Execution Version

EMPLOYMENT AGREEMENT

 

          This Agreement (the “Agreement”) is made and entered into on this 7th
day of December, 2009 (the “Effective Date”), between QUEST RESOURCE CORPORATION
(the “Company”), and EDDIE LEBLANC (“Employee”).

 

 

1.

Agreement to Employ; Duties.

 

a.         Agreement to Employ. The Company desires to retain Employee as its
Chief Financial Officer and accordingly desires to enter into this Agreement and
employ Employee, and Employee hereby accepts employment, upon the terms and
conditions hereinafter set forth. Employee will continue to serve as Chief
Financial Officer of the Company.

 

b.         Duties. Employee agrees that so long as he is employed pursuant to
this Agreement, he will: (i) to the satisfaction of the Company, devote his best
efforts and his entire business time to properly further the interests of the
Company; (ii) at all times be subject to the direction and control of the Chief
Executive Officer and the Board of Directors of the Company with respect to his
activities on behalf of the Company; (iii) comply with all rules, orders and
regulations of the Company and all statutes, regulations, interpretive rulings
and other enactments to which the Company is subject; (iv) truthfully and
accurately maintain and preserve such records and make all reports as the
Company may require; (v) fully account for all the Company’s and its affiliates’
monies which he may from time to time have custody over and deliver the same to
the Company whenever and however directed to do so; and (vi) perform such other
duties as may be requested or assigned to him from time to time by the Chief
Executive Officer and the Board of Directors of the Company.

 

 

2.

Compensation.

 

a.         Base Salary. For all services to be rendered by Employee, the Company
shall pay Employee a salary at the rate of Three Hundred Thousand ($300,000.00)
and No/100 Dollars per year, in installments of equal frequency in accordance
with the Company’s standard payroll practices. All payments made in accordance
with this Agreement shall be subject to withholding and other applicable taxes
(e.g., federal and state withholding, FICA, earnings tax, etc.). Any references
to “Base Salary” herein shall mean Employee’s salary at the time of such
reference.

 

b.         Incentive Bonus Compensation. Employee shall be entitled to
participate in the Company’s cash incentive bonus plan or program as, and to the
extent that, such plan or program is established annually by the Board of
Directors (or the Company’s Compensation Committee). Employee’s bonus for
obtaining the target level of performance under such plan shall not be less than
42% of Employee’s Base Salary. Employee’s actual bonus level will be contingent
upon the Company achieving predetermined financial results and the Board’s
(and/or Compensation Committee’s) approval, including approval of any components
based on Company or individual performance. Employee acknowledges that actual
payouts under the plan may be more or less than Employee’s target level based on
the performance of the Company against plan criteria and Employee’s performance
against any individual objectives.

 

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3.          Term. Unless earlier terminated by either party as provided in
Section 5 or 6 hereof, this Agreement shall commence on December 7, 2009, and
shall continue for a period of three (3) years thereafter until December 6, 2012
(the “Initial Term”); provided, however, the Initial Term shall only be one (1)
year and shall end December 6, 2010 if the Recombination (as defined below in
Section 6(a)) has not been consummated by such date. If a Change of Control (as
herein defined) occurs prior to a Recombination, the Initial Term shall end on
December 6, 2012. Upon the expiration of the Initial Term, this Agreement shall
automatically continue in effect for successive one (1) year terms (a “Renewal
Term”) unless terminated by either party by providing written Notice of
Termination (as provided in Section 7) not less than one hundred twenty (120)
days prior to the end of the Initial Term or any Renewal Term.

 

4.          Employee Benefits. Employee shall be entitled, during his employment
hereunder, to receive and participate in employee benefits available to senior
executives of the Company as the Board of Directors (or the Compensation
Committee) of the Company determines, in its sole discretion, from time to time.

 

                      Employee acknowledges that the benefits described above
are subject to change in the discretion of the Board of Directors (or the
Compensation Committee) of the Company, and that Employee is only entitled to
participate in these benefits to the extent they are made available by the
Company to senior executives from time to time.

 

 

5.

Termination of Employment by Employee.

 

                      a.         Voluntary Resignation. Employee shall have the
right to terminate his employment at any time by providing no less than thirty
(30) days prior written Notice of Termination to the Company as specified in
section 7 herein. Employee hereby agrees to assist in the training of his
replacement, if requested.

 

                      b.         With Good Reason. Employee may terminate his
employment with “Good Reason” as provided in this Section 5(b). Good Reason
means (i) the Company’s failure to pay Employee’s Base Salary or incentive bonus
(to the extent that incentive bonuses are paid to similarly situated executive
employees) in accordance with the terms of this Agreement (unless the payment is
not material and is being contested by the Company in good faith); (ii) the
requirement of the Company that Employee be based more than 50 miles from
Oklahoma City, Oklahoma (with the understanding that substantial travel may be
required for Employee’s position); (iii) a material reduction in Employee’s
duties or responsibilities; or (iv) any other action or inaction by the Company
that constitutes a material breach of this Agreement; provided, however, that
Employee will give the Company thirty days prior written Notice of Termination,
as specified in Section 7 herein, of the basis for claiming Good Reason exists,
and the Company shall have failed to cure such breach or nonperformance during
the thirty day notice period. If Employee terminates with Good Reason, subject
to the release requirement described below and Section 26 hereof, the Company
shall pay Employee as severance pay, (i) a lump-sum cash payment equal to one
month of his Base Salary on the 30th day following his termination date; and
(ii) payments of Employee’s Base Salary, in accordance with standard Company
payroll practices beginning with the first such complete payroll period
commencing on the 31st day following his termination date, for the remaining
period of the Initial Term, or if applicable, any subsequent Renewal Term
(collectively, “Severance Pay”). In addition, the Company shall (i) pay Employee
his pro rata portion (based on days employed) of any annual bonus to which he
would have been entitled for the year during which the termination

