Document:

dbrm_ex45-90406.htm

    
      Exhibit 4.5

      DAYBREAK
OIL AND GAS, INC.

      2009
RESTRICTED STOCK AND RESTRICTED STOCK UNIT PLAN

      

      

      1.    Purpose.  The
purpose of the Daybreak Oil and Gas, Inc., 2009 Restricted Stock and Restricted
Stock Unit Plan (the “Plan”) is to enhance
the ability of Daybreak Oil and Gas, Inc. (the “Company”) and its
Affiliates, if any, to attract and retain employees, consultants, officers and
directors of outstanding ability and to provide employees, consultants, officers
and directors with an interest in the Company parallel to that of the Company’s
stockholders.  The term “Company” as used in this Plan with reference
to Continuous Service shall include the Company and its Affiliates, if any, as
appropriate.

       

      2.    Definitions.

       

      (a)    “Affiliate” shall mean (i) any
person or entity that directly or indirectly controls, is controlled by or is
under common control with the Company and/or (ii) to the extent provided by
the Committee, any person or entity in which the Company has a significant
interest.  The term “control” (including, with correlative meaning,
the terms “controlled by” and “under common control with”), as applied to any
person or entity, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person or
entity, whether through the ownership of voting or other securities, by contract
or otherwise; provided, however, with respect
to any Award subject to Section 409A of the Code, the term “Affiliate” shall mean
any member of the Company’s control group within the meaning of U.S. Treasury
Regulation Section 1.409A-1(h)(3), as such may be modified or amended from time
to time, by applying the “at least 50 percent” provisions thereof.

       

      (b)    “Award Agreement”
shall mean the agreement evidencing any Award issued under the
Plan.

       

      (c)    “Award” shall mean an
award of Restricted Stock or Restricted Stock Units determined in accordance
with the terms of the Plan.

       

      (d)    “Board” shall mean the
Board of Directors of the Company.

       

      (e)    “Business
Combination”
shall have the meaning given to such term in the definition of Change in
Control.

       

      (f)    “Change in Control”
shall, in the case of a particular Award, unless the applicable Award Agreement
states otherwise or contains a different definition of “Change in Control,” be
deemed to occur upon:

       

      (i)    Any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”)
becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 50% or more of either (A) the then-outstanding shares of
Common Stock of the Company (the “Outstanding Company Common
Stock”) or (B) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting
Securities”); 

       

      
        
           

        

        
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      provided, however, that for
purposes of this Section 2(f), the following acquisitions shall not constitute a
Change in Control:  (I) any acquisition directly from the Company,
(II) any acquisition by the Company, (III) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Affiliate, (IV) any acquisition by any corporation pursuant to a transaction
that complies with Sections 2(f)(iii)(A), 2(f)(iii)(B) and 2(f)(iii)(C), or (V)
any acquisition involving beneficial ownership of less than 50% of the
Outstanding Company Common Stock or the Outstanding Company Voting Securities
that is determined by the Board, based on review of public disclosure by the
acquiring Person with respect to its passive investment intent, not to have a
purpose or effect of changing or influencing the control of the Company; provided, however, that for
purposes of this clause (V), any such acquisition in connection with (x) an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents or
(y) any Business Combination shall be presumed to be for the purpose or with the
effect of changing or influencing the control of the Company;

       

      (ii)    During
any period of five (5) consecutive years, individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;

       

      (iii)    Consummation
of a reorganization (excluding a reorganization under either Chapter 7 or
Chapter 11 of Title 11 of the United States Code), merger, statutory share
exchange or consolidation or similar transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each, a “Business
Combination”), in each case unless, following such Business Combination,
(A) all or substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock (or, for a non-corporate entity, equivalent securities)
and the combined voting power of the then-outstanding voting securities entitled
to vote generally in the election of directors (or, for a non-corporate entity,
equivalent governing body), as the case may be, of the entity resulting from
such Business Combination (including, without limitation, an entity that, as a
result of such transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, 

       

      
        
           

        

        
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      (B) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 50% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to the
Business Combination, and (C) at least a majority of the members of the board of
directors (or, for a non-corporate entity, equivalent governing body) of the
entity resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement or of the action of
the Board providing for such Business Combination; or

       

      (iv)    Approval
by the stockholders of the Company of a
complete liquidation or dissolution of the Company.

       

      (g)    “Code” shall mean the
Internal Revenue Code of 1986, as amended, and any successor
thereto.  Reference in the Plan to any section of the Code shall be
deemed to include any regulations or other interpretive guidance under such
section, and any amendments or successor provisions to such section, regulations
or guidance.

