlier of five days after
deposit in the mail or the date of delivery as shown by the return receipt therefore or (c)&nbsp;if sent
by telecopy or facsimile transmission, when the answer back is received. Approach or a Participant
may change, at any time and from time to time, by written notice to the other, the address that it
or such Participant had theretofore specified for receiving notices. Until such address is changed
in accordance herewith, notices hereunder or under an Award Agreement shall be delivered or sent
(a)&nbsp;to a Participant at his address as set forth in the records of the Company or (b)&nbsp;to Approach
at the principal executive offices of Approach clearly marked &#147;Attention: Corporate Secretary.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.8 Compliance with Law and Stock Exchange or Association Requirements. </B>In addition, it is
the intent of Approach that Options designated Incentive Stock Options comply with the applicable
provisions of Section&nbsp;422 of the Code, and that Awards intended to constitute &#147;qualified
performance-based awards&#148; comply with the applicable provisions of Section 162(m) of the Code and
that any deferral of the receipt of the payment of cash or the delivery of shares of Common Stock
that the Committee may permit or require, and all Awards either be exempt from Code section 409A
or, if not exempt, comply with the requirements of Section&nbsp;409A of the Code. To the extent that any
legal requirement of Section&nbsp;16 of the Exchange Act or Sections&nbsp;422, 162(m) or 409A of the Code as
set forth in the Plan ceases to be required under Section&nbsp;16 of the Exchange Act or Sections&nbsp;422,
162(m) or 409A of the Code, that Plan provision shall cease to apply. Any provision of this Plan
to the contrary notwithstanding, the Committee may revoke any Award if it is contrary to law,
governmental regulation or stock exchange or association requirements or modify an Award to bring
it into compliance with any government regulation or stock exchange or association requirements.
The Committee may agree to limit its authority under this Section.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.9 Binding Effect. </B>The obligations of Approach under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation or other
reorganization of Approach, or upon any successor corporation or organization succeeding to all or
substantially all of the assets and business of Approach. The terms and conditions of the Plan
shall be binding upon each Participant and his Permitted Transferees, heirs, legatees, distributees
and legal representatives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.10 Severability. </B>If any provision of the Plan or any Award Agreement is held to be illegal
or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions
of the Plan or such agreement, as the case may be, but such provision shall be fully severable and
the Plan or such agreement, as the case may be, shall be construed and enforced as if the illegal
or invalid provision had never been included herein or therein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.11 No Restriction of Corporate Action. </B>Nothing contained in the Plan shall be construed to
prevent Approach or any Affiliate from taking any corporate action (including any corporate action
to suspend, terminate, amend or modify the Plan) that is deemed by Approach or such Affiliate to be
appropriate or in its best interest, whether or not such action would have an adverse effect on the
Plan or any Awards made or to be made under the Plan. No Participant or other person shall have
any claim against Approach or any Affiliate as a result of such action.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 20 - <!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.12 Governing Law. </B>The Plan shall be governed by and construed in accordance with the
internal laws (and not the principles relating to conflicts of laws) of the State of Texas except
as superseded by applicable federal law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.13 No Right, Title or Interest in Company Assets. </B>No Participant shall have any rights as
a stockholder of Approach as a result of participation in the Plan until the date of issuance of
Common Stock in his name and, in the case of Restricted Stock, unless and until such rights are
granted to the Participant pursuant to the Plan. To the extent any person acquires a right to
receive payments from the Company under the Plan, such rights shall be no greater than the rights
of an unsecured general creditor of the Company, and such person shall not have any rights in or
against any specific assets of the Company. All Awards shall be unfunded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.14 Risk of Participation. </B>Nothing contained in the Plan shall be construed either as a
guarantee by Approach or its Affiliates, or their respective stockholders, directors, officers or
employees, of the value of any assets of the Plan or as an agreement by Approach or its Affiliates,
or their respective stockholders, directors, officers or employees, to indemnify anyone for any
losses, damages, costs or expenses resulting from participation in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.15 No Guarantee of Tax Consequences. </B>No person connected with the Plan in any capacity,
including without limitation Approach and the Affiliates and their respective directors, officers,
agents and employees, makes any representation, commitment or guarantee that any tax treatment,