 

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occurred in a lump sum cash payment at such time that bonuses are generally paid
by the Company, but in no event later than March 15th of the calendar year
immediately following the calendar year in which Employee terminates his
employment, and (ii) reimburse Employee’s COBRA health insurance premium
payments, if any (for the same coverage that Employee had in place immediately
prior to his termination) for the duration of the COBRA continuation period, or
if earlier, until Employee becomes eligible for health insurance because of
employment with a different employer. Reimbursements for COBRA insurance
premiums, including the timing thereof, shall be made in accordance with
standard Company reimbursement practices; provided, however, that no such
reimbursement shall be made later then the end of the calendar year first
following the calendar year in which such expense was incurred by Employee.

 

Employee shall forfeit the Severance Pay, pro rata bonus, and reimbursement of
COBRA insurance premiums described in this Section 5(b) if he has not signed and
returned to the Company an agreement containing a release of claims against the
Company, in a form substantially similar to that included in Exhibit A, attached
hereto and incorporated herein, within twenty-one (21) days following the date
of Employee’s termination of employment with the Company, without subsequent
revocation of the release during the seven-day period following his execution of
the release. In addition, Employee shall forfeit all unpaid Severance Pay, pro
rata bonus, and reimbursement of COBRA insurance premiums described in this
Section 5(b) immediately on the first date the Board determines, in its sole
discretion, that Employee has violated or threatened to violate Section 15.

 

 

6.

Termination of Employment by the Company; Disability.

 

                      a.         Without Cause. The Company may terminate
Employee’s employment under this Agreement at any time without cause upon Notice
of Termination. In such event, subject to the release requirement described
below and Section 26 hereof, the Company shall pay Employee Severance Pay;
provided, however, if Employee’s employment is terminated within two (2) years
following a “Change in Control” (as defined below), the Severance Pay will be
paid, subject to the release requirement described below and Section 26 hereof,
in one lump sum within 90 days of the date of Employee’s termination of
employment. In addition, the Company shall (i) pay Employee his pro rata portion
(based on days employed) of any annual bonus to which he would have been
entitled for the year during which the termination occurred in a lump sum cash
payment at such time that bonuses are generally paid by the Company, but in no
event later than March 15th of the calendar year immediately following the
calendar year in which Employee terminates his employment, and (ii) reimburse
Employee’s COBRA health insurance premium payments, if any (for the same
coverage that Employee had in place prior to his termination) for the duration
of the COBRA continuation period, or if earlier, until Employee becomes eligible
for health insurance because of employment with a different employer.
Reimbursements for COBRA insurance premiums, including the timing thereof, shall
be made in accordance with standard Company reimbursement practices; provided,
however, that no such reimbursement shall be made later then the end of the
calendar year first following the calendar year in which such expense was
incurred by Employee.

 

          Employee shall forfeit the Severance Pay, pro rata bonus (if any), and
reimbursement of COBRA insurance premiums described in this Section 6(b) if he
has not signed and returned to the Company an agreement containing a release of
claims against the Company, in a form substantially similar to that included in
Exhibit A, attached hereto and incorporated herein, within twenty-one (21)

 

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days following the date of Employee’s termination of employment with the
Company, without subsequent revocation of the release during the seven-day
period following his execution of the release. In addition, Employee shall
forfeit all unpaid Severance Pay, pro rata bonus (if any), and reimbursement of
COBRA insurance premiums described in this Section 6(b) immediately on the first
date the Board determines, in its sole discretion, that he has violated or
threatened to violate Section 15.

 

          For purposes of this section, a “Change in Control” shall be
consistent with regulations issued under Internal Revenue Code section 409A (the
“409A regulations”) and shall mean the occurrence of a “Change in the Ownership
of the Company,” a “Change in Effective Control of the Company”, or a “Change in
the Ownership of a Substantial Portion of the Company’s Assets.” A “Change in
the Ownership of the Company” means the acquisition by any one person, or more
than one person acting as a group, of the outstanding and issued common stock
(“Shares”) of the Company that, together with Shares held by such person or
group, constitutes more than 50 percent of the total voting power of the Shares
of the Company (however, if any one person, or more than one person acting as a
group, is considered to own more than 50 percent of the total voting power of
the Shares of the Company, the acquisition of additional Shares by the same
person or group shall not constitute a Change in the Ownership of the Company).
A “Change in Effective Control of the Company” shall occur if either (i) any one
person, or more than one person acting as a group, acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) ownership of Shares of the Company possessing 35 percent
or more of the total voting power of the Shares of the Company (however, if a
person, or more than one person acting as a group owns 35 percent of the total
fair market value or total voting power of the Shares of the Company, the
acquisition of additional Shares by such person or group shall not constitute a
Change in Effective Control of the Company; or (ii) a majority of members of the
Company’s board of directors is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of
the Company’s board of directors prior to the date of the appointment or
election. A “Change in the Ownership of a Substantial Portion of the Company’s
Assets” occurs when any one person, or more than one person acting as a group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value (“gross fair market value” means the value
of the assets of the Company, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such assets) equal
to or more than 40 percent of the total gross fair market value of all of the
assets of the Company immediately prior to such acquisition or acquisitions. For
purposes of this section, the term “acting as a group” shall have the same
meaning as defined in the 409A regulations. Notwithstanding the foregoing, the
“recombination” described in the Registration Statement of PostRock Energy
Corporation on Form S-4 filed with the Securities and Exchange Commission (the
“SEC”) on October 6, 2009 (Registration No. 333-162366) (the “Recombination”)
shall not be considered a Change of Control for purposes of this Agreement.

