Document:

exv10w1

 

    Exhibit 10.1

 

    NOBLE
    ENERGY, INC.

    

 

    1992
    STOCK OPTION AND RESTRICTED STOCK PLAN

    

    (As
    Amended Through April 24, 2007)

 

		
	
    Section 1.  
	
    Purpose

 

    The purpose of this Plan is to assist Noble Energy, Inc., a
    Delaware corporation formerly known as Noble Affiliates, Inc.,
    in attracting and retaining, as officers and key employees of
    the Company and its Affiliates, persons of training, experience
    and ability and to furnish additional incentive to such persons
    by encouraging them to become owners of Shares of the
    Company’s capital stock, by granting to such persons
    Incentive Options, Nonqualified Options, Restricted Stock, or
    any combination of the foregoing.

 

		
	
    Section 2.  
	
    Definitions

 

    Unless the context otherwise requires, the following words as
    used herein shall have the following meanings:

 

    (a) “Affiliate” means any corporation (other than
    the Company) in any unbroken chain of corporations
    (i) beginning with the Company if, at the time of the
    granting of the Option or award of Restricted Stock, each of the
    corporations other than the last corporation in the unbroken
    chain owns stock possessing 50 percent or more of the total
    combined voting power of all classes of stock in one of the
    other corporations in such chain, or (ii) ending with the
    Company if, at the time of the granting of the Option or award
    of Restricted Stock, each of the corporations, other than the
    Company, owns stock possessing 50 percent or more of the
    total combined voting power of all classes of stock in one of
    the other corporations in such chain.

 

    (b) “Agreement” means the written agreement
    (i) between the Company and the Optionee evidencing the
    Option and any SARs that relate to such Option granted by the
    Company and the understanding of the parties with respect
    thereto or (ii) between the Company and a recipient of
    Restricted Stock evidencing the restrictions, terms and
    conditions applicable to such award of Restricted Stock and the
    understanding of the parties with respect thereto.

 

    (c) “Board” means the Board of Directors of the
    Company as the same may be constituted from time to time.

 

    (d) “Code” means the Internal Revenue Code of
    1986, as amended.

 

    (e) “Committee” means the Committee provided for
    in Section 3 of the Plan as the same may be constituted
    from time to time.

 

    (f) “Company” means Noble Energy, Inc., a
    Delaware corporation.

 

    (g) “Corporate Transaction” shall have the
    meaning as defined in Section 8 of the Plan.

 

    (h) “Exchange Act” means the Securities Exchange
    Act of 1934, as amended.

 

    (i) “Fair Market Value” means the fair market
    value per Share as determined by the Committee in good faith;
    provided, however, that if a Share is listed or admitted to
    trading on a securities exchange registered under the Exchange
    Act, the Fair Market Value per Share shall be the average of the
    reported high and low sales price on the date in question (or if
    there was no reported sale on such date, on the last preceding
    date on which any reported sale occurred) on the principal
    securities exchange on which such Share is listed or admitted to
    trading, or if a Share is not listed or admitted to trading on
    any such exchange but is listed as a national market security on
    the National Association of Securities Dealers, Inc. Automated
    Quotations System (“NASDAQ”) or any similar system
    then in use, the Fair Market Value per Share shall be the
    average of the reported high and low sales price on the date in
    question (or if there was no reported sale on such date, on the
    last preceding date on which any reported sale occurred) on such
    system, or if a Share is not listed or admitted to trading on
    any such exchange and is not listed as a national market
    security on NASDAQ but is quoted on NASDAQ or any similar system
    then in use, the Fair Market Value per Share shall be the
    average of the closing high bid and low

    

    1

 

    asked quotations on such system for such Share on the date in
    question. For purposes of valuing Shares to be made subject to
    Incentive Options, the Fair Market Value per Share shall be
    determined without regard to any restriction other than one
    which, by its terms, will never lapse.

 

    (j) “Incentive Option” means an Option that is
    intended to satisfy the requirements of Section 422(b) of
    the Code and Section 17 of the Plan.

 

    (k) “Nonqualified Option” means an Option that
    does not qualify as a statutory stock option under
    Section 422 or 423 of the Code.

 

    (l) “Non-Employee Director” means a director of
    the Company who satisfies the definition thereof under
    Rule 16b-3
    promulgated under the Exchange Act.

 

    (m) “Option” means an option to purchase one or
    more Shares granted under and pursuant to the Plan. Such Option
    may be either an Incentive Option or a Nonqualified Option.

 

    (n) “Optionee” means a person who has been
    granted an Option and who has executed an Agreement with the
    Company.

 

    (o) “Outside Director” means a director of the
    Company who is an outside director within the meaning of
    Section 162(m) of the Code and the regulations promulgated
    thereunder.

 

    (p) “Plan” means this Noble Energy, Inc. 1992
    Stock Option and Restricted Stock Plan, as amended from time to
    time.

 

    (q) “Restricted Stock” means Shares issued or
    transferred pursuant to Section 20 of the Plan.

 

    (r) “Retirement” means a termination of
    employment with the Company or an Affiliate either (i) on a
    voluntary basis by a person who (A) is at least
    55 years of age with five years of credited service with
    the Company or one or more Affiliates or (B) has at least
    20 years of credited service with the Company or one or
    more Affiliates, immediately prior to such termination of
    employment or (ii) otherwise with the written consent of
    the Committee in its sole discretion.

 

    (s) “SARs” means stock appreciation rights
    granted pursuant to Section 7 of the Plan.

 

    (t) “Securities Act” means the Securities Act of
    1933, as amended.

 

    (u) “Share” means a share of the Company’s
    present common stock, par value
    $3.331/3
    per share, and any share or shares of capital stock or other
    securities of the Company hereafter issued or issuable in
    respect of or in substitution or exchange for each such present
    share. Such Shares may be unissued or reacquired Shares, as the
    Board, in its sole and absolute discretion, shall from time to
    time determine.

 

		
	
    Section 3.  
	
    Administration

 

    The Plan shall be administered by, and the decisions concerning
    the Plan shall be made solely by, a Committee of two or more
    directors of the Company, all of whom are (a) Non-Employee
    Directors, and (b) not later than immediately after the
    first meeting of stockholders of the Company at which its
    directors are elected that occurs after December 31, 1996,
    Outside Directors. Each member of the Committee shall be
    appointed by and shall serve at the pleasure of the Board. The
    Board shall have the sole continuing authority to appoint
    members of the Committee. In making grants or awards, the
    Committee shall take into consideration the contribution the
    person has made or may make to the success of the Company or its
    Affiliates and such other considerations as the Board may from
    time to time specify.

 

    The Committee shall elect one of its members as its chairman and
    shall hold its meetings at such times and places as it may
    determine. A majority of the members of the Committee shall
    constitute a quorum. All decisions and determinations of the
    Committee shall be made by the majority vote or decision of the
    members present at any meeting at which a quorum is present;
    provided, however, that any decision or determination reduced to
    writing and signed by all members of the Committee shall be as
    fully effective as if it had been made by a majority vote or
    decision at a meeting duly called and held. The Committee may
    appoint a secretary (who need not be a member of the Committee)
    who shall keep minutes of its meetings. The Committee may make
    any rules and regulations for the

    

    2

 

    conduct of its business that are not inconsistent with the
    express provisions of the Plan, the bylaws or certificate of
    incorporation of the Company or any resolutions of the Board.

 

    All questions of interpretation or application of the Plan, or
    of a grant of an Option and any SARs that relate to such Option
    or an award of Restricted Stock, including questions of
    interpretation or application of an Agreement, shall be subject
    to the determination of the Committee, which determination shall
    be final and binding upon all parties.

 

    Subject to the express provisions of the Plan, the Committee
    shall have the authority, in its sole and absolute discretion,
    (a) to adopt, amend or rescind administrative and
    interpretive rules and regulations relating to the Plan;
    (b) to construe the Plan; (c) to make all other
    determinations necessary or advisable for administering the
    Plan; (d) to determine the terms and provisions of the
    respective Agreements (which need not be identical), including
    provisions defining or otherwise relating to (i) the term
    and the period or periods and extent of exercisability of the
    Options, (ii) the extent to which the transferability of
    Shares issued upon exercise of Options or any SARs that relate
    to such Options is restricted, (iii) the effect of
    termination of employment upon the exercisability of the
    Options, and (iv) the effect of approved leaves of absence
    (consistent with any applicable regulations of the Internal
    Revenue Service) upon the exercisability of such Options;
    (e) subject to Sections 9 and 11 of the Plan, to
    accelerate, for any reason, regardless of whether the Agreement
    so provides, the time of exercisability of any Option and any
    SARs that relate to such Option that have been granted or the
    time of the lapsing of restrictions on Restricted Stock;
    (f) to construe the respective Agreements; and (g) to
    exercise the powers conferred on the Committee under the Plan.
    The Board may correct any defect or supply any omission or
    reconcile any inconsistency in the Plan in the manner and to the
    extent it shall deem expedient to carry it into effect, and it
    shall be the sole and final judge of such expediency. The
    determinations of the Committee or Board, as the case may be, on
    the matters referred to in this Section 3 shall be final
    and conclusive.