including without limitation federal, state and local income, estate and gift tax treatment, will
be applicable with respect to any Awards or payments thereunder made to or for the benefit of a
Participant under the Plan or that such tax treatment will apply to or be available to a
Participant on account of participation in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.16 Continued Employment or Service. </B>Nothing contained in the Plan or in any Award
Agreement shall confer upon any Participant the right to continue in the employ or service of the
Company, or interfere in any way with the rights of the Company to terminate a Participant&#146;s
employment or service at any time, with or without cause. The loss of existing or potential profit
in Awards will not constitute an element of damages in the event of termination of employment or
service for any reason, even if the termination is in violation of an obligation of Approach or an
Affiliate to the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.17 Miscellaneous. </B>Headings are given to the articles and sections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction of the Plan or any provisions hereof. The use of the masculine gender
shall also include within its meaning the feminine. Wherever the context of the Plan dictates, the
use of the singular shall also include within its meaning the plural, and vice versa.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, this Plan has been executed as of the Effective Date.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>APPROACH RESOURCES INC.</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ J. Ross Craft
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">J. Ross Craft&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">President and Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 21 - <!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Appendix 2</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>FIRST AMENDMENT TO THE<BR>
APPROACH RESOURCES INC.<BR>
2007 STOCK INCENTIVE PLAN</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This First Amendment to the Approach Resources Inc. 2007 Stock Incentive Plan (the
&#147;Amendment&#148;) is made effective as of December&nbsp;31, 2008, by Approach Resources Inc., a Delaware
corporation (&#147;Approach&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>W I T N E S S E T H</U>:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Approach established the Approach Resources Inc. 2007 Stock Incentive Plan (the
&#147;Plan&#148;) effective as of June&nbsp;28, 2007; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Approach now desires to amend the Plan for compliance with Internal Revenue Code
Section&nbsp;409A and the Treasury Regulations issued thereunder;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, pursuant to the authority reserved in Section&nbsp;14.1, the Plan is amended as
follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">1. Section&nbsp;4.2 of the Plan is hereby amended by the addition of the following sentence:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Notwithstanding the provisions of this Section&nbsp;4.2, outstanding Awards and Award
Agreements shall be adjusted in accordance with (A)&nbsp;Sections&nbsp;422 and 424 of the Code
and the regulations thereunder with respect to Incentive Stock Options and (B)
Section&nbsp;409A of the Code and the regulations thereunder with respect to Nonqualified
Stock Options, SARs and, to the extent applicable, other Awards.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">2. Article&nbsp;V of the Plan is hereby amended by the addition of the following sentence:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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&nbsp;409A until the
Affiliate adopts this Plan as a participating employer in accordance with Section
15.18.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;The second sentence of Section&nbsp;7.1 of the Plan is hereby amended and restated in its
entirety as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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 &#147;controlling interest&#148; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;The first sentence of Section&nbsp;8.1(b) of the Plan is hereby amended and restated in its
entirety as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&#147;controlling interest&#148; 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">5. The Plan is hereby amended by the addition of the following as Section&nbsp;15.18:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.18 <U>Participating Affiliates</U>. 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&#146;s
Employees under the Plan of any Award subject to Code Section&nbsp;409A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;Except as otherwise specifically set forth herein, all other terms and conditions of the
Plan shall remain in full force and effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, Approach has caused this Amendment to be executed on its behalf by its
duly authorized officer as of this the 31<SUP style="FONT-size: 85%; vertical-align: text-top">st</SUP> day of December, 2008.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">APPROACH RESOURCES INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ J. Ross Craft
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" nowrap>J. Ross Craft, President and Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>