 

                      b.         With Cause. The Company may terminate
Employee’s employment under this Agreement at any time for Cause effective
immediately upon Notice of Termination. In the event the Company terminates this
Agreement for Cause (as herein defined), Employee shall only receive Base Salary
accrued but unpaid as of the date of his termination of employment. Employee
shall not be entitled to receive any payments or benefits (including, but not
limited to, Severance Pay or bonuses) from the Company if his employment is
terminated for Cause. For purposes of this

 

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Agreement, “Cause” shall be defined to include, but not be limited to, the
following: (i) any act or omission by Employee in the conduct of his duties that
constitutes gross negligence or willful misconduct; (ii) theft, dishonest acts
or breach of fiduciary duty that materially enrich Employee or materially damage
the Company or conviction of a felony; (iii) any conflict of interest, except
those consented to in writing by the Board of Directors; (iv) any material
failure by Employee to observe Company work rules, policies or procedures; (v)
failure or refusal by Employee to perform his duties and responsibilities
required hereunder, or to carry out reasonable instruction, to the satisfaction
of the Company; (vi) any conduct that is materially detrimental to the
operations, financial condition or reputation of the Company; or (vii) any
material breach of this Agreement by Employee; provided, however, the occurrence
of those events set forth in clauses (i), (iv), (v) or (vii), shall be deemed
“Cause” to the extent and only to the extent that such breach or nonperformance
remains uncorrected for thirty (30) days following Company’s reasonably detailed
written notice to Employee of such breach or nonperformance; provided further,
however, that a repeated breach after notice and cure of any provision of
clauses (i), (iv), (v) or (vii) involving the same or substantially similar
actions or conduct, shall be grounds for termination for “Cause” without any
additional notice from the Company.

 

c.         Employee’s Disability. In the event the Company determines that the
Employee has suffered a disability within the meaning of Section 409A of the
Internal Revenue Code (“Code”), and subject to Employee signing and returning to
the Company an agreement containing a release of claims against the Company, in
a form substantially similar to that included in Exhibit A, attached hereto and
incorporated herein, within twenty-one (21) days following the date of such
determination, without subsequent revocation of the release during the seven-day
period following his execution of the release, Employee shall receive from the
Company, in a lump-sum payment due within sixty (60) days of the effective date
of such disability, the sum equal to Three Hundred Thousand Dollars
($300,000.00), and all compensation and benefits that accrued and vested as of
the date of such disability.

7.          Notice of Termination. Any termination of Employee’s employment by
the Company pursuant to Section 6 or by Employee pursuant to Section 5 shall be
communicated by written Notice of Termination to the other party hereto. Said
Notice shall be deemed to have been duly given when delivered personally or by
overnight delivery, sent via facsimile, or mailed by United States certified
mail, return receipt requested, postage prepaid, addressed as follows:

 

 

If to the Company:

 

 

Quest Resource Corporation

 

2010 Park Avenue, Suite 2750

 

Oklahoma City, Oklahoma 73102

 

Attention: David Lawler (or then current Chief Executive Officer)

 

Facsimile: (405) 840-9897

 

 

If to Employee:

 

 

Eddie LeBlanc

 

210 Park Avenue, Suite 2750

 

Oklahoma City, Oklahoma 73102

 

Facsimile: (405) 702-7490

 

 

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or at such other address as either party may designate in writing to the other.
In the event Employee leaves the employ of the Company, the Company may provide
notification to Employee’s new employer concerning Employee’s rights and
obligations under this Agreement.

 

8.          Company Property. Upon termination of this Agreement for any reason
whatsoever, Employee shall immediately deliver to the Company any and all
Company property, including, without limitation, all Confidential Information,
as such Confidential Information is defined in Section 15, whether such
information was prepared by Employee or by others, and whether such information
exists as hard copy or in electronic form on a Company-issued computer device, a
personal computer device or any other electronic device. All documents, records,
computer programs, electronic data, and tangible items and materials containing
or embodying any Confidential Information, including all copies thereof, whether
prepared by Employee or by others, shall immediately be returned to Company upon
termination of Employee’s employment with Company (voluntary or otherwise), or
at any time upon Company’s request. Employee understands and agrees that
Employee’s obligation to maintain the confidentiality of Confidential
Information remains even after Employee’s employment with Company ends and
continues for so long as such Confidential Information remains not generally
known to the public through no fault or breach of this Agreement by Employee.
From and after termination of this Agreement, Employee shall not represent that
he has any further authority to act as a representative of the Company, in any
capacity.

 

9.          Intellectual Property. Any interest in patents, patent applications,
inventions, copyrights, developments and processes (“Inventions”) which Employee
now or hereafter during the period Employee is employed by the Company may own
or develop relating to the fields in which the Company may then be engaged shall
belong to the Company; and forthwith upon request of the Company, Employee shall
execute all assignments and other documents and take all such other action as
the Company may reasonably request in order to vest in the Company all his
right, title and interest in and to the Inventions free and clear of all liens,
charges and encumbrances.