 

		
	
    Section 4.  
	
    Shares Subject
    to the Plan

 

    (a) The total number of Shares that may be purchased
    pursuant to Options, issued or transferred pursuant to the
    exercise of SARs or awarded as Restricted Stock shall not exceed
    a maximum of 22,000,000 in the aggregate, and the total number
    of shares for which Options and SARs may be granted, and which
    may be awarded as Restricted Stock, to any one person during a
    calendar year is 400,000 in the aggregate; provided that each
    such maximum number of Shares shall be increased or decreased as
    provided in Section 13 of the Plan.

 

    (b) At any time and from time to time after the Plan takes
    effect, the Committee, pursuant to the provisions herein set
    forth, may grant Options and any SARs that relate to such
    Options and award Restricted Stock until the maximum number of
    Shares shall be exhausted or the Plan shall be sooner
    terminated; provided, however, that no Incentive Option and any
    SARs that relate to such Option shall be granted after
    December 9, 2006.

 

    (c) Shares subject to an Option that expires or terminates
    prior to exercise and Shares that had been previously awarded as
    Restricted Stock that have since been forfeited shall be
    available for further grant of Options or award as Restricted
    Stock. No Option shall be granted and no Restricted Stock shall
    be awarded if the number of Shares for which Options have been
    granted and which pursuant to this Section are not again
    available for Option grant, plus the number of Shares that have
    been awarded as Restricted Stock, would, if such Option were
    granted or such Restricted Stock were awarded, exceed 22,000,000.

 

    (d) Any Shares withheld pursuant to Section 19(c) of
    the Plan shall not be available after such withholding for being
    optioned or awarded pursuant to the provisions hereof.

 

    (e) Unless the Shares awarded as Restricted Stock are
    Shares that have been reacquired by the Company as treasury
    shares, Restricted Stock shall be awarded only for services
    actually rendered, as determined by the Committee.

 

		
	
    Section 5.  
	
    Eligibility

 

    The persons who shall be eligible to receive grants of Options
    and any SARs that relate to such Options, and to receive awards
    of Restricted Stock, shall be regular salaried officers or other
    employees of the Company or one or more of its Affiliates.

    

    3

 

 

    Section 6.
    Grant of Options

 

    (a) From time to time while the Plan is in effect, the
    Committee may, in its sole and absolute discretion, select from
    among the persons eligible to receive a grant of Options under
    the Plan (including persons who have already received such
    grants of Options) such one or more of them as in the opinion of
    the Committee should be granted Options. The Committee shall
    thereupon, likewise in its sole and absolute discretion,
    determine the number of Shares to be allotted for option to each
    person so selected.

 

    (b) Each person so selected shall be offered an Option to
    purchase the number of Shares so allotted to him, upon such
    terms and conditions, consistent with the provisions of the
    Plan, as the Committee may specify. Each such person shall have
    a reasonable period of time, to be fixed by the Committee,
    within which to accept or reject the proffered Option. Failure
    to accept within the period so fixed may be treated as a
    rejection.

 

    (c) Each person who accepts an Option offered to him shall
    enter into an Agreement with the Company, in such form as the
    Committee may prescribe, setting forth the terms and conditions
    of the Option, whereupon such person shall become a participant
    in the Plan. In the event a person is granted both one or more
    Incentive Options and one or more Nonqualified Options, such
    grants shall be evidenced by separate Agreements, one for each
    Incentive Option grant and one for each Nonqualified Option
    grant. The date on which the Committee completes all action
    constituting an offer of an Option to a person, including the
    specification of the number of Shares to be subject to the
    Option, shall constitute the date on which the Option covered by
    such Agreement is granted. In no event, however, shall an
    Optionee gain any rights in addition to those specified by the
    Committee in its grant, regardless of the time that may pass
    between the grant of the Option and the actual signing of the
    Agreement by the Company and the Optionee.

 

    (d) Each Agreement that includes SARs in addition to an
    Option shall comply with the provisions of Section 7 of the
    Plan.

 

		
	
    Section 7.  
	
    Grant of
    SARs

 

    The Committee may from time to time grant SARs in conjunction
    with all or any portion of any Option either (i) at the
    time of the initial Option grant (not including any subsequent
    modification that may be treated as a new grant of an Incentive
    Option for purposes of Section 424(h) of the Code) or
    (ii) with respect to Nonqualified Options, at any time
    after the initial Option grant while the Nonqualified Option is
    still outstanding. SARs shall not be granted other than in
    conjunction with an Option granted hereunder.

 

    SARs granted hereunder shall comply with the following
    conditions and also with the terms of the Agreement governing
    the Option in conjunction with which they are granted:

 

    (a) The SAR shall expire no later than the expiration of
    the underlying Option.

 

    (b) Upon the exercise of an SAR, the Optionee shall be
    entitled to receive payment equal to the excess of the aggregate
    Fair Market Value of the Shares with respect to which the SAR is
    then being exercised (determined as of the date of such
    exercise) over the aggregate purchase price of such Shares as
    provided in the related Option. Payment may be made in Shares,
    valued at their Fair Market Value on the date of exercise, or in
    cash, or partly in Shares and partly in cash, as determined by
    the Committee in its sole and absolute discretion.

 

    (c) SARs shall be exercisable (i) only at such time or
    times and only to the extent that the Option to which they
    relate shall be exercisable, (ii) only when the Fair Market
    Value of the Shares subject to the related Option exceeds the
    purchase price of the Shares as provided in the related Option,
    and (iii) only upon surrender of the related Option or any
    portion thereof with respect to the Shares for which the SARs
    are then being exercised.

 

    (d) Upon exercise of an SAR, a corresponding number of
    Shares subject to option under the related Option shall be
    canceled. Such canceled Shares shall be charged against the
    Shares reserved for the Plan, as provided in Section 4 of
    the Plan, as if the Option had been exercised to such extent and
    shall not be available for future Option grants or Restricted
    Stock awards hereunder.

    

    4

 

 

    Section 8.  Option
    Price

 

    The option price for each Share covered by an Incentive Option
    shall not be less than the greater of (a) the par value of
    such Share or (b) the Fair Market Value of such Share at
    the time such Option is granted. The option price for each Share
    covered by a Nonqualified Option shall not be less than the
    greater of (a) the par value of such Share or
    (b) 100 percent of the Fair Market Value of such Share
    at the time the Option is granted. Notwithstanding the two
    immediately preceding sentences, if the Company or an Affiliate
    agrees to substitute a new Option under the Plan for an old
    Option, or to assume an old Option, by reason of a corporate
    merger, consolidation, acquisition of property or stock,
    separation, reorganization, or liquidation (any of such events
    being referred to herein as a “Corporate
    Transaction”), the option price of the Shares covered by
    each such new Option or assumed Option may be other than the
    Fair Market Value of the Shares at the time the Option is
    granted as determined by reference to a formula, established at
    the time of the Corporate Transaction, which will give effect to
    such substitution or assumption; provided, however, in no event
    shall:

 

    (a) the excess of the aggregate Fair Market Value of the
    Shares subject to the Option immediately after the substitution
    or assumption over the aggregate option price of such Shares be
    more than the excess of the aggregate Fair Market Value of all
    Shares subject to the Option immediately prior to the
    substitution or assumption over the aggregate option price of
    such Shares;

 

    (b) in the case of an Incentive Option, the new Option or
    the assumption of the old Option give the Optionee additional
    benefits that he would not have under the old Option; or

 

    (c) the ratio of the option price to the Fair Market Value
    of the stock subject to the Option immediately after the
    substitution or assumption be more favorable to the Optionee
    than the ratio of the option price to the Fair Market Value of
    the stock subject to the old Option immediately prior to such
    substitution or assumption, on a Share by Share basis.