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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 12pt; margin-top: 18pt"><B>ANNUAL MEETING OF STOCKHOLDERS OF</B>
</DIV>


<DIV align="Center" style="font-size: 12pt; margin-top: 6pt"><IMG src="d81255d8125504.gif" alt="(APPROACH LOGO)">
</DIV>

<DIV align="Center" style="font-size: 12pt; margin-top: 6pt; MARGIN-left: 6%"><B>June&nbsp;1, 2011</B>
</DIV>
<P>
<div align="center">
<DIV style="width: 40%; border: 1px solid black; padding: 11px; background: #cccccc">



<DIV align="Center" style="font-size: 12pt; margin-top: 6pt"><B>PROXY VOTING INSTRUCTIONS</B>
</DIV>
</DIV>
</DIV>


<div align="left" style="margin-left: 4%">
<P><DIV style="position: relative; float: left; width: 46%">
<DIV align="justify" style="font-size: 9pt; margin-top: 6pt"><B><U>INTERNET</U> - </B>Access &#147;<B>www.voteproxy.com</B>&#148; and follow the on-screen instructions. Have
your proxy card available when you access the web page, and use the Company Number and Account
Number shown on your proxy card.
</DIV>

<DIV align="justify" style="font-size: 9pt; margin-top: 6pt"><B><U>TELEPHONE</U> - </B>Call toll-free <B>1-800-PROXIES </B>(1-800-776-9437) in the United States or
<B>1-718-921-8500 </B>from foreign countries from any touch-tone telephone and follow the instructions.
Have your proxy card available when you call and use the Company Number and Account Number shown on
your proxy card.
</DIV>

<DIV align="justify" style="font-size: 9pt; margin-top: 6pt">Vote online/phone until 11:59 PM EST the day before the meeting.
</DIV>

<DIV align="justify" style="font-size: 9pt; margin-top: 6pt"><B><U>MAIL</U> - </B>Sign, date and mail your proxy card in the envelope provided as soon as
possible.
</DIV>

<DIV align="justify" style="font-size: 9pt; margin-top: 6pt"><B><U>IN PERSON</U> - </B>You may vote your shares in person by attending the Annual Meeting. To
obtain directions to attend the meeting and vote in person, contact investor relations at (817)
989-9000.
</DIV>

</DIV>
<DIV style="position: relative; float: right; width: 48%">
<DIV align="right" style="margin-top: 45pt; margin-left: 6%">
<TABLE style="font-size: 12pt" cellspacing="0" border="0" cellpadding="2" width="94%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD><!-- VRule -->
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD width="1%" style="border-left: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 2px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
    <TD width="1%" style="border-left: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>COMPANY NUMBER</B></DIV></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
    <TD width="1%" style="border-left: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD width="1%" style="border-left: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 2px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
    <TD width="1%" style="border-left: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>ACCOUNT NUMBER</B></DIV></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
    <TD width="1%" style="border-left: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD width="1%" style="border-left: 2px solid #000000; border-top: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 2px solid #000000; background: #bfbfbf"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
    <TD width="1%" style="border-left: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD align="center" valign="top" style="background: #bfbfbf"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD align="center" valign="top" style="background: #bfbfbf"><DIV style="margin-left:0px; text-indent:-0px"><B>&nbsp;</B></DIV></TD>
    <TD style="border-right: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
    <TD width="1%" style="border-left: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD align="center" valign="top" style="background: #bfbfbf"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD width="1%" style="border-left: 2px solid #000000; border-bottom: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD align="center" valign="top" style="border-bottom: 2px solid #000000; background: #bfbfbf"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD style="border-right: 2px solid #000000; border-bottom: 2px solid #000000; background: #bfbfbf">&nbsp;</TD>
    <TD style="border-bottom: 2px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-bottom: 2px solid #000000">&nbsp;</TD>
    <TD width="1%" style="border-right: 2px solid #000000; border-bottom: 2px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>
</DIV>
<BR clear="all"><BR>

<DIV style="width: 100%; border: 1px solid black; padding: 1px;">



<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><U><B>NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL</B></U>:<BR>
<div style="font size: 9pt">The Notice of Annual Meeting of Stockholders, proxy statement, proxy card and 2010 annual report to stockholders<BR>
<BR style="font-size: 2pt">
are available at http://www.approachresources.com</div>
</DIV>
<DIV align="center" style="font-size: 3pt; margin-top: 3pt">&nbsp;
</DIV>


