Exhibit 10.20

POSTROCK ENERGY CORPORATION

2010 LONG-TERM INCENTIVE PLAN

STOCK OPTION AWARD AGREEMENT

 

    Date of Grant:    [            ]     Number of Shares Subject to Option:   
[            ]     Option Price:    [$          ]     Expiration Date:   
[            ]

This Option Award Agreement (the “Agreement”) dated [            ], 20        ,
is made by and between PostRock Energy Corporation, a Delaware corporation (the
“Company”), and [            ] (“Participant”).

RECITALS:

A. The Company established the 2010 Long-Term Incentive Plan (the “Plan”) under
which the Company may grant eligible employees of the Company and its
Subsidiaries and non-employee directors of the Company certain equity-based
awards.

B. Participant is an eligible employee of the Company or one of its Subsidiaries
or a non-employee director of the Company and the Committee has elected to grant
to Participant an Option under the Plan pursuant to and in accordance with this
Agreement.

AGREEMENT:

In consideration of the mutual premises and covenants contained herein and other
good and valuable consideration paid by Recipient to the Company, the Company
and Recipient agree as follows:

Section 1. Incorporation of Plan.

All provisions of this Agreement and the rights of Participant hereunder are
subject in all respects to the provisions of the Plan and the powers of the Plan
Committee therein provided. Capitalized terms used in this Agreement but not
defined herein shall have the meaning set forth in the Plan.

Section 2. Grant of Option; Expiration.

Subject to the conditions and restrictions set forth in this Agreement and the
Plan, the Company hereby grants to Participant an Option with respect to the
number of Shares identified above opposite the heading “Number of Shares Subject
to Option” (the “Option”) at the exercise price (the “Option Price”) provided
above. The Option is a nonqualified stock option and will continue in effect
until the date that is 6 years from the Date of Grant (the “Expiration Date”),
subject to earlier termination in accordance with this Agreement or the Plan. If
not exercised prior to the Expiration Date, the Option will be forfeited.

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Section 3. Vesting; No Assignment of Rights.

Subject to any exceptions listed in this Agreement or in the Plan, the Option
shall become exercisable on the respective vesting date (the “Vesting Date”)
with respect to the number of Shares and in accordance with the schedule set
forth below, provided Participant is an employee of the Company or one of its
Subsidiaries or a non-employee director of the Company from the Grant Date
through the applicable Vesting Date:

 

Anniversary of Date of Grant

(Vesting Date)

   Number of Shares

First Anniversary

   [            ] Shares

During Participant’s lifetime, the Option may be exercised only by Participant.
Subject to any exceptions set forth in this Agreement or in the Plan, the Option
or the rights relating thereto may not be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by Participant. Any
attempt to assign, alienate, pledge, attach, sell, or otherwise transfer or
encumber the Option or the rights relating thereto shall be null and void.

Section 4. Forfeiture Prior to Vesting; Period of Exercisability.

If Participant has a Termination of Affiliation with the Company or any of its
Subsidiaries for any reason (including due to Disability or death) before one or
more of the Vesting Date for the Option, Participant will thereupon immediately
forfeit all unvested portions of the Option. Section 5.4(b) of the Plan shall
not apply; any unvested portion of the Option under this Agreement will
immediately be forfeited upon Participant’s Termination of Affiliation due to
Disability or death. Upon such forfeiture, Participant shall have no further
rights under this Agreement (except with respect to any periods of
exercisability for any vested portions of the Option as set out under this
Agreement). For purposes of this Agreement, transfer of employment between the
Company and any of its Subsidiaries does not constitute a Termination of
Affiliation.

Upon Termination of Affiliation other than due to Disability or death,
Participant will be entitled to exercise any vested portion of the Option at any
time prior to the Expiration Date or the expiration of 90 days after the date of
the Termination of Affiliation, whichever is the shorter period. Upon
Termination of Affiliation due to Disability or death, Participant, or in the
event of Participant’s death, Participant’s beneficiary, will be entitled to
exercise any vested portion of the Option at any time prior to the Expiration
Date or the expiration of one year after the date of the Termination of
Affiliation, whichever is the shorter period.

 

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Section 5. Exercise of Option.

The exercise of the Option must be accompanied by full payment of the Option
Price for the Shares being acquired by: (i) cash, (ii) a check acceptable to the
Company, (iii) the delivery of a number of already-owned Shares having a Fair
Market Value equal to such Exercise Price, (iv) a “cashless broker exercise” of
the Option through any procedures established or approved by the Plan Committee
with respect thereto, or (v) any combination of the foregoing approved by the
Plan Committee. No Shares will be issued until the Option Price has been paid.

Section 6. Dividends and Voting Rights.

Unless and until Shares have been delivered pursuant to this Agreement,
Participant (a) is not entitled to receive any dividends or dividend
equivalents, whether paid in cash or stock, or any other distributions declared
on or with respect to actual Shares and (b) does not have nor may Participant
exercise any voting rights with respect to any of the Shares.

Section 7. Designation of Beneficiary.

Participant may designate a person or persons to exercise and receive, in the
event of Participant’s death, any Shares resulting from the vesting or exercise
of the Option or other property then or thereafter distributable relating to
such Shares. Such designation may be made either in the space indicated at the
end of this Agreement or in a written instrument delivered to the Company or its
delegate and may be revoked only by a written instrument similarly delivered. If
Participant fails effectively to designate a beneficiary, the legal
representative of the estate of Participant will be deemed to be the beneficiary
of Participant with respect to any such Shares or other property and will have
the rights to exercise the Option as described herein.

Section 8. Tax Withholding.

To the extent that grant, vesting or exercise of the Option granted hereunder
may obligate the Company to pay withholding taxes on behalf of Participant, the
Company shall have the power to withhold, or require Participant to remit to the
Company, an amount sufficient to satisfy any such federal, state, local or
foreign withholding tax requirements.

Section 9. No Right to Continued Employment.

If the Participant is an employee of the Company or one of its Subsidiaries,
nothing in this Agreement shall interfere with or limit in any way the right of
the Company or its Subsidiaries to terminate Participant’s employment at any
time, nor confer upon Participant the right to continue in the employ of the
Company or one of its Subsidiaries.

Section 10. Entire Agreement; Amendment.

This Agreement constitutes the entire agreement of the parties with regard to
the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
the Option granted hereby. All prior understandings and agreements, if any,
among the parties hereto relating to the subject matter hereof are hereby null
and void and of no further force and effect. This Agreement may be amended only
by a writing executed by the parties hereto which specifically states that it is
an amendment of this Agreement.

 

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Section 11. Governing Law.

This Agreement will be governed by and construed in accordance with the laws of
the State of Delaware, excluding its conflict of laws provisions.

Section 12. Section 409A.

The Option granted hereunder and the distribution of the Shares upon exercise of
the Option are exempt from the requirements of Section 409A of the Code as a
stock option, and this Agreement shall be interpreted and administered in a
manner consistent with that intent.

This Agreement has been executed and delivered by the parties hereto effective
the day and year first above written.

 

POSTROCK ENERGY CORPORATION By:  

 

  Name: [            ]   Title:   [            ]

 

PARTICIPANT

 

 

 

 

    NAME

 

Designation of Beneficiary

    (Relationship to Recipient)        

 

    (Name of Beneficiary)    

 

    (Street Address)    

 

    (City, State, Zip Code)

 

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