 

    Notwithstanding the above, the provisions of this Section 8
    with respect to the option price in the event of a Corporate
    Transaction shall, in the case of an Incentive Option, be
    subject to the requirements of Section 424(a) of the Code
    and the Treasury regulations and revenue rulings promulgated
    thereunder. In the case of an Incentive Option, in the event of
    a conflict between the terms of this Section 8 and the
    above cited statute, regulations and rulings, or in the event of
    an omission in this Section 8 of a provision required by
    said laws, the latter shall control in all respects and are
    hereby incorporated herein by reference as if set out at length.

 

    Section 9.  Option
    Period and Terms of Exercise

 

    (a) Each Option shall be exercisable during such period of
    time as the Committee may specify, but in no event for longer
    than 10 years from the date when the Option is granted;
    provided, however, that

 

    (i) All rights to exercise an Option and any SARs that
    relate to such Option shall, subject to the provisions of
    subsection (c) of this Section 9, terminate one
    year after the date the Optionee ceases to be employed by at
    least one of the employers in the group of employers consisting
    of the Company and its Affiliates, for any reason other than
    death, becoming disabled (within the meaning of
    Section 22(e)(3) of the Code) or Retirement, except that,
    in the event of the termination of employment of the Optionee on
    account of (a) fraud or intentional misrepresentation, or
    (b) embezzlement, misappropriation or conversion of assets
    or opportunities of the Company or its Affiliates, the Option
    and any SARs that relate to such Option shall thereafter be null
    and void for all purposes. Employment shall not be deemed to
    have ceased by reason of the transfer of employment, without
    interruption of service, between or among the Company and any of
    its Affiliates.

 

    (ii) If the Optionee ceases to be employed by at least one
    of the employers in the group of employers consisting of the
    Company and its Affiliates, by reason of his death, becoming
    disabled (within the meaning of Section 22(e)(3) of the
    Code) or Retirement, all rights to exercise such Option and any
    SARs that relate to such Option shall, subject to the provisions
    of subsection (c) of this Section 9, terminate
    five years thereafter.

    

    5

 

 

    (b) If an Option is granted with a term shorter than
    10 years, the Committee may extend the term of the Option
    and any SARs that relate to such Option, but for not more than
    10 years from the date when the Option was originally
    granted.

 

    (c) In no event may an Option or any SARs that relate to
    such Option be exercised after the expiration of the term
    thereof.

 

    Section 10.  Transferability
    of Options and SARs

 

    Except as provided in this Section 10, no Option or any
    SARs that relate to an Option shall be (i) transferable
    otherwise than by will or the laws of descent and distribution,
    or (ii) exercisable during the lifetime of the Optionee by
    anyone other than the Optionee. A Nonqualified Option granted to
    an Optionee, and any SARs that relate to such Nonqualified
    Option, may be transferred by such Optionee to a permitted
    transferee (as defined below), provided that (i) there is
    no consideration for such transfer (other than receipt by the
    Optionee of interests in an entity that is a permitted
    transferee); (ii) the Optionee (or such Optionee’s
    estate or representative) shall remain obligated to satisfy all
    income or other tax withholding obligations associated with the
    exercise of such Nonqualified Option or SARs; (iii) the
    Optionee shall notify the Company in writing that such transfer
    has occurred and disclose to the Company the name and address of
    the permitted transferee and the relationship of the permitted
    transferee to the Optionee; and (iv) such transfer shall be
    effected pursuant to transfer documents in a form approved by
    the Committee. A permitted transferee may not further assign or
    transfer any such transferred Nonqualified Option or any SARs
    that relate to such Nonqualified Option otherwise than by will
    or the laws of descent and distribution. Following the transfer
    of an Nonqualified Option and any SARs that relate to such
    Nonqualified Option to a permitted transferee, such Nonqualified
    Option and SARs shall continue to be subject to the same terms
    and conditions that applied to them prior to their transfer by
    the Optionee, except that they shall be exercisable by the
    permitted transferee to whom such transfer was made rather than
    by the transferring Optionee. For the purposes of the Plan, the
    term “permitted transferee” means, with respect to an
    Optionee, (i) any 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
    of the Optionee, including adoptive relationships, (ii) any
    person sharing the Optionee’s household (other than a
    tenant or an employee), (iii) a trust in which the persons
    described in clauses (i) and (ii) above have more than
    fifty percent of the beneficial interest, (iv) a foundation
    in which the Optionee
    and/or
    persons described in clauses (i) and (ii) above
    control the management of assets, and (v) any other entity
    in which the Optionee
    and/or
    persons described in clauses (i) and (ii) above own
    more than fifty percent of the voting interests.

 

    Section 11.  Exercise
    of Options and SARs

 

    (a) In the event of an Optionee’s death, any then
    exercisable portion of an Option that has been granted to such
    Optionee, and any SARs that relate to such Option, may be
    exercised, within the period ending with the earlier of the
    fifth anniversary of the date of the Optionee’s death or
    the date of the termination of such Option, by the duly
    authorized representative of the deceased Optionee’s estate
    or the permitted transferee to whom such Option and SARs have
    been transferred.

 

    (b) At any time, and from time to time, during the period
    when any Option and any SARs that relate to such Option, or a
    portion thereof, are exercisable, such Option or SARs, or
    portion thereof, may be exercised in whole or in part; provided,
    however, that the Committee may require any Option or SAR that
    is partially exercised to be so exercised with respect to at
    least a stated minimum number of Shares.

 

    (c) Each exercise of an Option, or a portion thereof, shall
    be evidenced by a notice in writing to the Company accompanied
    by payment in full of the option price of the Shares then being
    purchased. Payment in full shall mean payment of the full amount
    due: (i) in cash, (ii) by certified check or
    cashier’s check, (iii) with Shares owned by the
    exercising Optionee or permitted transferee having a Fair Market
    Value at least equal to the aggregate option price payable in
    connection with such exercise, but only to the extent that such
    Shares are “mature” as determined by the Corporation
    in accordance with generally accepted accounting principles, or
    (iv) by any combination of clauses (i) through (iii).
    If the exercising Optionee or permitted transferee chooses to
    remit Shares in payment of all or any portion of the option
    price, then (for purposes of payment of the option price) those
    Shares shall be deemed to have a

    

    6

 

    cash value equal to their aggregate Fair Market Value determined
    as of the date the exercising Optionee or permitted transferee
    exercises such Option.

 

    Notwithstanding anything contained herein to the contrary, at
    the request of an exercising Optionee or permitted transferee
    and to the extent permitted by applicable law, the Committee
    shall approve arrangements with a brokerage firm or firms under
    which any such brokerage firm shall, on behalf of the exercising
    Optionee or permitted transferee, make payment in full to the
    Company of the option price of the Shares then being purchased,
    and the Company, pursuant to an irrevocable notice in writing
    from the exercising Optionee or permitted transferee, shall make
    prompt delivery of one or more certificates for the appropriate
    number of Shares to such brokerage firm. Payment in full for
    purposes of the immediately preceding sentence shall mean
    payment of the full amount due, either in cash or by certified
    check or cashier’s check.

 

    (d) Each exercise of SARs, or a portion thereof, shall be
    evidenced by a notice in writing to the Company.

 

    (e) No Shares shall be issued upon exercise of an Option
    until full payment therefor has been made, and an exercising
    Optionee or permitted transferee shall have none of the rights
    of a shareholder until Shares are issued to him.

 

    (f) Nothing herein or in any Agreement shall require the
    Company to issue any Shares upon exercise of an Option or SAR if
    such issuance would, in the opinion of counsel for the Company,
    constitute a violation of the Securities Act or any similar or
    superseding statute or statutes, or any other applicable statute
    or regulation, as then in effect. Upon the exercise of an Option
    or SAR (as a result of which the exercising Optionee or
    permitted transferee receives Shares), or portion thereof, the
    exercising Optionee or permitted transferee shall give to the
    Company satisfactory evidence that he is acquiring such Shares
    for the purposes of investment only and not with a view to their
    distribution; provided, however, if or to the extent that the
    Shares delivered to the exercising Optionee or permitted
    transferee shall be included in a registration statement filed
    by the Company under the Securities Act, such investment
    representation shall be abrogated.