</DIV>

</div>

<DIV align="Center" style="font-size: 8pt; margin-top: 0pt"><FONT style="font-family: Wingdings">&#226;</FONT> Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. <FONT style="font-family: Wingdings">&#226;</FONT>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-family: Wingdings; font-size: 18pt">&#110;</FONT>
</DIV></TD>
    <TD valign="top">20330403030000000000 9</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">060111</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 7pt; margin-top: 3pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="Center" style="font-size: 7pt; margin-top: 6pt"><B>The Board of Directors recommends that you vote FOR ALL NOMINEES on proposal 1, FOR proposals 2, 4 and 5 and for 1 YEAR on proposal 3.</B>
</DIV>
<DIV align="center" style="font-size: 7pt; margin-top: 0pt"><B>PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE </B><FONT style="font-family: Wingdings; FONT-size: 10pt">&#120;</FONT></DIV>


<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></DIV>


<DIV style="position: relative; float: left; width: 50%; border-right: 1px solid #000000">
<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD colspan="7" valign="top" align="left">1. Election of three Class&nbsp;I Directors</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left"><font style="font-size: 7pt"><B>NOMINEES:</B></font></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="middle"><font style="font-size: 6pt"><B>FOR
ALL NOMINEES</B></font>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" rowspan="3"><FONT style="font-family: Wingdings">&#161;</FONT><br><FONT style="font-family: Wingdings">&#161;</FONT><br>
<FONT style="font-family: Wingdings">&#161;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" rowspan="3">Alan D. Bell<br>Sheldon B. Lubar<br>Christopher J. Whyte</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>


    <TD>&nbsp;</TD>

</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="middle" nowrap><font style="font-size: 6pt"><B>WITHHOLD AUTHORITY<br>
FOR ALL NOMINEES</B></font>
</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>

</TR>
<TR valign="bottom" style="line-height: 6pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="middle"><font style="font-size: 6pt"><B>FOR ALL EXCEPT</B><br>
(See instructions below)</font></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="margin-top: 60pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 7pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B><u>INSTRUCTIONS</u>:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="justify"><div align="justify">To withhold authority to vote for any
individual nominee(s), mark <B>&#147;FOR <BR>
ALL EXCEPT&#148; </B>and fill in the
circle next to each nominee you wish <BR>to withhold, as shown
here:
<FONT style="font-family: Wingdings; FONT-size: 10pt">&#108;</FONT></div></TD>
</TR>
</TABLE>
</DIV>
<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV></DIV>


<DIV align="center" style="margin-top: 60pt">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><div align="justify"><DIV style="margin-left:0px; text-indent:-0px">To change the address on your account, please check the
box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be submitted
via this method.</div>
</DIV></TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><font style="font-size: 30pt">&#9633;</font></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="3" valign="top" align="left" style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
</DIV>
<DIV style="position: relative; float: right; width: 48%">
<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 3pt">
    <TD width="75%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 6pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">FOR
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">ABSTAIN</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><div align="justify"><DIV style="margin-left:21px; text-indent:-21px">2.&nbsp;&nbsp;&nbsp;Advisory vote on executive compensation</DIV></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
</TR>
<TR valign="bottom" style="line-height: 10pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 6pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">1&nbsp;year
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2&nbsp;years
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">3&nbsp;years
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">ABSTAIN</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><div align="justify"><DIV style="margin-left:21px; text-indent:-21px">3.&nbsp;&nbsp;&nbsp;Advisory vote on the frequency of future advisory votes
on executive compensation</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
</TR>
<TR valign="bottom" style="line-height: 10pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 6pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">FOR
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">ABSTAIN</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><div align="justify"><DIV style="margin-left:21px; text-indent:-21px">4.&nbsp;&nbsp;&nbsp;Reapprove certain material terms of the Company&#146;s 2007
Stock Incentive Plan to comply with Section&nbsp;162(m) of the
Internal Revenue Code</DIV></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
</TR>
<TR valign="bottom" style="line-height: 10pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 6pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">FOR
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">ABSTAIN</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><div align="justify"><DIV style="margin-left:21px; text-indent:-21px">5.&nbsp;&nbsp;&nbsp;Ratify the appointment of Hein &#038; Associates LLP as the
Company&#146;s independent registered public accounting firm for
the fiscal year ending December&nbsp;31, 2011</DIV></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings; FONT-size: 17pt">&#111;</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="justify" style="font-size: 8pt; margin-top: 12pt"><B>This proxy, when properly executed, will be voted in the manner
directed herein. If no direction is made, this proxy will be voted &#147;FOR
ALL NOMINEES&#148; in Proposal 1, &#147;FOR&#148; Proposal 2, for &#147;1 YEAR&#148; in Proposal
3, &#147;FOR&#148; Proposals 4 and 5, and in the proxies&#146; discretion on any other
business that may properly come before the meeting or any postponement
or adjournment thereof.</B>
</DIV>