 

10.        No Conflicts. Employee represents and warrants to the Company that
neither the execution nor delivery of this Agreement, nor the performance of
Employee’s obligations hereunder, will conflict with, or result in a breach of,
any term, condition, or provision of, or constitute a default under, any
obligation, contract, agreement, covenant or instrument to which Employee is a
party or under which Employee is bound, including, without limitation, the
breach by Employee of a fiduciary duty to any former employers.

 

11.        Personnel Policies. The general personnel policies of the Company (as
said policies may exist from time to time) will apply to Employee with the same
force and effect as to any other employee of the Company, except to the extent
such general personnel policies are inconsistent with the terms and provisions
of this Agreement, in which event the terms and provisions of this Agreement
shall control.

 

12.        Compensation Review. The Company will conduct periodic reviews of
Employee and his performance no less frequently than annually. While the Company
currently anticipates that during such reviews, it may consider possible
increases to Base Salary, both Employee and the Company hereby agree that the
Company shall have no obligation to alter or adjust any compensation or benefits
due to Employee pursuant to the terms of this Agreement.

 

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13.        Expense Reimbursement. Employee shall be reimbursed by the Company
for the reasonable and necessary business expenses incurred by Employee in the
discharge of his duties, subject to the Company’s standard policies and
procedures related to expense reimbursement and approval thereof. Any
reimbursement shall be made in accordance with Section 26.

 

14.        Conflict of Interest. Employee shall devote his full time and
attention to the business of the Company and the diligent discharge of the
duties assigned to Employee throughout the term of this Agreement. Unless
consented to by the Board of Directors in writing, Employee will not, directly
or indirectly, have any business interests or investments (whether as principal,
partner, shareholder, director, officer, employee, agent or otherwise) that: (i)
are other than passive investments which do not require Employee’s direct
personal time, attention, or services; or (ii) create any conflict of interest
with the Company or with Employee’s employment by the Company. For purposes of
the foregoing, a conflict of interest shall include, but not be limited to, any
direct or indirect interest in any business or enterprise that is competitive
with the Company or any corporation or business enterprise directly or
indirectly controlling, controlled by or under common control with the Company.
Notwithstanding the foregoing, during the term of the Agreement, Employee may
own up to 1% of the outstanding equity securities of stock in any corporation
which is listed upon a national stock exchange or traded in the over-the-counter
market.

 

15.        Confidentiality; Non-Competition. Company promises to provide to
Employee and Employee acknowledges that he will receive confidential information
such as information relating to the Company’s business strategies and know-how,
the Company’s customers, business prospects and suppliers, business and
marketing plans, customer files and lists, business prospects, sales techniques,
billing files, software, source code, financial information, reports, summaries,
spreadsheets, evaluations, drawings, specifications, seismic data, reserve
reports, prospect analyses, geological and geophysical data, maps, models,
interpretations, and other confidential or proprietary information of the
Company whether in written, graphic, electronic or any other format
(collectively “Confidential Information”). Employee further acknowledges that
the Company will expend considerable amounts of time, money and other assets in
the development of this Confidential Information which is essential to its
business, and Employee acknowledges that his employment by the Company is
conditioned on his promise not to use any Confidential Information or to divulge
any Confidential Information to any person or entity not employed by the Company
without the Company’s prior written approval. Employee, therefore, agrees not to
use, disclose or in any manner reveal to any person, firm, company, corporation
or other entity any of the Confidential Information conveyed to him or in
connection with his employment by the Company prior or subsequent to this
Agreement other than for Employee to carry out his duties under this Agreement.
Anything herein to the contrary notwithstanding, this Agreement shall be
inoperative as to such portions of the Confidential Information which (i) are or
become generally available to the public other than as a result of a disclosure
by Employee, except as part of his duties and responsibilities, (ii) become
available to Employee on a nonconfidential basis from a source, other than the
Company or its representatives, which has represented to Employee (and which
Employee has no reason to disbelieve after due inquiry) that such source is
entitled to disclose it, or (iii) were known to Employee on a nonconfidential
basis prior to disclosure to Employee by the Company or its representatives.

 

          Employee further agrees that for the Initial Term and any additional
Renewal Terms of this Agreement, Employee will not directly or indirectly
(whether through any person, firm, company, corporation or other entity, other
than the Company), do any of the following:

 

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a.     Directly or indirectly, perform services, which are similar to the
services Employee provided to Company, for any business competitive with Company
in the Cherokee Basin.

 

b.    For his own account, for any person, firm, company, corporation or other
entity, other than the Company, or for any other reason, solicit business to the
detriment of the Company or cause agents of any person, firm, company,
corporation or other entity to solicit business, to the detriment of the
Company, of a type similar to that solicited by the Company from or for any
person, firm, company, corporation or other entity who was, at the effective
date of the termination of his employment with the Company, or within a one (1)
year period prior to such termination, a customer of the Company, as disclosed
by the Company’s books and records, or solicit business to the detriment of the
Company from any prospective customer of the Company with whom the Company has
had contact within the one (1) year period prior to such termination as
disclosed by the Company’s books and records. For purposes of this Agreement,
the term “customer” and “prospective customer” means all persons or entities (i)
with whom Employee has had, during the period of Employee’s employment with the
Company, contact with by virtue of Employee’s position with Company or (ii) for
whom Employee has received Confidential Information.