 

    Section 12.  Delivery
    of Stock Certificates

 

    As promptly as may be practicable after an Option or SAR (as a
    result of the exercise of which the exercising Optionee or
    permitted transferee receives Shares), or a portion thereof, has
    been exercised as hereinabove provided, the Company shall make
    delivery of one or more certificates for the appropriate number
    of Shares. In the event that an Optionee exercises both
    (i) an Incentive Option or SARs that relate to such Option
    (as a result of which the Optionee receives Shares), or a
    portion thereof, and (ii) a Nonqualified Option or SARs
    that relate to such Option (as a result of which the Optionee
    receives Shares), or a portion thereof, separate stock
    certificates shall be issued, one for the Shares subject to the
    Incentive Option and one for the Shares subject to the
    Nonqualified Option.

 

    Section 13.  Changes
    in Company’s Shares and Certain Corporate
    Transactions

 

    If at any time while the Plan is in effect there shall be any
    increase or decrease in the number of issued and outstanding
    Shares of the Company effected without receipt of consideration
    therefor by the Company, through the declaration of a stock
    dividend or through any recapitalization or merger or otherwise
    in which the Company is the surviving corporation, resulting in
    a stock
    split-up,
    combination or exchange of Shares of the Company, then and in
    each such event:

 

    (a) An appropriate adjustment shall be made in the maximum
    number of Shares then subject to being optioned or awarded as
    Restricted Stock under the Plan, to the end that the same
    proportion of the Company’s issued and outstanding Shares
    shall continue to be subject to being so optioned and awarded;

 

    (b) Appropriate adjustment shall be made in the number of
    Shares and the option price per Share thereof then subject to
    purchase pursuant to each Option previously granted and then
    outstanding, to the end that the same proportion of the
    Company’s issued and outstanding Shares in each such
    instance shall remain subject to purchase at the same aggregate
    option price; and

 

    (c) In the case of Incentive Options, any such adjustments
    shall in all respects satisfy the requirements of
    Section 424(a) of the Code and the Treasury regulations and
    revenue rulings promulgated thereunder.

    

    7

 

 

    Except as is otherwise expressly provided herein, the issue by
    the Company of shares of its capital stock of any class, or
    securities convertible into shares of capital stock of any
    class, either in connection with a direct sale or upon the
    exercise of rights or warrants to subscribe therefor, or upon
    conversion of shares or obligations of the Company convertible
    into such shares or other securities, shall not affect, and no
    adjustment by reason thereof shall be made with respect to, the
    number of or option price of Shares then subject to outstanding
    Options granted under the Plan. Furthermore, the presence of
    outstanding Options granted under the Plan shall not affect in
    any manner the right or power of the Company to make, authorize
    or consummate (i) any or all adjustments,
    recapitalizations, reorganizations or other changes in the
    Company’s capital structure or its business; (ii) any
    merger or consolidation of the Company; (iii) any issue by
    the Company of debt securities or preferred stock that would
    rank above the Shares subject to outstanding Options granted
    under the Plan; (iv) the dissolution or liquidation of the
    Company; (v) any sale, transfer or assignment of all or any
    part of the assets or business of the Company; or (vi) any
    other corporate act or proceeding, whether of a similar
    character or otherwise.

 

    Section 14.  Effective
    Date

 

    The Plan was originally adopted by the Board on January 28,
    1992, and approved by the stockholders of the Company on
    April 28, 1992. The Plan was amended and restated on
    December 10, 1996, and was approved by the stockholders of
    the Company on April 22, 1997. The Plan was amended and
    restated on February 1, 2000, and was approved by the
    stockholders of the Company on April 25, 2000. The Plan as
    amended and restated through January 29, 2002, was approved
    and adopted by the Board on January 29, 2002, to be
    effective as of that date. The Plan was amended by the Board on
    January 27, 2003, and was approved by the stockholders of
    the Company on April 29, 2003. The Plan was amended by the
    Board on July 22, 2003, to be effective as of that date.
    The Plan was amended by the Board on April 25, 2005, to be
    effective as of that date. The Plan was amended by the Board on
    March 3, 2007, and was approved by the stockholders of the
    Company on April 24, 2007.

 

    Section 15.  Amendment,
    Suspension or Termination

 

    The Board may at any time amend, suspend or terminate the Plan;
    provided, however, that after the shareholders have approved and
    ratified the Plan in accordance with Section 14 of the
    Plan, the Board may not, without approval of the shareholders of
    the Company, amend the Plan so as to (a) increase the
    maximum number of Shares subject thereto, as specified in
    Sections 4(a) and 13 of the Plan, (b) reduce the
    option price for Shares covered by Options granted hereunder
    below the price specified in Section 8 of the Plan or
    (c) permit the “repricing” of Options and any
    SARs that relate to such new Options in contravention of
    Section 18 of the Plan; and provided further, that the
    Board may not modify, impair or cancel any outstanding Option or
    SAR that relates to such Option, or the restrictions, terms or
    conditions applicable to Shares of Restricted Stock, without the
    consent of the holder thereof.

 

    Section 16.  Requirements
    of Law

 

    Notwithstanding anything contained herein or in any Agreement to
    the contrary, the Company shall not be required to sell or issue
    Shares under any Option or SAR if the issuance thereof would
    constitute a violation by the Optionee or the Company of any
    provision of any law or regulation of any governmental authority
    or any national securities exchange; and as a condition of any
    sale or issuance of Shares upon exercise of an Option or SAR,
    the Company may require such agreements or undertakings, if any,
    as the Company may deem necessary or advisable to assure
    compliance with any such law or regulation.

 

    Section 17.  Incentive
    Options

 

    The Committee may, in its sole and absolute discretion,
    designate any Option granted under the Plan as an Incentive
    Option intended to qualify under Section 422(b) of the
    Code. Any provision of the Plan to the contrary notwithstanding,
    (a) no Incentive Option shall be granted to any person who,
    at the time such Incentive Option is granted, owns stock
    possessing more than 10 percent of the total combined
    voting power of all classes of stock of the Company or any
    Affiliate unless the option price under such Incentive Option is
    at least 110 percent of the Fair Market Value of the Shares
    subject to the Incentive Option at the date of its grant and
    such Incentive Option is not exercisable after the expiration of
    five years from the date of its grant; and (b) the
    aggregate Fair Market Value of the

    

    8

 

    Shares subject to an Incentive Option and the aggregate Fair
    Market Value of the shares of stock of the Company or any
    Affiliate (or a predecessor corporation of the Company or an
    Affiliate) subject to any other incentive stock option (within
    the meaning of Section 422(b) of the Code) of the Company
    and its Affiliates (or a predecessor corporation of any such
    corporation), that may become first exercisable in any calendar
    year, shall not (with respect to any Optionee) exceed $100,000,
    determined as of the date the Incentive Option is granted.

 

    Section 18.  Modification
    of Options and SARs

 

    Subject to the terms and conditions of and within the
    limitations of the Plan, the Committee may modify, extend or
    renew outstanding Options and any SARs that relate to such
    Options granted under the Plan. The Committee shall not have
    authority to accept the surrender or cancellation of any Options
    and any SARs that relate to such Options outstanding hereunder
    (to the extent not theretofore exercised) and grant new Options
    and any SARs that relate to such new Options hereunder in
    substitution therefor (to the extent not theretofore exercised)
    at an Option Price that is less than the Option Price of the
    Options surrendered or canceled. Notwithstanding the foregoing
    provisions of this Section 18, no modification of an
    outstanding Option and any SARs that relate to such Option
    granted hereunder shall, without the consent of the Optionee,
    alter or impair any rights or obligations under any Option and
    any SARs that relate to such Option theretofore granted
    hereunder to such Optionee, except as may be necessary, with
    respect to Incentive Options, to satisfy the requirements of
    Section 422(b) of the Code.

 

		
	
    Section 19.  
	
    Agreement
    Provisions

 

    (a) Each Agreement shall contain such provisions
    (including, without limitation, restrictions or the removal of
    restrictions upon the exercise of the Option and any SARs that
    relate to such Option and the transfer of shares thereby
    acquired) as the Committee shall deem advisable. Each Agreement
    relating to an Option shall identify the Option evidenced
    thereby as an Incentive Option or Nonqualified Option, as the
    case may be. Incentive Options and Nonqualified Options may not
    both be covered by a single Agreement. Each such Agreement
    relating to Incentive Options shall contain such limitations and
    restrictions upon the exercise of the Incentive Option as shall
    be necessary for the Incentive Option to which such Agreement
    relates to constitute an incentive stock option, as defined in
    Section 422(b) of the Code.

 

    (b) Each Agreement shall recite that it is subject to the
    Plan and that the Plan shall govern where there is any
    inconsistency between the Plan and the Agreement.

