QUEST RESOURCE CORPORATION
2005 OMNIBUS STOCK AWARD PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
(Non-Employee Director)
To: ___________________________ ("you" or the "Grantee")
NOTICE OF ▇▇▇▇▇:
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As a director of Quest Resource Corporation (the "Company"), you have been
granted an option (the "Option") to purchase common shares, $0.01 par value per
share, of Quest Resource Corporation ("Shares"), subject to the terms and
conditions of the Quest Resource Corporation 2005 Omnibus Stock Award Plan (the
"Plan") and the Option Award Agreement between you and the Company, attached as
Exhibit A, as follows:
Grant Date: October 14, 2005
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Total Number of Shares Subject to Option Fifty thousand (50,000)*
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Option Price per Share ($): $___.___
Expiration Date: October 14, 2015
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In order to fully understand your rights under the Plan (a copy of which is
attached) and the Option Award Agreement, attached as Exhibit A, you are
encouraged to read the Plan and this document carefully. By accepting this
Option, you are also agreeing to be bound by Exhibit A. Please refer to the Plan
document for the definition of capitalized terms used in this Agreement.
QUEST RESOURCE CORPORATION
By:
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▇▇▇▇▇ ▇▇▇▇,
President and CEO
*The Award granted under this Award Agreement has given effect to the 2.5:1
reverse stock split effective October 31, 2005.
EXHIBIT A
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AGREEMENT:
In consideration of the mutual promises and covenants contained herein
and other good and valuable consideration paid by the Grantee to the Company,
the Grantee and the Company agree as follows:
Section 1. Incorporation of Plan
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All provisions of this Award Agreement and the rights of the Grantee
hereunder are subject in all respects to the provisions of the Plan and the
powers of the Board therein provided. Capitalized terms used in this Award
Agreement but not defined shall have the meaning set forth in the Plan.
Section 2. ▇▇▇▇▇ of Nonqualified Stock Option
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As of the Grant Date identified above, the Company grants to the Grantee,
subject to the terms and conditions set forth herein and in the Plan, the right,
privilege, and option (the "Option") to purchase that number of Shares
identified above opposite the heading "Total Number of Shares Subject to
Option," at the per Share price specified above opposite the heading "Option
Price per Share."
Section 3. Exercisability of Option
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(a) Except to the extent the Option is permitted to be transferred to
a person set forth in Section 8(b) of this Award Agreement,
during the Grantee's lifetime, this Option may be exercised only
by the Grantee. As of the dates specified below, this Option,
except as specifically provided elsewhere under the terms of the
Plan or this Award Agreement, shall become exercisable with
respect to that number of shares under the column stated "Number
of Shares Subject to Option Exerecisable," provided that the
Grantee is serving as a director of the Company on the specified
date:
Date Number of Shares Subject
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to Option Exercisable
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Prior to October 14, 2005 -0-
October 14, 2005 10,000
October 14, 2006 20,000
October 14, 2007 30,000
October 14, 2008 40,000
October 14, 2009 50,000
(b) In the event of the Grantee's death or Disability while the
Grantee is serving as a director of the Company, the Option shall
become fully exercisable. In the event that the Grantee dies or
becomes Disabled following the Grantee's Termination of
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Affiliation, the exercisability of the Option shall not
accelerate due to such death or Disability and shall be
exercisable only to the extent it was exercisable on the date of
the Grantee's Termination of Affiliation.
Section 4. Method of Exercise
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Provided this Option has not expired, been terminated or cancelled in
accordance with the terms of the Plan, that number of shares subject to the
Option which are exercisable in accordance with Section 3 above may be
exercised, in whole or in part and from time to time, by delivery to the Company
or its designee a written notice to the Company or its designee which shall:
(a) set forth the number of Shares with respect to which the Option
is to be exercised (such number must be in a minimum amount of 50
Shares);
(b) if the person exercising this Option is not the Grantee, be
accompanied by satisfactory evidence of such person's right to
exercise this Option; and
(c) be accompanied by payment in full of the Option Price in the form
of cash, personal or certified bank check or electronic wire
transfer payable to the order of the Company or any other means
allowable under the Plan which the Company in its sole discretion
determines will provide legal consideration for the Shares.
Section 5. Expiration of Option
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Unless terminated earlier in accordance with the terms of this Award
Agreement or the Plan, the Option granted herein shall expire at 5:00 P.M., U.S.
Central Time, on the tenth (10th) Anniversary of the Grant Date (the "Expiration
Date"). In the event the Expiration Date is a Saturday, Sunday or any other day
which is a holiday of the United States Federal Government (a "Non-Business
Day"), then the Option granted herein shall expire, unless earlier terminated in
a accordance with the terms of this Award Agreement or the Plan, at 5:00 P.M.,
U.S. Central Time, on the first day that is not a Non-Business Day (a "Business
Day") following such Expiration Date. In no event may the Option be exercised
after the Expiration Date, whether such exercise is with or without the consent
of the Company, the Board or the Grantee, unless such extended exercise period
is permitted by regulations issued under Section 409A of the Internal Revenue
Code (and approved by the Board).