       

      (h)    “Committee” shall mean
a committee of at least two people as the Board may appoint to administer the
Plan or, if no such committee has been appointed by the Board, the
Board.

       

      (i)    “Common Stock” shall
mean the common stock, par value $0.001 per share, of the Company.

       

      (j)    “Company” shall mean
Daybreak Oil and Gas, Inc., a Washington corporation, and any successor
thereto.

       

      (k)    “Continuous Service”
means that the Participant’s service with the Company or an Affiliate, whether
as an employee, consultant, director or officer, is not interrupted or
terminated, as determined by the Committee; provided, that, with respect to
any Award subject to Section 409A of the Code, a Participant who experiences a
“separation from service” under Section 409A of the Code, including the default
presumptions thereunder, will no longer be in Continuous Service.

       

      (l)    “Date of Grant” shall
mean the date on which the granting of an Award is authorized, or such other
date as may be specified in such authorization.

       

      (m)    “Effective Date” shall
mean April 6, 2009.

       

      (n)    “Eligible Director”
shall mean a person who is a “non-employee director” within the meaning of Rule
16b-3 under the Exchange Act.

       

      
        
           

        

        
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      (o)    “Eligible Individual”
shall mean an individual designated as such pursuant to Section 5.

       

      (p)    “Event” shall have the
meaning set forth in Section 12.

       

      (q)    “Exchange Act” shall
have the meaning given to such term in the definition of Change in
Control.

       

      (r)    “Fair Market Value”
per share shall mean, as of any date, the value of Common Stock determined as
follows:

       

      (i)    If the
Common Stock is listed on any established stock exchange or a national market
system, its Fair Market Value will be the closing price for such stock as quoted
on such exchange or system on the day of determination, as reported in The Wall Street Journal or
such other source as the Committee deems reliable;

       

      (ii)    If the
Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a share of Common Stock will
be the mean between the high bid and low asked prices for the Common Stock on
the day of determination, as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or

       

      (iii)    In the
absence of an established market for the Common Stock, the Fair Market Value
will be determined in good faith by the Committee.

       

      (s)    “Incumbent Board”
shall have the meaning given to such term in the definition of Change in
Control.

       

      (t)    “Indemnifiable Person”
shall have the meaning set forth in Section 4.

       

      (u)    “Mature Shares” shall
mean shares of Common Stock owned by a Participant that are not subject to any
pledge or security interest and that have been either previously acquired by the
Participant on the open market or meet such other requirements, if any, as the
Committee may determine are necessary in order to avoid an accounting earnings
charge on account of the use of such shares to satisfy a withholding obligation
of the Participant.

       

      (v)    “Outstanding Company Common
Stock” shall have the meaning given to such term in the definition of
Change in Control.

       

      (w)    “Outstanding Company Voting
Securities” shall have the meaning given to such term in the definition
of Change in Control.

       

      (x)    “Participant” shall
mean an Eligible Individual who is selected by the Committee to participate in
the Plan in accordance with Section 5.

       

      (y)    “Person” shall have
the meaning given to such term in the definition of Change in
Control.

       

      
        
           

        

        
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      (z)    “Plan” shall mean this
Daybreak Oil and Gas, Inc. 2009 Restricted Stock and Restricted Stock Unit
Plan.

       

      (aa)    “Restricted Period”
shall mean the period of time determined by the Committee during which an Award
is subject to restrictions or, as applicable, the period of time within which
performance is measured for purposes of determining whether an Award has been
earned.

       

      (bb)    “Restricted Stock”
shall mean shares of Common Stock, subject to certain specified restrictions
(including, without limitation, a requirement that the Participant remain
continuously employed or provide continuous services for a specified period of
time), granted under Section 7 of the Plan.

       

      (cc)    “Restricted Stock
Unit” shall mean an unfunded and unsecured promise to deliver shares of
Common Stock, cash, other securities or other property, subject to certain
restrictions (including, without limitation, a requirement that the Participant
remain continuously employed or provide continuous services for a specified
period of time), granted under Section 8 of the Plan.

       

      3.    Shares Subject to the
Plan.  Awards granted under the Plan shall be subject to
adjustment in accordance with Section 12, the total of the number of shares of
Common Stock which shall be available for the grant of Awards under the Plan
shall not exceed 4,000,000 shares; provided, that, upon forfeiture
of Awards in accordance with the provisions of the Plan and the terms and
conditions of the applicable Award, shares subject to such forfeited Awards
shall be available for subsequent Awards.  Common Stock available for
issue or distribution under the Plan shall be authorized and unissued shares or
shares reacquired by the Company in any manner.  The Company, during
the term of this Plan, shall reserve and keep available at all times such number
of shares of Common Stock as shall be sufficient to satisfy the requirements of
this Plan.