 

    (c) Each Agreement shall contain a covenant by the
    Optionee, in such form as the Committee may require in its
    discretion, that he consents to and will take whatever
    affirmative actions are required, in the opinion of the
    Committee, to enable the Company or appropriate Affiliate to
    satisfy its Federal income tax and FICA and any applicable state
    and local withholding obligations incurred as a result of such
    Optionee’s (or his permitted transferee’s) exercise of
    an Option granted to such Optionee or any SARs that relate to
    such Option. Upon the exercise of an Option or SARs requiring
    tax withholding, an exercising Optionee or permitted transferee
    may (i) direct the Company to withhold from the Shares to
    be issued to the exercising Optionee or permitted transferee the
    number of Shares (based upon the aggregate Fair Market Value of
    the Shares at the date of exercise) necessary to satisfy the
    Company’s obligation to withhold taxes, (ii) deliver
    to the Company sufficient Shares (based upon the aggregate Fair
    Market Value of the Shares at the date of exercise) to satisfy
    the Company’s tax withholding obligations,
    (iii) deliver sufficient cash to the Company to satisfy the
    Company’s tax withholding obligations, or (iv) any
    combination of clauses (i) through (iii). In the event the
    Committee subsequently determines that the aggregate Fair Market
    Value (as determined above) of any Shares withheld as payment of
    any tax withholding obligation is insufficient to discharge that
    tax withholding obligation, then the Optionee to whom the Option
    and SARs in question were granted shall pay (or cause the
    permitted transferee to whom such Option and SARs were
    transferred to pay) to the Company, immediately upon the
    Committee’s request, the amount of that deficiency.

 

    (d) Each Agreement relating to an Incentive Option shall
    contain a covenant by the Optionee immediately to notify the
    Company in writing of any disqualifying disposition (within the
    meaning of Section 421(b) of the Code) of Shares received
    upon the exercise of an Incentive Option.

    

    9

 

 

    Section 20.  Restricted
    Stock

 

    (a) The Committee may from time to time, in its sole and
    absolute discretion, award Shares of Restricted Stock to such
    persons as it shall select from among those persons who are
    eligible under Section 5 of the Plan to receive awards of
    Restricted Stock. Any award of Restricted Stock shall be made
    from Shares subject hereto as provided in Section 4 of the
    Plan.

 

    (b) A Share of Restricted Stock shall be subject to such
    restrictions, terms and conditions, including forfeitures, if
    any, as may be determined by the Committee, which may include,
    without limitation, the rendition of services to the Company or
    its Affiliates for a specified time or the achievement of
    specific goals, and to the further restriction that no such
    Share may be sold, assigned, transferred, discounted, exchanged,
    pledged or otherwise encumbered or disposed of until the terms
    and conditions set by the Committee at the time of the award of
    the Restricted Stock have been satisfied. Each recipient of an
    award of Restricted Stock shall enter into an Agreement with the
    Company, in such form as the Committee shall prescribe, setting
    forth the restrictions, terms and conditions of such award,
    whereupon such recipient shall become a participant in the Plan.

 

    If a person is awarded Shares of Restricted Stock, whether or
    not escrowed as provided below, the person shall be the record
    owner of such Shares and shall have all the rights of a
    shareholder with respect to such Shares (unless the escrow
    agreement, if any, specifically provides otherwise), including
    the right to vote and the right to receive dividends or other
    distributions made or paid with respect to such Shares. Any
    certificate or certificates representing Shares of Restricted
    Stock shall bear a legend similar to the following:

 

    The shares represented by this certificate have been issued
    pursuant to the terms of the Noble Energy, Inc. 1992 Stock
    Option and Restricted Stock Plan and may not be sold, assigned,
    transferred, discounted, exchanged, pledged or otherwise
    encumbered or disposed of in any manner except as set forth in
    the terms of the agreement embodying the award of such shares
    dated          ,          .

 

    In order to enforce the restrictions, terms and conditions that
    may be applicable to a person’s Shares of Restricted Stock,
    the Committee may require the person, upon the receipt of a
    certificate or certificates representing such Shares, or at any
    time thereafter, to deposit such certificate or certificates,
    together with stock powers and other instruments of transfer,
    appropriately endorsed in blank, with the Company or an escrow
    agent designated by the Company under an escrow agreement in
    such form as by the Committee shall prescribe.

 

    After the satisfaction of the restrictions, terms and conditions
    set by the Committee at the time of an award of Restricted Stock
    to a person, a new certificate, without the legend set forth
    above, for the number of Shares that are no longer subject to
    such restrictions, terms and conditions shall be delivered to
    the person.

 

    If a person to whom Restricted Stock has been awarded dies after
    satisfaction of the restrictions, terms and conditions for the
    payment of all or a portion of the award but prior to the actual
    payment of all or such portion thereof, such payment shall be
    made to the person’s beneficiary or beneficiaries at the
    time and in the same manner that such payment would have been
    made to the person.

 

    The Committee shall have the authority (and the Agreement
    evidencing an award of Restricted Stock may so provide) to
    cancel all or any portion of any outstanding restrictions prior
    to the expiration of such restrictions with respect to any or
    all of the Shares of Restricted Stock awarded to a person
    hereunder on such terms and conditions as the Committee may deem
    appropriate.

 

    (c) Without limiting the provisions of the first paragraph
    of subsection (b) of this Section 20, if a person
    to whom Restricted Stock has been awarded ceases to be employed
    by at least one of the employers in the group of employers
    consisting of the Company and its Affiliates, for any reason,
    prior to the satisfaction of any terms and conditions of an
    award, any Restricted Stock remaining subject to restrictions
    shall thereupon be forfeited by the person and transferred to,
    and reacquired by, the Company or an Affiliate at no cost to the
    Company or the Affiliate; provided, however, if the cessation is
    due to the person’s death, disability or Retirement, the
    Committee may, in its sole and absolute discretion, deem that
    the terms and conditions have been met for all or part of such
    remaining portion. In the event of such forfeiture, the person,
    or in the event of his death, his personal representative, shall
    forthwith deliver to the Secretary of the Company the
    certificates for the Shares of Restricted Stock remaining

    

    10

 

    subject to such restrictions, accompanied by such instruments of
    transfer, if any, as may reasonably be required by the Secretary
    of the Company.

 

    (d) In case of any consolidation or merger of another
    corporation into the Company in which the Company is the
    surviving corporation and in which there is a reclassification
    or change (including a change to the right to receive cash or
    other property) of the Shares (other than a change in par value,
    or from par value to no par value, or as a result of a
    subdivision or combination, but including any change in such
    shares into two or more classes or series of shares), the
    Committee may provide that payment of Restricted Stock shall
    take the form of the kind and amount of shares of stock and
    other securities (including those of any new direct or indirect
    parent of the Company), property, cash or any combination
    thereof receivable upon such consolidation or merger.

 

		
	
    Section 21.  
	
    General

 

    (a) The proceeds received by the Company from the sale of
    Shares pursuant to Options shall be used for general corporate
    purposes.

 

    (b) Nothing contained in the Plan or in any Agreement shall
    confer upon any Optionee or recipient of Restricted Stock the
    right to continue in the employ of the Company or any Affiliate,
    or interfere in any way with the rights of the Company or any
    Affiliate to terminate his employment at any time, with or
    without cause.

 

    (c) Neither the members of the Board nor any member of the
    Committee shall be liable for any act, omission or determination
    taken or made in good faith with respect to the Plan or any
    Option and any SARs that relate to such Option granted hereunder
    or any Restricted Stock awarded hereunder; and the members of
    the Board and the Committee shall be entitled to indemnification
    and reimbursement by the Company in respect of any claim, loss,
    damage or expenses (including counsel fees) arising therefrom to
    the full extent permitted by law and under any directors’
    and officers’ liability or similar insurance coverage that
    may be in effect from time to time.

 

    (d) Any payment of cash or any issuance or transfer of
    Shares to an exercising Optionee or permitted transferee, or to
    his legal representative, heir, legatee or distributee, in
    accordance with the provisions hereof, shall, to the extent
    thereof, be in full satisfaction of all claims of such persons
    hereunder. The Committee may require an exercising Optionee or
    permitted transferee, legal representative, heir, legatee or
    distributee, as a condition precedent to such payment, to
    execute a release and receipt therefor in such form as it shall
    determine.

 

    (e) Neither the Committee, the Board nor the Company
    guarantees the Shares from loss or depreciation.

 

    (f) All expenses incident to the administration,
    termination or protection of the Plan, including, but not
    limited to, legal and accounting fees, shall be paid by the
    Company or its Affiliates.