Section 6. Effect of Termination of Affiliation
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If the Grantee has a Termination of Affiliation for any reason, including
termination by the Company with or without Cause, voluntary resignation, death,
or Disability, the effect of such Termination of Affiliation on all or any
portion of this Option is as provided below. Notwithstanding anything below to
the contrary, in no event may the Option be exercised after the Expiration Date
whether such extended exercise period is with or without the consent of the
Company, the Board or the Grantee, unless such delayed exercise is permitted by
regulations issued under Section 409A of the Internal Revenue Code (and approved
by the Board).
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(a) If the Grantee has a Termination of Affiliation within the Option
Term due to the Grantee's ceasing to be a director of the
Company, the Option may be exercised by the Grantee at any time
prior to 5:00 P.M., U.S. Central Time, on the ninetieth (90th)
calendar day following the Grantee's Termination of Affiliation
(but in no event later than the Expiration Date). In the event
that such ninetieth (90th) day shall not be a Business Day, then
the Option shall expire at 5:00 P.M., U.S. Central Time, on the
first (1st) Business Day immediately following such ninetieth
(90th) day. In any such case, the Option may be exercised only as
to the Shares as to which the Option had become exercisable on or
before the date of the Termination of Affiliation.
(b) If the Grantee dies or becomes Disabled within the Option Term
(A)while he or she is a director of the company, or (B) within
the ninety-day period referred to in clause (a) above, the Option
may be exercised by the Grantee or the Grantee's Beneficiaries
entitled to do so at any time prior to 5:00 P.M., U.S. Central
Time, on the 365th calendar day following the date of the
Grantee's death or Disability (but in no event later than the
Expiration Date). In the event that the 365th day is not a
Business Day, then the Option shall expire at 5:00 P.M., U.S.
Central Time, on the first (1st) Business Day immediately
following such 365th day. In any such case, the Option may be
exercised only as to the Shares as to which the Option had become
exercisable on or before the date of the Grantee's death or
Disability, or at such time as the Grantee ceased to be a
director of the Company, whichever is earlier.
(c) In the event the Grantee has a Termination of Affiliation during
a Change in Control Period (which is the one year period
following a Change of Control) and such Termination of
Affiliation is initiated by the Company or a Subsidiary other
than for Cause or initiated by the Grantee for Good Reason, then
all Options shall immediately become exercisable and may be
exercised, in whole or in part, for ninety (90) days following
such Termination of Affiliation (but in no event later than the
Expiration Date).
Section 7. Investment Intent
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The Grantee agrees that the Shares acquired on exercise of this Option
shall be acquired for his/her own account for investment only and not with a
view to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act of 1933 (the "1933 Act") or
other applicable securities laws. If the Board so determines, any share
certificates issued upon exercise of this Option shall bear a legend to the
effect that the Shares have been so acquired. The Company may, but in no event
shall be required to, bear any expenses of complying with the 1933 Act, other
applicable securities laws or the rules and regulations of any national
securities exchange or other regulatory authority in connection with the
registration, qualification, or transfer, as the case may be, of this Option or
any Shares acquired upon the exercise thereof. The foregoing restrictions on the
transfer of the Shares shall be inoperative if (a) the Company previously shall
have been furnished with an opinion of counsel, satisfactory to it, to the
effect that such transfer will not involve any violation of the 1933 Act and
other applicable securities laws or (b) the Shares shall have been duly
registered in compliance with the 1933 Act and other applicable state or federal
securities laws. If this Option, or the Shares subject to this Option, are so
registered under the 1933
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Act, the Grantee agrees that he will not make a public offering of the said
Shares except on a national securities exchange on which the common shares of
the Company are then listed.
Section 8. Nontransferability of Option
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(a) Except as provided above in Section 6(b) (in the event of the
Grantee's death) or below in Section 8(b), or as otherwise may be
provided in the Plan, no portion of the Option granted hereunder
may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will, by the laws of
descent and distribution. All rights with respect to the Option
granted to the Grantee shall be available during his or her
lifetime only to the Grantee.
(b) Pursuant to conditions and procedures established by the Board
from time to time, the Board may permit the Option to be
transferred to, exercised by and paid to (a) the Grantee's child,
▇▇▇▇▇▇▇▇▇, 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), (b) any person
sharing the Grantee's household(other than a tenant or employee),
(c) a trust in which persons described in (a) or (b) have more
than 50% of the beneficial interest, (d) a foundation in which
persons described in (a) or (b) or the Grantee owns more than 50%
of the voting interests; provided such transfer is not for value.
Any permitted transfer shall be subject to the condition that the
Board receive evidence satisfactory to it that the transfer is
being made for estate and/or tax planning purposes on a
gratuitous or donative basis and without consideration (other
than nominal consideration).