       

      4.    Administration.

       

      (a)    The
Committee shall administer the Plan.  To the extent required to comply
with the provisions of Rule 16b-3 promulgated under the Exchange Act (if the
Board is not acting as the Committee under the Plan), it is intended that each
member of the Committee shall, at the time he takes any action with respect to
an Award under the Plan, be an Eligible Director.  However, the fact
that a Committee member shall fail to qualify as an Eligible Director shall not
invalidate any Award granted by the Committee that is otherwise validly granted
under the Plan.  The majority of the members of the Committee shall
constitute a quorum.  The acts of a majority of the members present at
any meeting at which a quorum is present or acts approved in writing by a
majority of the Committee shall be deemed the acts of the
Committee.

       

      (b)    Subject
to the provisions of the Plan and applicable law, the Committee shall have the
sole and plenary authority, in addition to other express powers and
authorizations conferred on the Committee by the Plan,
to:  (i) designate Participants; (ii) determine the type or
types of Awards to be granted to a Participant; (iii) determine the number
of shares of Common Stock to be covered by, or with respect to which payments,
rights, or other matters are to be calculated in connection with, Awards;

       

      
        
           

        

        
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      (iv) determine
the terms and conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be settled in cash, shares of
Common Stock, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, canceled, forfeited, or suspended; (vi) determine whether, to what
extent, and under what circumstances the delivery of cash, Common Stock, other
securities, other Awards or other property and other amounts payable with
respect to an Award shall be deferred either automatically or at the election of
the Participant or of the Committee; (vii) interpret, administer, reconcile
any inconsistency in, correct any defect in and/or supply any omission in the
Plan and any instrument or agreement relating to, or Award granted under, the
Plan; (viii) establish, amend, suspend, or waive any rules and regulations
and appoint such agents as the Committee shall deem appropriate for the proper
administration of the Plan; (ix) accelerate the vesting of, payment for or
lapse of restrictions on, Awards; and (x) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan.

       

      (c)    The
Committee may delegate to one or more officers of the Company or any Affiliate
the authority to act on behalf of the Committee with respect to any matter,
right, obligation, or election that is the responsibility of or that is
allocated to the Committee herein, and that may be so delegated as a matter of
law, except for grants of Awards to persons subject to Section 16 of
the Exchange Act.

       

      (d)    Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any
Award or any documents evidencing Awards granted pursuant to the Plan shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all persons or entities, including,
without limitation, the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, and any stockholder of the Company.

       

      (e)    No member
of the Board, the Committee, delegate of the Committee or any employee or agent
of the Company (each such person, an “Indemnifiable
Person”) shall be liable for any action taken or omitted to be taken or
any determination made in good faith with respect to the Plan or any Award
hereunder.  Each Indemnifiable Person shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
(including attorneys’ fees) that may be imposed upon or incurred by such
Indemnifiable Person in connection with or resulting from any action, suit or
proceeding to which such Indemnifiable Person may be a party or in which such
Indemnifiable Person may be involved by reason of any action taken or omitted to
be taken under the Plan or any Award agreement and against and from any and all
amounts paid by such Indemnifiable Person with the Company’s approval, in
settlement thereof, or paid by such Indemnifiable Person in satisfaction of any
judgment in any such action, suit or proceeding against such Indemnifiable
Person; provided, that, the Company
shall have the right, at its own expense, to assume and defend any such action,
suit or proceeding and once the Company gives notice of its intent to assume the
defense, the Company shall have sole control over such defense with counsel of
the Company’s choice.  The foregoing right of indemnification shall
not be available to an Indemnifiable Person to the extent that a final judgment
or other final adjudication (in either case not subject to further appeal)
binding upon such Indemnifiable Person determines that the acts or omissions of
such Indemnifiable Person giving rise to the indemnification claim resulted from
such Indemnifiable Person’s bad faith, fraud or willful criminal act or omission
or that such right of indemnification is otherwise prohibited by law or by the
Company’s Certificate of Incorporation or Bylaws.  

       

      
        
           

        

        
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      The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such Indemnifiable Persons may be entitled under the
Company’s Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any other power that the Company may have to indemnify such
Indemnifiable Persons or hold them harmless.

       

      (f)    Notwithstanding
anything to the contrary contained in the Plan, the Board may, in its sole
discretion, at any time and from time to time, grant Awards and administer the
Plan with respect to such Awards.  In any such case, the Board shall
have all the authority granted to the Committee under the Plan

       

      5.    Eligibility.  Individuals
eligible under the Plan shall be the officers, other employees, consultants and
directors of the Company and its Affiliates, if any, who are selected by the
Committee.