 

    (g) Records of the Company and its Affiliates regarding a
    person’s period of employment, termination of employment
    and the reason therefor, leaves of absence, re-employment and
    other matters shall be conclusive for all purposes hereunder,
    unless determined by the Committee to be incorrect.

 

    (h) Any action required of the Company shall be by
    resolution of its Board or by a person authorized to act by
    resolution of the Board. Any action required of the Committee
    shall be by resolution of the Committee or by a person
    authorized to act by resolution of the Committee.

 

    (i) If any provision of the Plan or any 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.

 

    (j) Whenever any notice is required or permitted hereunder,
    such notice must be in writing and personally delivered or sent
    by mail. Any notice required or permitted to be delivered
    hereunder shall be deemed to be delivered on the date on which
    it is personally delivered, 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, an Optionee or a
    recipient of Restricted Stock may change, at any time and from
    time to time, by written notice to the other, the address that
    it or he had theretofore specified for receiving

    

    11

 

    notices. Until changed in accordance herewith, the Company and
    each Optionee and recipient of Restricted Stock shall specify as
    its and his address for receiving notices the address set forth
    in the Agreement pertaining to the Shares to which such notice
    relates.

 

    (k) Any person entitled to notice hereunder may waive such
    notice.

 

    (l) The Plan shall be binding upon the Optionee or
    recipient of Restricted Stock, his heirs, legatees,
    distributees, legal representatives and permitted transferees,
    upon the Company, its successors and assigns, and upon the
    Committee, and its successors.

 

    (m) The titles and headings of Sections and paragraphs are
    included for convenience of reference only and are not to be
    considered in the construction of the provisions hereof.

 

    (n) All questions arising with respect to the provisions of
    the Plan shall be determined by application of the laws of the
    State of Texas except to the extent Texas law is preempted by
    Federal law.

 

    (o) Words used in the masculine shall apply to the feminine
    where applicable, and wherever the context of the Plan dictates,
    the plural shall be read as the singular and the singular as the
    plural.

 

		
	
    Section 22.  
	
    UK
    Sub-Plan

 

    Any provision of this Plan to the contrary notwithstanding, the
    Committee may grant to the employees of the Company or one of
    its Affiliates whose compensation from the Company or such
    Affiliate is subject to taxation under the laws of the United
    Kingdom Options which (i) will terminate one year after the
    Optionee’s death, (ii) cannot be transferred to a
    permitted transferee pursuant to the provisions of
    Section 10, (iii) cannot be exercised using a means of
    payment other than cash or a certified check or cashier’s
    check, and (iv) will not be adjusted pursuant to
    Section 13 without the approval of the Board of Inland
    Revenue of the United Kingdom.

    

    12SUBSCRIPTION AGREEMENT

 

INSTRUCTIONS

 

Each subscriber must complete and sign the Subscription Agreement in accordance with the following instructions. Subscribers must meet certain requirements in order for Quest Group International, Inc. (the “Company”), a Nevada corporation, to comply with the offering exemptions from registration and qualification under the Federal Securities Act of 1933, as amended, and applicable state securities laws. The Company will be relying on the accuracy and completeness of information provided in the Subscription Agreement to establish the qualifications of prospective investors and the Company’s legal right to sell these securities. The Subscription Agreement will at all times be kept strictly confidential, unless necessary to establish the legality of a prospective investor’s participation in the offering. The Company should be contacted immediately if there is any change
in the information the prospective investor has provided.

 

	
             
 	
            1.
 	
            Complete and sign the SUBSCRIPTION AGREEMENT.
 

 

	
             
 	
            2.
 	
            The following sets forth the number of signatures required for different forms of ownership:
 

 

	
             
 	
            Form of Ownership:
 	
            Signatures Required
 

 

	
             
 	
            Individual:
 	
            One signature required.
 

 

	
             
 	
            Joint Tenants With
 	
             

	
             
 	
            Right of Survivorship:
 	
            Both parties must sign.
 
					

 

	
             
 	
            Tenants in Common:
 	
            All parties must sign.
 

 

	
             
 	
            Community Property:
 	
            One signature required if security will be held in one name; two signatures required if security will be held in both names.
 

 

	
             
 	
            Corporation:
 	
            Signature of authorized officer or officers required.
 

 

	
             
 	
            Partnership:
 	
            Signature of general partner required; additional signatures only if required by partnership agreement.
 

 

	
             
 	
            Trust:
 	
            Trustee’s signature must indicate “Trustee for the __________ Trust.”
 

 

	
             
 	
            Other Entities:
 	
            As required by the applicable document governing such entity.
 

 

 

 

 

SUBSCRIPTION AGREEMENT

 

QUEST GROUP INTERNATIONAL, INC.

967 West Center Street

Orem, Utah 84057

PHONE: (801) 765-1301  

FAX: (801) 765-1316

 

THIS SUBSCRIPTION AGREEMENT made this 27th day of April, 2007, by and between Quest Group International, Inc., a Nevada corporation (the “Company”), and ____________ (the “Subscriber”), who, for and in consideration of the mutual promises and covenants set forth herein, do hereto agree as follows:

 

1.            Subscription. The Subscriber hereby subscribes for _________ shares of the Company’s common stock (the “Shares”) at a purchase price of $.001 per share which the Subscriber has tendered herewith in good funds as payment for said Shares. The subscription evidenced by this Subscription Agreement (“Subscription”) is an irrevocable offer by the Subscriber to subscribe for the Shares offered by the Company, and, subject to the terms hereof, shall become upon the acceptance thereof by the Company a contract for the sale of said securities. Upon acceptance of this subscription by the Company, the net proceeds will be available for immediate use by the Company. Subscription Agreements and subscription funds should be sent to the Company.

 

It is anticipated that the Company will raise at least twenty million dollars ($20,000,000) from the sale of common stock at a purchase price of at least fifty cents ($.50) per share  on or before May 31, 2007 (the “Subsequent Funding”). Certificates evidencing the Shares will not be delivered to Subscriber until and unless the Subsequent Funding has been completed. In the event the Subsequent Funding is not completed on or before May 31, 2007, then the Company or its nominee(s) may purchase the Shares subscribed for herein for a purchase price of $.00001 per share, and such transfer will be effective immediately upon payment of said purchase price. 

 

2.            Acceptance. This Subscription Agreement is made subject to the Company’s discretionary right to accept or reject the subscription herein in whole or in part, and the Subscriber will be promptly notified as to whether the subscription has been accepted. If the Company shall for any reason reject all or part of this Subscription, the amount paid by the Subscriber with respect to the rejected Subscription, or part thereof, will be refunded, without interest. Acceptance of this Subscription by the Company will be evidenced by the execution hereof by an officer of the Company.

 

	
             
 	
            3.
 	
            Subscriber Representations. The Subscriber hereby represents and warrants that:
 

 

 (a)           The Subscriber’s representations in this Subscription Agreement are complete and accurate to the best of the Subscriber’s knowledge, and the Company and any sales agent may rely upon them. The Subscriber will notify the Company and any such agent immediately if any material change occurs in any of this information before the sale of the Shares.

 

 (b)           The Subscriber is able to bear the economic risk of an investment in the Shares for an indefinite period of time, can afford the loss of the entire investment in the Shares, and will, after making an investment in the securities, have sufficient means of providing for Subscriber’s current needs and possible future contingencies. Additionally, the Subscriber’s overall commitment to investments which are not readily marketable is not disproportionate to Subscriber’s net worth and this Subscription will not cause such overall commitment to become excessive.

 

 (c)           The Shares subscribed for herein will not be sold by the Subscriber without registration under applicable securities acts or a proper exemption from such registration. The Subscriber also understands and agrees that the Shares will be subject to additional restrictions on transferability that are imposed by the participation agreement. 

 

 (d)           The Shares subscribed for herein are being acquired for the Subscriber’s own account and risk, for investment purposes, and not on behalf of any other person or with a view to, or for resale 

 

2

 

 

in connection with, any distribution thereof within the meaning of the Securities Act of 1933. The Subscriber is aware that there are substantial restrictions on the transferability of the Shares. 

 

 (e)           The Subscriber has had access to any and all information concerning the Company which the Subscriber and the Subscriber’s financial, tax and legal advisors required or considered necessary to make a proper evaluation of this investment. In making the decision to purchase the Shares herein subscribed for, the Subscriber and his or her advisers have relied solely upon their own independent investigations, and fully understand that there are no guarantees, assurances or promises in connection with any investment hereunder and understand that the particular tax consequences arising from this investment in the Company will depend upon the individual circumstances of the Subscriber. The Subscriber further understands that no opinion is being given as to any securities or tax matters involving the offering.