Section 9. Status of the Grantee
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The Grantee shall not be deemed a shareholder of the Company with respect
to any of the Shares subject to this Option, except to the extent that such
Shares shall have been purchased and issued to him or her. The Company shall not
be required to issue or transfer any certificates for Shares purchased upon
exercise of this Option until all applicable requirements of law have been
complied with and such Shares shall have been duly listed on any securities
exchange on which the Shares may then be listed.
Section 10. No Effect on Capital Structure
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This Option shall not affect the right of the Company to reclassify,
recapitalize or otherwise change its capital or debt structure or to merge,
consolidate, convey any or all of its assets, dissolve, liquidate, windup, or
otherwise reorganize.
Section 11. Adjustments
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(a) Except as provided in Section 11(b) below, in the event of any
change in the number of outstanding Shares effected without
receipt of consideration therefor by the Company, by reason of a
merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, stock split, share
combination or other change
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in the corporate structure of the Company affecting the Shares,
the aggregate number and class of Shares subject to this Option
and the exercise price of this Option shall be automatically
adjusted to accurately and equitably reflect the effect thereon
of such change; provided, however, that any fractional share
resulting from such adjustment shall be eliminated. In the event
of a dispute concerning such adjustment, the decision of the
Board shall be conclusive.
(b) Section 11(a) above shall not apply to the 2.5:1 reverse stock
split effective October 31, 2005, as all Awards made under this
Award Agreement have given effect to such reverse stock split.
Section 12. Amendments
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This Award Agreement may be amended only by a writing executed by the
Company and the Grantee which specifically states that it is amending this Award
Agreement; provided that this Award Agreement is subject to the power of the
Board to amend the Plan as provided therein. Except as otherwise provided in the
Plan, no such amendment shall materially adversely affect the Grantee's rights
under this Award Agreement without the Grantee's consent, nor may any such
amendment extend the time the Option may be exercised as specified in Sections 5
and 6 above (except as such an amendment may otherwise be permitted by
regulations issued under Section 409A of the Internal Revenue Code).
Section 13. Board Authority
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Any questions concerning the interpretation of this Award Agreement, any
adjustments required to be made under Sections 10 or 11 of this Award Agreement,
and any controversy which arises under this Award Agreement shall be settled by
the Board in its sole discretion.
Section 14. Withholding Taxes
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The Grantee agrees to make appropriate arrangements with the Company for
satisfaction of any applicable Federal, state or local income tax or payroll tax
withholding amounts required by law to be withheld, including the payment to the
Company at the time of exercise of an Option of all such taxes and requirements.
The Company is not required to issue shares upon the exercise of this Option
unless the Grantee first pays in cash or by share withholding to the Company
such amount, if any, of tax withholding. The Company may, in its discretion,
accommodate the Grantee's request to have additional tax withholding taken at
the time of exercise.
Section 15. Nonqualified Stock Option
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This Option is not intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Code, and shall not be so construed.
Section 16. Notice
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Whenever any notice is required or permitted hereunder, such notice must be
given in writing by (a) personal delivery, or (b) expedited, recognized delivery
service with proof of delivery, or (c)
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United States Mail, postage prepaid, certified mail, return receipt requested.
Any notice required or permitted to be delivered hereunder shall be deemed to be
delivered on the date which it was personally delivered, received by the
intended addressee, or, whether actually received or not, on the third business
day after it is deposited in the United States mail, certified or registered,
postage prepaid, addressed to the person who is to receive it at the address
which such person has theretofore specified by written notice delivered in
accordance herewith. The Company or the Grantee may change, at any time and from
time to time, by written notice to the other, the address specified for
receiving notices. Until changed in accordance herewith, the Company's address
for receiving notices shall be Quest Resource Corporation, Attention: Chief
Financial Officer, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Unless
changed, the Grantee's address for receiving notices shall be the last known
address of the Grantee on the Company's records. It shall be the Grantee's sole
responsibility to notify the Company as to any change in his or her address.
Such notification shall be made in accordance with this Section 17.
Section 17. Severability
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If any part of this Award Agreement is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any part of this Award Agreement not
declared to be unlawful or invalid. Any part so declared unlawful or invalid
shall, if possible, be construed in a manner which gives effect to the terms of
such part to the fullest extent possible while remaining lawful and valid.
Additionally, if any of the covenants in Section 9 are determined by a court to
be unenforceable in whole or in part because of such covenant's duration or
geographical or other scope, such court shall have the power to modify the
duration or scope of such provision as the case may be, so as to cause such
covenant, as so modified, to be enforceable.
Section 18. Binding Effect
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This Award Agreement shall bind, and, except as specifically provided
herein, shall inure to the benefit of the respective heirs, legal
representatives, successors and assigns of the parties hereto.
Section 19. Governing Law
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This Award Agreement and the rights of all persons claiming hereunder shall
be construed and determined in accordance with the laws of the State of Oklahoma
without giving effect to the principles of the Conflict of Laws to the contrary.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and the Participant has hereunto set his or her hand effective the day and year
first above written.
QUEST RESOURCE CORPORATION
By:
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Title:
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PARTICIPANT
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