       

      6.    Awards; Award
Agreements.  Awards under the Plan shall consist of Restricted
Stock and Restricted Stock Units.  Awards shall be subject to the
terms and conditions of the Plan and shall be evidenced by an Award Agreement
(whether in paper or electronic form (including e-mail or the posting on a
website maintained by the Company or a third party under contract with the
Company)) containing such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall deem desirable.

       

      7.    Restricted
Stock.  Each grant of Restricted Stock shall be subject to the
conditions set forth in this Section 7, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement.

       

      (a)    Stock Certificates; Escrow
or Similar Arrangement.  Upon the grant of Restricted Stock,
the Committee shall cause a stock certificate registered in the name of the
Participant to be issued and, if the Committee determines that the Restricted
Stock shall be held by the Company or in escrow rather than delivered to the
Participant pending the release of the applicable restrictions, the Committee
may require the Participant to additionally execute and deliver to the Company
(i) an escrow agreement satisfactory to the Committee, if applicable, and
(ii) the appropriate stock power (endorsed in blank) with respect to the
Restricted Stock covered by such agreement.  If a Participant shall
fail to execute an Award Agreement and, if applicable, an escrow agreement and
blank stock power, within the amount of time specified by the Committee, the
Award shall be null and void.  Subject to the restrictions set forth
in this Section 7 and the applicable Award Agreement, the Participant
generally shall have the rights and privileges of a stockholder as to such
Restricted Stock, including, without limitation, the right to vote such
Restricted Stock.  To the extent shares of Restricted Stock are
forfeited, any stock certificates issued to the Participant evidencing such
shares shall be returned to the Company, and all rights of the Participant to
such shares and as a stockholder with respect thereto shall terminate without
further obligation on the part of the Company.

       

      (b)    Vesting; Acceleration of
Lapse of Restrictions.  Unless otherwise provided by the
Committee in an Award Agreement:  (i) the Restricted Period shall
lapse with respect to 25% of the Restricted Stock on each of the first four
anniversaries of the Date of Grant; and (ii) the unvested portion of
Restricted Stock shall terminate and be forfeited upon termination of employment
or service of the Participant granted the Award.

       

      
        
           

        

        
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      (c)    Legends on Restricted
Stock.  Each certificate representing Restricted Stock awarded
under the Plan shall bear a legend substantially in the form of the following in
addition to any other information the Company deems appropriate until the lapse
of all restrictions with respect to such Common Stock:

       

      TRANSFER
OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS RESTRICTED PURSUANT TO
THE TERMS OF THE DAYBREAK OIL AND GAS, INC. 2009 RESTRICTED STOCK AND RESTRICTED
STOCK UNIT PLAN AND A RESTRICTED STOCK AWARD AGREEMENT, BETWEEN DAYBREAK OIL AND
GAS, INC. AND THE PARTICIPANT.  A COPY OF SUCH PLAN AND AWARD
AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF DAYBREAK OIL AND GAS,
INC.

       

      (d)    Delivery of Restricted
Stock.  (i) Upon
the expiration of the Restricted Period with respect to any shares of Restricted
Stock, the restrictions set forth in the applicable Award Agreement shall be of
no further force or effect with respect to such shares, except as set forth in
the applicable Award Agreement.  If an escrow arrangement is used,
upon such expiration, the Company shall deliver to the Participant, or his
beneficiary, without charge, the stock certificate evidencing the shares of
Restricted Stock that have not then been forfeited and with respect to which the
Restricted Period has expired (rounded down to the nearest full
share).  Dividends, if any, that may have been withheld by the
Committee and attributable to any particular share of Restricted Stock shall be
distributed to the Participant in cash or, at the sole discretion of the
Committee, in shares of Common Stock having a Fair Market Value equal to the
amount of such dividends, upon the release of restrictions on such share and, if
such share is forfeited, the Participant shall have no right to such dividends
(except as otherwise set forth by the Committee in the applicable Award
Agreement).

       

      8.    Restricted Stock
Units.  Each grant of Restricted Stock Units shall be subject
to the conditions set forth in this Section 8, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement.

       

      (a)    Vesting; Acceleration of
Lapse of Restrictions.  Unless otherwise provided by the
Committee in an Award Agreement:  (i) the Restricted Period shall
lapse with respect to 25% of the Restricted
Stock Units on each of the first four anniversaries of the Date of Grant
and (ii) the unvested portion of the Restricted Stock Units shall
terminate and be forfeited upon termination of employment or service of the
Participant granted the Award.