 

 (f)           All of the representations and warranties of the Subscriber contained herein and all information furnished by the Subscriber to the Company are true, correct and complete in all respects, and the Subscriber agrees to notify the Company immediately of any change in any representation, warranty or other information set forth herein.

 

 (g)           The Subscriber also understands and agrees that stop transfer instructions relating to the Shares will be placed in the Company’s stock transfer ledger, and that the certificates evidencing the Shares sold will bear legends in substantially the following form:

 

The securities represented by this certificate have not been registered under the Securities Act of 1933 (the “Act”) and are “restricted securities” as that term is defined in Rule 144 under the Act. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company.

 

 (h)          Subscriber has been given the unrestricted opportunity to ask questions of, and receive answers from, the Company, or persons acting on its behalf, concerning the terms and conditions of, and all other matters relating to the offering, and has been given the unrestricted opportunity to obtain such additional information with respect to the offering as he has desired, including, but not limited to, any additional information necessary to verify the accuracy of the information set forth in the attached documentation. The undersigned has carefully read the Company’s annual report on Form 10-KSB, dated September, 30, 2006, Form 10-QSB, dated December 31, 2006, and definitive proxy statement relating to the Company’s annual meeting that was held on March 26, 2007 (collectively, the “SEC Filings”). Except as
set forth in this Subscription Agreement and the SEC Filings, the Subscriber is not relying on any representations, warranties or information from the Company in making an investment decision. 

 

 (i)           The Subscriber knows that the Shares subscribed for herein are offered and sold pursuant to exemptions from registration under the Securities Act of 1933, and state securities law based, in part, on these warranties and representations, which are the very essence of this Subscription Agreement, and constitute a material part of the bargained-for consideration without which this Subscription Agreement would not have been executed.

 

 (j)           By reason of the Subscriber’s business or financial experience or the business or financial experience of professional advisors who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent of the Company, directly or indirectly, the Subscriber has the capacity to protect Subscriber’s own interest in connection with this transaction or has a pre-existing personal or business relationship with the Company or one or more of its officers, directors or controlling persons consisting of personal or business contacts of a nature and duration such as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of such person with whom such relationship exists.

 

 (k)           This Subscription Agreement when fully executed and delivered by the Company will constitute a valid and legally binding obligation of the Subscriber, enforceable in accordance with its terms. The Subscriber, if it is a partnership, joint venture, corporation, trust or other entity, was not formed or organized for the specific purpose of acquiring the Shares. The purchase of the Shares by the Subscriber, if it is an entity investor, is a permissible investment in accordance with the Subscriber’s Articles of Incorporation, by-laws, partnership agreement, declaration of trust or other similar charter document, and has been duly approved by all requisite action by the entity’s owners, directors, officers or other authorized managers. The person 

 

3

 

 

signing this document and all documents necessary to consummate the purchase of the shares has all requisite authority to sign such documents on behalf of the Subscriber, if it is an entity investor.

 

 (l)           The Subscriber has not duplicated or distributed the Memorandum to anyone other than his personal advisors, and will not do so in the future.

 

 (m)         The Shares offered hereby were not offered to the Subscriber by way of general solicitation or general advertising and at no time was the Subscriber presented with or solicited by means of any leaflet, public promotional meeting, circular, newspaper or magazine article, radio or television advertisement.

 

 (n)          By entering into this Subscription Agreement, the undersigned Subscriber acknowledges receipt of the Memorandum used in connection with this offering. 

 

 (o)          If initialed below, the Subscriber represents that Subscriber is an “accredited investor” as defined under Rule 501 of Regulation D by reason of:

 

FOR INDIVIDUALS ONLY (INITIAL IF APPLICABLE):

          

	
                          

Initial

Here
 	
             
 	
            1.      I had individual income (exclusive of any income attributable to my spouse) in excess of $200,000 in each of the most recent two years and I reasonably expect to have an individual income in excess of $200,000 for the current year, or I had joint income with my spouse in excess of $300,000 in each of those years and I reasonably expect to have a joint income with my spouse in excess of $300,000 for the current year.

 
 
	
             
 	
             
 	
             
 
	
                            

Initial

Here
 	
             
 	
            2.      I have an individual net worth, or my spouse and I have a combined individual net worth, in excess of $1,000,000. For purposes of this Subscription Agreement, “individual net worth” means the excess of total assets at fair market value, including home and personal property, over total liabilities.
 
	
             
 	
             
 	
             
 
	
            ______

Initial

Here
 	
             
 	
            3.      I am qualified as an “accredited investor” pursuant to Rule 501(a) of Regulation D of the 1933 Act for the following reason: _____________________________________________________

_____________________________________________________________________________
 
	
             
 	
             
 	
             
 

FOR CORPORATIONS AND PARTNERSHIPS ONLY (INITIAL IF APPLICABLE):

 

	
            ______

Initial

Here
 	
             
 	
            1.       The undersigned hereby certifies that the Partnership or Corporation which he/she represents possesses total assets in excess of $5,000,000 and was not formed for the specific purpose of acquiring the securities offered by Company.
 

 

	
            ______

Initial

Here
 	
             
 	
            2.       The undersigned hereby certifies personally, and on behalf of the Partnership or Corporation which he/she represents, that all of the beneficial owners of equity qualify individually as accredited investors under the individual accredited investor test set forth above. 
 
	
             
 	
             
 	
             
 

FOR TRUSTS ONLY (INITIAL IF APPLICABLE):

 

	
            ______

Initial

Here
 	
             
 	
            1.       The undersigned hereby certifies that the trust which he/she represents possesses total assets in excess of $5,000,000 and was not formed for the specific purpose of acquiring the securities offered by Company, and that the purchase of the securities is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Act.
 
	
             
 	
             
 	
             
 
	
            ______

Initial

Here
 	
             
 	
            2.       The undersigned hereby certifies personally, and on behalf of the trust that he/she represents, that such trust is a revocable trust which may be amended or revoked at any time by the grantors, and all the grantors are accredited individual investors under the individual accredited investor test set forth above.
 
	
             
 	
             
 	
             
 

FOR TRUSTEES AND AGENTS (READ AND INITIAL BOTH STATEMENTS):

 

	
            ______

Initial

Here
 	
             
 	
            1.     The undersigned hereby acknowledges that he/she is acting as an agent or trustee for the following person or entity:                                                                                                

 
 

 

 

4

 

 

 

 

	
             
 	
             
 	
             
 
	
            ______

Initial

Here
 	
             
 	
            2.       The undersigned hereby agrees to provide to Company, upon Company’s request, the following documents:

 

(a)     a copy of the trust agreement, power of attorney or other instrument granting the power and authority to execute and deliver the Subscription Agreement, or 

 

(b)     an opinion of counsel verifying the undersigned’s power and authority to execute and deliver the Subscription Agreement. 
 
	
             
 	
             
 	
             
 

FOR RETIREMENT OR EMPLOYEE BENEFIT PLANS (INITIAL IF APPLICABLE):

 

	
            ______

Initial

Here
 	
             
 	
            1.      The undersigned hereby certifies that the plan which he/she represents is an employee benefit plan within the meaning of the Employment Retirement Income Security Act of 1974 (“ERISA”) and that either
 
	
             
 	
             
 	
             
 
	
            ______

Initial

Here
 	
             
 	
            (a)    the decision to invest in the securities was made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or
 
	
             
 	
             
 	
             
 
	
            ______

Initial

Here
 	
             
 	
            (b)   the employee benefit plan has total assets in excess of $5,000,000, or
 
	
            
 	
             
 	
             
 
	
            ______

Initial

Here
 	
             
 	
            (c)    the plan is a self-directed plan, the decision to invest in the securities was made solely by a person that is an accredited investor, and each of the following statements is true with respect to that plan:

 

•       the plan provides for segregated accounts for each plan participant,

 

•       the document governing the plan provides each participant with the power to direct each particular investment to the extent of the participant’s voluntary contributions plus any portion of employer contributions that have vested to the participant’s benefit, and

 

•       the decision to invest in the securities was made pursuant to the plan participant’s power to direct the investment of his or her account in the plan trust.
 

 

As evidence of the foregoing, the undersigned will complete if requested a Purchaser Questionnaire in the form attached hereto, the contents of which, if completed, are hereby certified to be correct.