 

c.     In any way, directly or indirectly, whether personally or through agents,
other persons or otherwise, divert or take away or attempt to divert or take
away any of such customers or prospective customers or any of the Company’s
suppliers or business prospects, or otherwise adversely interfere with or
attempt to adversely interfere with the Company’s relations with any of such
customers, prospective customers, business prospects or suppliers.

 

d.    On his own behalf or on behalf of any other person, have any contact with
a person who is, during such time frame, an employee of the Company, for the
purpose of encouraging that person’s leaving such employment. Employee shall
not, in any other manner attempt, directly or indirectly, to hire any employee
of the Company or to influence, induce or encourage any employee of the Company
to leave the employment of the Company.

 

16.        Severability of Restrictive Covenants. It is understood and agreed
that the restrictions imposed by the provisions of the foregoing Sections 14 and
15 and each subsection thereof are separate and severable, and it is the intent
of the parties hereto that in the event the restrictions imposed by said Section
or any subsection should be determined by any court of competent jurisdiction to
be void for any reason whatsoever, the remaining provisions of this Agreement
and the restrictions imposed by the remainder of said Section or subsection
shall remain valid and binding upon the parties. It is also agreed and
understood that in the event any restriction contained in Sections 14 and 15
should be considered by any court of competent jurisdiction to be unenforceable
because unreasonable either in length of time or area to which said restriction
applies, it is the intent of both parties hereto that said court reduce and
reform the provisions thereof so as to apply to limits considered enforceable by
said court.

 

17.        Equitable Remedies. Recognizing that irreparable damage will result
to the Company in the event of any actual breach or threat of any actual breach
of any of the foregoing covenants and assurances of Sections 14 and 15 by
Employee, the Company shall be entitled to an

 

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injunction to be issued by any court of competent jurisdiction enjoining and
restraining Employee and each and every person, firm, company, corporation or
other entity acting in concert or participating with Employee from the
continuation of such actual breach, and in addition thereto, Employee shall pay
to the Company all ascertainable actual damages, including costs and reasonable
attorneys’ fees and expenses, sustained by the Company by reason of the actual
breach of said covenants and assurances.

 

18.        Survival of Representations. The covenants, agreements,
representations and warranties contained in or made by Employee pursuant to this
Agreement shall be for the entire term of the Agreement and shall survive
Employee’s termination of employment, irrespective of any investigation made by
or on behalf of any party.

 

19.        Waiver. Failure of either party to demand strict compliance with any
of the terms, covenants or conditions hereof shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment by
either party of any right or power hereunder at any one time or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.

 

20.        Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. Employee has carefully read and considered the provisions of Sections 14
and 15 and agrees that the restrictions set forth therein, including, but not
limited to, the time period and areas of the restrictions and the scope of
activities restricted are fair and reasonable and are supported by sufficient
and valid consideration, and that these restrictions do not impose any greater
restraint than is necessary to protect the goodwill and other legitimate
business interests of the Company and its affiliated entities, officers,
directors, shareholders and other employees. Employee acknowledges that the
covenants and agreements in Sections 14 and 15 are ancillary to and a part of an
otherwise enforceable agreement entered into at the time these covenants are
made, namely, the agreement concerning provision and confidentiality of
Confidential Information. Employee acknowledges that Employee’s agreement to be
bound by the restrictive covenants set forth in Sections 14 and 15 is a
concurrent and material inducement for the Company (i) to enter into the
ancillary terms of this Agreement, (ii) to initiate and continue the employment
of Employee and (iii) to provide Employee with promises and consideration set
forth in this Agreement. Employee agrees that each ancillary agreement set forth
in this Agreement, is otherwise enforceable and independently sufficient to
support all of the protective covenants in Sections 14 and 15 hereof. Employee
acknowledges that these restrictions will not prevent Employee from obtaining
gainful employment in Employee’s occupation or field of expertise or cause
Employee undue hardship and that there are numerous other employment and
business opportunities available to Employee that are not affected by these
restrictions.

 

21.        Arbitration. Both Employee and Company hereby agree that any and all
claims or controversies between Employee and Company relating to Employee’s
employment with Company, or termination thereof, including claims for breach of
contract, personal injury, tort, employment discrimination (including unlawful
harassment), and any violation of any state of federal law shall be resolved by
final binding arbitration in accordance with the rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof. Employee
understands that this agreement to arbitrate covers any and all claims that
Employee might bring under Title VII, the Americans with Disabilities Act and
the Age Discrimination in Employment Act.

 

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                      a.         Arbitrators. The arbitrators shall be selected
from a panel provided by the American Arbitration Association. Each party shall
select one person to act as arbitrator, and the two arbitrators so selected
shall select a third arbitrator.

 

                      b.         Venue. Any such arbitration shall be conducted
in Dallas, Texas or such other place as may be mutually agreed upon by the
parties.

 

                      c.         Costs. Each party shall bear its own costs,
expenses, and attorneys’ fees. Employee will pay a filing fee in the amount of
the standard filing fee in the federal judicial district in which Employee
works. Company shall pay the remainder of the arbitrators’ expenses and
administrative fees of arbitration.

 

                      d.        Attorney’s Fees. If any party prevails on a
statutory claim that affords the prevailing party attorneys’ fees, then the
arbitrator may award reasonable attorneys’ fees and costs to the prevailing
party.