</DIV>
<BR clear="all"><BR>

<DIV align=center style="margin-top: -12pt">
<TABLE style="FONT-SIZE: 6pt" cellSpacing=0 cellPadding=0 width="100%" border="0"><!-- Begin Table Head -->

  <TR style="FONT-SIZE: 1pt" vAlign=bottom>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
  <TR style="FONT-SIZE: 6pt" vAlign=bottom>
    <TD noWrap>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">Signature of
      Stockholder&nbsp;&nbsp; </DIV></TD>
    <TD style="FONT-SIZE: 12pt" valign="TOP" align=left colSpan=3>
      <DIV style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid">&nbsp;</DIV></TD>
    <TD align=left>&nbsp;&nbsp;&nbsp;Date:&nbsp;&nbsp;&nbsp; </TD>
    <TD style="FONT-SIZE: 12pt" valign="TOP" align=left colSpan=2>
      <DIV style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid">&nbsp;</DIV></TD>
    <TD noWrap align=left colSpan=3>&nbsp;&nbsp;Signature of
Stockholder&nbsp;&nbsp;
    </TD>
    <TD style="FONT-SIZE: 12pt" valign="TOP" align=left colSpan=2>
      <DIV style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid">&nbsp;</DIV></TD>
    <TD align="center">&nbsp;Date:&nbsp;&nbsp; </TD>
    <TD style="FONT-SIZE: 12pt" valign="TOP" align=left colSpan=2>
      <DIV style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid">&nbsp;</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 6pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="bottom"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-family: Wingdings; font-size: 16pt">&#110;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Note:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><div align="justify">Please sign exactly as your name or names appear on this proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.</div>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT style="font-family: Wingdings; font-size: 16pt">&#110;</FONT></td>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#D81255tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">
<P>
<div align="center" style="margin-top: 280pt">
<DIV style="width: 50%; border: 1px solid black; padding: 11px;">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><br><br><br><br><br><br><br><br><br>
</DIV>
</DIV>
</DIV>


<DIV align="right" style="font-size: 16pt; margin-top: 30pt"><FONT style="font-family: Wingdings; FONT-SIZE: 10PT">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-family: Wingdings">&#110;</FONT>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 60pt"><IMG src="d81255d8125504.gif" alt="(APPROACH LOGO)">
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 10pt"><B>THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS</B>
</DIV>


<DIV align="justify" style="font-size: 12pt; margin-top: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned stockholder of Approach Resources Inc. (the &#147;Company&#148;) acknowledges receipt of
the Notice of Annual Meeting of Stockholders and accompanying proxy statement, proxy card and 2010
annual report of the Company and hereby appoints J. Ross Craft and J. Curtis Henderson, and each of
them, with full power of substitution, to act as attorneys and proxies for the undersigned to vote
all the shares of common stock of the Company that the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at Approach Resources Inc., located at One
Ridgmar Centre, 6500 West Freeway, Suite&nbsp;800 in Fort Worth, Texas, on June&nbsp;1, 2011, at 10:00&nbsp;a.m.,
Central Time, and at all postponements or adjournments thereof, as indicated on this proxy.
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 14pt"><B>(Continued and to be signed on the reverse side)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
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    <TD width="85%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-family: Wingdings; font-size: 16pt">&#110;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">14475</td>
    <TD align="right" valign="top"><FONT style="font-family: Wingdings; font-size: 16pt">&#110;</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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