 

4.           Indemnification. The Subscriber understands that the offer of the Shares was made in reliance upon Subscriber’s representations and warranties set forth in this Section 3 above. The Subscriber hereby agrees, except to the extent specifically prohibited by applicable law, to indemnify the Company and each of its affiliates and to defend and hold each of them harmless from and against any loss, claim, damage, liability, cost or expense (including reasonable attorneys’ fees) due to or arising out of a breach of any representation, warranty or agreement of the Subscriber contained in this Agreement or in any other document provided by the Subscriber to the Company in connection with the Subscriber’s purchase of the Shares. 

 

	
             
 	
            5.
 	
            Issuer Representations. The Issuer hereby represents and warrants to Subscriber as follows:
 

 

(a)           The total number of shares of all classes which the Company is authorized to have outstanding is One Hundred Fifty-Five Million (155,000,000) shares of which stock One Hundred Fifty Million (150,000,000) shares in the par value of $.001 each, amounting in the aggregate to One Hundred Fifty Thousand Dollars ($150,000), are voting common stock and of which Five Million (5,000,000) shares in the par value of $.001 each, amounting in the aggregate to Five Thousand Dollars ($5,000), are blank check preferred stock. There are 10,259,000 authorized, issued and outstanding shares of common stock of the Company on the date hereof which are the only issued and outstanding securities 

 

5

 

 

of the Company. The shares of outstanding common stock of the Company have been duly authorized and validly issued and are fully paid, nonassessable and are free of preemptive or similar rights. Company shareholders owning 7,759,000 shares of the Company’s common stock have agreed to cancel all 7,759,000 shares at the time the Subsequent Funding is closed in consideration for specified cash payments. 

 

(b)           The common stock to be issued by the Company pursuant hereto have been duly authorized and, when issued and delivered for consideration in accordance with the terms of this Agreement, will be validly issued and outstanding, fully paid and nonassessable, and free from preemptive or similar rights. 

 

(c)           All tax returns required to be filed by the Company in all jurisdictions have been so filed. All taxes, including withholding taxes, penalties and interest, assessments, fees and other charges due or claimed to be due from such entities or that are due and payable have been paid, other than those being contested in good faith and for which adequate reserves have been provided or those currently payable without penalty or interest. 

 

(d)           The Company has been duly incorporated and are validly existing as a corporation in good standing under the laws of the States of Nevada. The Company has the corporate power and authority necessary to issue, sell and deliver the common stock to be issued, sold and delivered by it pursuant hereto. 

 

(e)           There is no action, suit or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, which has been served on the Company is now pending or which, to the knowledge of the Company, is threatened against or affects the Company or the assets of the Company. There are not pending any governmental proceedings to which the Company is a party or to which any of its property is subject. The Company is not subject to any injunction, restraining order or order of any nature by a federal or state court of competent jurisdiction has been issued and remains in effect that would prevent are effect the issuance of the common stock.

 

(f)            The Company is not in violation of its charter or bylaws or is in default under any material agreement or instrument to which the Company is a party or is subject to. To the knowledge of the Company and/or its management, there exists no condition that, with notice, the passage of time or otherwise, would constitute a material default under any such document, instrument or agreement to which the Company is subject.

 

(g)           No consent, approval, authorization, license or other order of any regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of its properties or assets is legally required for the valid issuance and sale of the common stock and the consummation of the transactions contemplated by this Agreement, other than such approvals and authorizations as have been obtained. No consents or waivers from any person are required to consummate the transactions contemplated by this Agreement, other than such consents and waivers as have been obtained.

 

(h)           The historical financial statements of the Company and the related notes and schedules contained in the most recent Annual Report on Form 10-KSB and Quarterly Report on Form 10-QSB (individually and collectively, the “Public Reports”) present fairly the financial position of the Company as of the dates indicated and the results of its operations and the changes in financial position for the periods therein specified. All such financial statements (including the related notes and schedules) have been prepared in accordance with generally accented accounting principles applied on a consistent basis throughout the periods specified, subject in the case of interim statements to normal year-end audit adjustments.

 

(i)            Subsequent to the dates as of which information is given in the Public Reports: (i) the Company has not incurred any liabilities or obligations, direct or contingent, or entered into any transactions, that are material, individually or in the aggregate, to the business of the Company; (ii) there has not been any material change in the capital stock of the Company or any increase in long-term indebtedness and/or short-term indebtedness of the Company; and (iii) there has not been any material adverse change in the condition (financial or other), business, properties, net worth or results of operations of the Company.

 

 

6

 

 

 

 (j)           The Company has not incurred any casualty losses, whether insured or uninsured, that are material, individually or in the aggregate, to the business of the Company.

 

6.            Entire Agreement. This Subscription Agreement constitutes the entire agreement between the parties with respect to the matters covered hereby, and may only be amended by a writing executed by all parties hereto. 

 

7.            Survival of Representations. The representations, warranties, acknowledgments and agreements made by the Subscriber shall survive the acceptance of this Subscription and run in favor of, and for the benefit of, the Company.

 

8.            Waiver. No waiver or modification of any of the terms of this Subscription Agreement shall be valid unless in writing. No waiver of a breach of, or default under, any provision hereof shall be deemed a waiver of such provision or of any subsequent breach or default of the same or similar nature or of any other provision or condition of this Subscription Agreement.

 

9.            Counterparts. This Subscription Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

10.          Notices. Except as otherwise required in this Subscription Agreement, any notice required or permitted under this Subscription Agreement shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid, addressed as follows:

 

	
             
 	
            To the Company:
 	
            967 West Center Street, Orem, Utah 84057
 

 

	
             
 	
            To the Subscriber:
 	
            At the address set forth beneath the Subscriber’s signature
 

 

11.          Non-Assignability. The obligations of the Subscriber hereunder shall not be delegated or assigned to any other party without the prior written consent of the Company.

 

12.          Form of Ownership. Please indicate the form of ownership which the Subscriber desires for the Shares:

 

	
             
 	
            [  
 	
            ]
 	
            Individual
 

 

	
             
 	
            [  
 	
            ]
 	
            Joint Tenants with Right of Survivorship
 

 

	
             
 	
            [  
 	
            ]
 	
            Tenants in Common
 

 

	
             
 	
            [  
 	
            ]
 	
            Community Property
 

 

	
             
 	
            [  
 	
            ]
 	
            Trust
 

 

	
             
 	
            [  
 	
            ]
 	
            Corporation
 

 

	
             
 	
            [  
 	
            ]
 	
            Partnership
 

 

	
             
 	
            [  
 	
            ]
 	
            Other:______________
 

 

7

 

 

 

 

[Signature Page For Individual]

 

DATED this 27th day of April, 2007.

 

 

	
             
 	
                                                      
                
 
	
             
 	
            (Signature)
 	
             

				

 

	
             
 	
                                                      
                  
 
	
             
 	
            (Name - Please Print)
 	
             

 

	
             
 	
                                                      
                  
 
	
             
 	
            (Primary Place of Residence)
 	
             

 

	
             
 	
                                                      
                  
 
	
             
 	
            (City, State and ZIP Code)
 	
             

 

	
             
 	
                                                      
                  
 
	
             
 	
            (Telephone Number - Residence)
 	
             

 

	
             
 	
                                                      
                  
 
	
             
 	
            (Telephone Number - Business)
 	
             

 

 

ACCEPTED this 27th day of April, 2007.

 

QUEST GROUP INTERNATIONAL, INC.

 

 

By                                            
            

	
             
 	
            President
 

 

 

 

8

 

 

 

[Signature Page For Corporation or Other Entity]

 

DATED this 27th day of April, 2007.

 

 

	
             
 	
            __________________________________
 
	
             
 	
            (Name of Entity)
 	
             

 

	
             
 	
            __________________________________
 
	
             
 	
            (Signature of Authorized Person)
 	
             

 

	
             
 	
            __________________________________
 
	
             
 	
            (Name and Title – Please Print)
 	
             

 

	
             
 	
            __________________________________
 
	
             
 	
            (Business Address)
 	
             

 

	
             
 	
            __________________________________
 
	
             
 	
            (City, State and ZIP Code)
 	
             

 

	
             
 	
            __________________________________
 
	
             
 	
            (Telephone Number - Business)
 	
             

 

 

ACCEPTED this 27th day of April, 2007.

 

QUEST GROUP INTERNATIONAL, INC.

 

 

By___________________________________

 

 

9

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