 

                      e.         Right to Injunctive Relief. Notwithstanding
anything to the contrary contained in this Section, if the Employee breaches, or
threatens to commit a breach of, any of the provisions of Sections 14 and 15 of
this Agreement, Company shall have the right and remedy to seek from any court
of competent jurisdiction specific performance of such provisions or injunctive
relief against any act which would violate any of Sections 14 and 15 of this
Agreement, it being acknowledged and agreed that any such breach or threatened
breach will cause irreparable injury to Company. The parties (i) agree that any
suit, action or legal proceeding permitted by this Section may be brought in the
courts of record of the State of Texas in Dallas County or the court of the
United States, Southern District of Texas; (ii) consent to the jurisdiction of
each such court in any suit, action or proceeding permitted by this Section; and
(iii) waive any objection that they may have to the laying of venue of any such
suit, action or proceeding permitted by this Section in any of such courts.

 

22.        Governing Law; Binding Effect. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas and shall be
binding upon the parties hereto, their heirs, executors, administrators,
successors and assigns.

 

23.        Entire and Final Agreement. This Agreement shall supersede any and
all agreements of employment, oral or written (including correspondence,
memoranda, term sheets, etc.), heretofore existing and contains the entire
agreement of the parties with respect to the subject matter hereof. This
Agreement may not be modified orally, but only by an agreement in writing,
signed by the party against whom the enforcement of any waiver, change,
modification, extension or discharge is sought.

 

24.        Assignment. Neither this Agreement nor any of the rights, obligations
or interests arising hereunder may be assigned by Employee without the prior
written consent of the Company. Neither this Agreement nor any of the rights,
obligations or interests arising hereunder may be assigned by the Company,
without the prior written consent of Employee, to a person other than: (1) an
affiliate of the Company; or (2) any party with which the Company merges or
consolidates, or to whomever the Company may sell all or substantially of its
assets; provided, however, that any such

 

10

 

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affiliate or successor shall expressly assume all of the Company’s obligations
and liabilities to Employee under this Agreement.

 

25.        Section Headings. The section headings contained in this Agreement
are inserted for purposes of convenience only and shall not affect the meaning
or interpretation of this Agreement.

 

26.        Section 409A. It is the intent of the parties that the provisions of
this Agreement comply with Code Section 409A and the Treasury regulations and
guidance issued thereunder. Accordingly, the parties intend that this Agreement
be interpreted and operated consistent with such requirements of Code Section
409A in order to avoid the application of additive taxes under Code Section 409A
to the extent reasonably practicable. Notwithstanding any provision of this
Agreement to the contrary, this Agreement shall not be amended in any manner
that would cause (i) this Agreement or any amounts or benefits payable hereunder
to fail to comply with the requirements of Code Section 409A, to the extent
applicable, or (ii) any amounts or benefits payable hereunder that are not
subject to Code Section 409A to become subject thereto (unless they also are in
compliance therewith), and the provisions of any purported amendment that may
reasonably be expected to result in such non-compliance shall be of no force or
effect with respect to this Agreement.

 

If Employee is a “Specified Employee” (as defined under Code Section 409A) as of
the date of his “Separation from Service” (as defined under Code Section 409A)
as determined by the Company, and any stock of the Company is publicly traded on
an established securities market or otherwise, the payment of any amount under
this Agreement on account of his Separation from Service that is deferred
compensation subject to the provisions of Code Section 409A and not otherwise
excluded from Code Section 409A, shall not be paid until the later of the first
business day that is six months after the date after Employee’s Separation from
Service or the date the payment is otherwise payable under this Agreement (the
“Delay Period”). Upon the expiration of the Delay Period, all payments and
benefits delayed pursuant to this Section 26 (whether they would have otherwise
been payable in a single sum or in installments in the absence of such delay)
shall be paid or reimbursed to Employee in a lump sum, without interest, and any
remaining payments due under this Agreement shall be paid or provided in
accordance with the normal payment dates specified for them herein.

 

All reimbursements and in-kind benefits provided pursuant to this Agreement
shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv)
such that any reimbursements or in-kind benefits will be deemed payable at a
specified time or on a fixed schedule relative to a permissible payment event.
Specifically, (i) the amounts reimbursed and in-kind benefits provided under
this Agreement, other than with respect to medical benefits, during Employee’s
taxable year may not affect the amounts reimbursed or in-kind benefits provided
in any other taxable year, (ii) the reimbursement of an eligible expense shall
be made on or before the last day of Employee’s taxable year following the
taxable year in which the expense was incurred, and (iii) the right to
reimbursement or an in-kind benefit is not subject to liquidation or exchange
for another benefit.

 

 

27.

Section 280G.

 

a.         General Rule. Notwithstanding any contrary provisions in this
Agreement (but subject to subsection (c) of this Section 27), if all or any
portion of the amounts and benefits payable under this Agreement, either alone
or together with other amounts and benefits that

 

11

 

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Employee receives or is entitled to receive from the Company and any of its
affiliates, would constitute a “parachute payment” within the meaning of Code
Section 280G, then the Company shall automatically reduce (the “Reduction”)
Employee’s amounts and benefits payable under this Agreement to the minimum
extent necessary to prevent any portion thereof (after the Reduction) from being
subject to the excise tax imposed by Code Section 4999, but only if, by reason
of the Reduction, the Net After-Tax Benefit shall exceed the Net After-Tax
Benefit if such Reduction were not made. “Net After-Tax Benefit” to Employee for
these purposes shall mean the sum of (i) the total of (A) the amounts and
benefits payable to Employee under this Agreement that would constitute a
“parachute payment” within the meaning of Code Section 280G, plus (B) all other
amounts and benefits that Employee receives or is then entitled to receive from
the Company and any of its affiliate that would constitute a “parachute payment”
within the meaning of Code Section 280G, less (ii) the amount of federal income
taxes payable with respect to the amounts and benefits described in clause (i)
above, calculated at the maximum marginal income tax rate for the current year,
less (iii) the amount of excise taxes imposed with respect to the amounts and
benefits described in clause (i) above by Code Section 4999. The Reduction shall
be made first from the non-cash benefits payable under this Agreement that are
not subject to Code Section 409A and that are not stock options or other
equity-based benefits that are excluded from Code Section 409A; second, to the
extent necessary, from Employee’s other amounts and benefits payable under this
Agreement, other than the Severance Pay, that provide Employee the greatest
economic benefit (and continuing from such greatest benefit, based on decreasing
economic benefit, to the least economic benefit) and to the extent any such
benefits are economically equivalent with each other, each shall be reduced pro
rata; and third, to the extent necessary, from Employee’s Severance Pay with any
such reduction being first made from the amount payable at the latest date in
time (and continuing from such latest date in reverse chronological order).

 

b.         Determinations. All determinations required to be made under this
Section 27, including the Net After-Tax Benefit and amounts and benefits subject
to the Reduction, shall be made by a certified public accounting firm that is
selected by the Company (the “Accounting Firm”), which may be the Company’s
independent auditors. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control or the Accounting Firm declines or is unable to serve, Employee shall
appoint another certified public accounting firm, which is reasonably agreed to
by the Company, to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. The
determinations by the Accounting Firm shall be binding upon the Company and
Employee.

 

c.         Gross-Up Payment Exception. The foregoing notwithstanding, if
Employee is entitled to a Gross-Up Payment under another agreement, plan,
program or policy (if any) of the Company or any of its affiliates, then there
shall be no Reduction under this Section 27. A “Gross-Up Payment” means a
payment by the Company or its affiliate to cover the excise tax imposed under
Code Section 4999 on the amounts and benefits payable by the Company and its
affiliates under this Agreement and all other agreements, plans, programs or
policies of the Company and any of its affiliates, along with federal, state and
local income taxes and any other taxes imposed as a result of such Gross-Up
Payment).

 

 

28.

Signature Blocks.

 

 

12

 

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                      IN WITNESS WHEREOF, the Company has caused this Agreement
to be executed on its behalf and Employee has hereunto set his hand the day and
year first above written.

 

“Employee”

 

“Company”

 

 

 

 

 

QUEST RESOURCE CORPORATION

 

 

 

/s/ Eddie LeBlanc

 

 

Eddie LeBlanc

 

By:

/s/ David Lawler

 

 

 

David Lawler

 

 

Title:

Chief Executive Officer

 

 

13

 

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EXHIBIT A

RELEASE AGREEMENT

 

THIS RELEASE AGREEMENT (“Release”) is entered into effective the date signed
below, by and between EDDIE LEBLANC (“Employee”) and QUEST RESOURCE CORPORATION
(“Company”).

 

WHEREAS, the Company has determined that Employee’s employment with the Company
should end effective ________________________ (“Termination Date”); and

 

WHEREAS, the Company and Employee desire to fully and finally resolve all issues
which might relate to Employee’s employment with the Company.

 

NOW THEREFORE, in consideration of the mutual promises set forth below, it is
hereby agreed by and between Employee and Company as follows:

 

 

A.

Payment to Employee. The Company agrees to pay Employee the sum of $________
(the “Payment”) as severance pay, less all applicable withholdings for state,
federal and FICA taxes. The Payment shall be made in such form as is set forth
in Section 5 or Section 6 of Employee’s Employment Agreement (as defined below).
Employee acknowledges that he is not entitled to the Payment unless he executes
this Release.

 

 

B.

Employee’s Release of Liability. Employee agrees to the following general
release:

 

          (a)       Except for claims available to Employee for recovery under a
directors and officers insurance or indemnification policy, Employee does hereby
release, waive and forever discharge the Company, it agents, owners, employees,
officers, directors, stockholders, representatives and all related companies,
divisions, subsidiaries, parent and affiliated companies and any employee
benefit plan or trust (whether or not subject to the Employee Retirement Income
Security Act of 1974 (“ERISA”)) sponsored or contributed to by the Company or
any of its affiliates and all fiduciaries thereto (collectively or individually
the “Released Parties”), from all claims, liabilities, demands, and causes of
action, whether known or unknown, fixed or contingent, including claims for
wages, damages (whether or not liquidated) and/or attorneys’ fees and costs
(collectively “Claims”), which Employee may have or claim to have against the
Released Parties in any way arising out of Employee’s employment with the
Company and/or the Employment Agreement or that otherwise may exist on the date
this Release is executed, including, but not limited to Claims arising under any
purported contract, written or oral, express or implied; Claims arising under
any tort theory of recovery; Claims arising under any federal, state, and local
laws prohibiting employment discrimination on account of race, religion, color,
sex, national origin, age, and/or disability, including but not limited to,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act (“ADEA”), the Rehabilitation Act of 1973, the
Americans with Disabilities Act of 1991 (“ADA”), the Family and Medical Leave
Act of 1993, the Fair Labor Standards Act, ERISA, the Oklahoma
Anti-Discrimination Act (all

 

A-1

 

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as amended from time to time) and any other federal, state or local law,
statute, regulation, code or ordinance; and Claims arising in any other way,
directly or indirectly, and without regard to the legal theory or form of action
underlying such Claims, arising or alleged to arise out of Employee’s employment
by the Company and/or the Employment Agreement or that otherwise may exist on
the date this Release is executed against the Released Parties, including any
Claims brought on behalf of employee or as a member of any class, as allowed by
law.

 

(b)       Employee hereby represents, warrants, and agrees that Employee has not
initiated any legal proceedings, charges, complaints, or other actions in any
court or administrative agency regarding the Claims released herein. Employee
further agrees to release, waive, relinquish and forego all legal relief,
equitable relief, statutory relief, reinstatement, back pay, front pay and any
other damages, benefits, remedies or relief that Employee could receive from
actions or suits filed, charged, instituted, or pursued by any agency or
commission based upon or arising out of the matters which are released and
waived by this Release.

 

(c)       Employee specifically understands and agrees that Employee is
releasing all claims, damages, and causes of action that Employee may have under
any local, state, federal or common law meant to protect workers from age
discrimination in their employment relationships including, without limitation,
the Age Discrimination in Employment Act, as amended, the Oklahoma
Anti-Discrimination Act, and any other federal, state or local laws prohibiting
age discrimination in employment, whether known or not, arising, directly or
indirectly out of Employee’s employment with the Company and/or the termination
of Employee’s employment with the Company. Employee further acknowledges that he
is being hereby advised that this waiver and release does not apply to any
rights or claims that may arise after the execution date of this Release.

C.  Confidentiality of this Release. Employee agrees to keep the terms, amount
and fact of this Release confidential. Employee will not disclose any
information concerning this Release to anyone other than his immediate family,
tax advisor and attorney, each of whom will be informed and bound by this
confidentiality provision. Employee acknowledges that revealing any information
regarding the terms of his separation from employment or discussing the terms of
this Release may cause the Company injury and damage and will constitute a
breach of his obligations under the Release and will cause a forfeiture of his
rights hereunder.

 

D.  Employee Agreement. The parties acknowledge that Employee’s obligations
under the Employment Agreement entered into between Company and Employee dated
October __, 2009 (the “Employment Agreement”) remain in full force and effect.
This Release and the Employment Agreement constitute the entire agreement
between Employee and the Company. This Release may not be modified orally, but
only by an agreement in writing, signed by the party against whom the
enforcement of any waiver, change, modification, extension or discharge is
sought.

 

E.  Time to Review. Employee acknowledges that he is hereby advised to consult
with an attorney prior to executing this Release and has been given the
opportunity to consider and review this Release with counsel of his choice for a
reasonable period of time, up to twenty-

 

A-2

 

--------------------------------------------------------------------------------

one (21) days, and that he understands his respective rights and obligations
pursuant to this Release. Employee further declares he enters into this Release
freely, voluntarily and without any pressure or coercion from any person or
entity, including, but not limited to, the Company or any of its
representatives.

 

F.  Time to Revoke. Employee understands that he has the right to revoke this
Release within a period of seven (7) days following his signing this Release and
that this Release shall not become effective or enforceable, nor shall he
receive the Payment, until the seven-day revocation period has ended.

 

G.  Governing Law; Binding Effect. This Release is made and entered into in the
State of Texas and shall be interpreted, enforced and governed by the laws of
the State of Texas, and shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns.

 

H.  Non-Admission of Liability. Employee understands and agrees that the Company
denies that he has cognizable claims against it. He further understands and
agrees that neither this Release nor any action taken hereunder is to be
construed as an admission by the Company of violation of any local, state,
federal or common law. In fact, Employee understands that the Company expressly
denies any such violation.

 

I.   Severability. The invalidity or unenforceability of any provision or
provisions of this Release shall not affect the validity or enforceability of
any other provision of this Release, which shall remain in full force and
effect.

 

J.   Supersedes. To the extent there are any conflicts or inconsistencies
between this Release and the terms and conditions contained within the
Employment Agreement or any other prior agreement between the Parties, the terms
of this Release supersedes the prior agreement(s) and governs.

 

K.  Entire Agreement. In signing this Release, the Parties understand that the
terms hereof are contractual and not merely a recital, and that they are not
relying upon any statement or representation made by the other party (other than
those reflected in this Release), but, instead, they are relying solely upon
their own judgment and/or the advice of their attorney. The Parties acknowledge
that this Release is the entire agreement of the Parties regarding this matter.

 

          IN WITNESS WHEREOF, the Company has caused this Release to be executed
on its behalf to be effective the date signed below.

 

 

 

QUEST RESOURCE CORPORATION

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

A-3

 

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I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE TERMS OF THIS RELEASE, INCLUDING
THE RELEASE OF CLAIMS HEREIN, AND AM HEREBY ADVISED BY THE COMPANY TO CONSULT
WITH LEGAL COUNSEL PRIOR TO EXECUTING THIS RELEASE AND HAVE HAD SUFFICIENT
OPPORTUNITY TO DO SO TO THE EXTENT I DEEMED SUCH CONSULTATION NECESSARY AND I
VOLUNTARILY ACCEPT AND AGREE TO THE TERMS OF THIS RELEASE, INCLUDING THE RELEASE
OF CLAIMS HEREIN.

 

 

 

EMPLOYEE

 

 

 

Dated:

 

 

 

 

 

 

Eddie LeBlanc

 

 

 

 

 

 

 

Current Address:

 

 

 

 

 

Current Telephone No.

 

 

 

 

A-4