       

      (b)    Settlement of Restricted
Stock Units. Unless otherwise provided by the Committee in an Award
Agreement, upon the expiration of the Restricted Period with respect to any
outstanding Restricted Stock Units (and in no event later than March 15 of the
year following the year in which the Restricted Stock Units vest), the Company
shall deliver to the Participant, or his beneficiary, without charge, one share
of Common Stock for each such outstanding Restricted Stock Unit; provided, however, that the
Committee may, in its sole discretion, elect to (i) pay cash or part cash
and part Common Stock in lieu of delivering only shares of Common Stock in
respect of such Restricted Stock Units or (ii) defer the delivery of Common
Stock (or cash or part Common Stock and part cash, as the case may be) beyond
the expiration of the Restricted Period.  

       

      
        
           

        

        
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      If a cash
payment is made in lieu of delivering shares of Common Stock, the amount of such
payment shall be equal to the Fair Market Value of the Common Stock as of the
date on which the Restricted Period lapsed with respect to such Restricted Stock
Units, less an amount equal to any federal, state, local and non-U.S. income and
employment taxes required to be withheld.

       

      9.    Withholding.

       

      (i)    A
Participant shall be required to pay to the Company or any Affiliate, and the
Company or any Affiliate shall have the right and is hereby authorized to
withhold, from any cash, shares of Common Stock, other securities or other
property deliverable under any Award or from any compensation or other amounts
owing to a Participant, the amount (in cash, Common Stock, other securities or
other property) of any required withholding taxes in respect of an Award, or any
payment or transfer under an Award or under the Plan and to take such other
action as may be necessary in the opinion of the Committee or the Company to
satisfy all obligations for the payment of such withholding and
taxes.

       

      (ii)    Without
limiting the generality of clause (i) above, the Committee may, in its sole
discretion, permit a Participant to satisfy, in whole or in part, the foregoing
withholding liability by (A) the delivery of shares of Common Stock (which
are not subject to any pledge or other security interest and are Mature Shares)
owned by the Participant having a Fair Market Value equal to such withholding
liability or (B) having the Company withhold from the number of shares of
Common Stock otherwise issuable or deliverable pursuant to the settlement of the
Award a number of shares with a Fair Market Value equal to such withholding
liability (but no more than the minimum required statutory withholding
liability).

       

      10.    No Right to Continuous
Service.  Nothing contained in the Plan or in any Award under
the Plan shall confer upon any Participant any right with respect to the
continuation of service with the Company or any of its Affiliates, or interfere
in any way with the right of the Company to terminate his or her Continuous
Service at any time.  Nothing contained in the Plan shall confer upon
any Eligible Individual any claim or right to any Award.

       

      11.    Governmental
Compliance.  Each Award under the Plan shall be subject to the
requirement that if at any time the Committee shall determine that the listing,
registration or qualification of any shares issuable or deliverable thereunder
upon any securities exchange or under any Federal or state law, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition thereof, or in connection therewith, no shares shall be issued or
delivered unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.

       

      
        
           

        

        
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      12.    Adjustments.

       

      (a)    In the
event of any extraordinary dividend or other distribution (whether in the form
of cash, Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets or stock of the Company, or exchange of Common
Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event (an “Event”), and in the
Committee’s opinion, such event affects the Common Stock such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to an Award, then the Committee shall, in such
manner as it may deem equitable, including, without limitation, adjust any or
all of the following: (i)  the number and kind of shares of Common
Stock (or other securities or property) with respect to which Awards may be
granted or awarded; (ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Awards; and (iii) any performance
conditions relating to any Award.  The Committee’s determination in
good faith under this Section 12(a) shall be final, binding and
conclusive.

       

      (b)    Upon the
occurrence of an Event or similar corporate event or transaction in which
outstanding Awards are not to be assumed or otherwise continued following such
an Event, or similar corporate event or transaction, the Committee may, in its
discretion, terminate any outstanding Award without a Participant’s consent and
make a payment to such Participant equal to the Fair Market Value of the vested
portion of such Award.

       

      (c)    The
existence of the Plan, the Award Agreement and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or
otherwise.

       

      13.    Effect of Change in
Control.  Except to the extent otherwise provided in an Award
Agreement, in the event of a Change in Control, notwithstanding any provision of
the Plan to the contrary, the Committee may provide that, with respect to all or
any portion of a particular outstanding Award or Awards:

       

      (a)    The
Restricted Period shall expire as of a time prior to the Change in Control;
and

       

      (b)    To the
extent practicable, any actions taken by the Committee under the immediately
preceding clause (a) shall occur in a manner and at a time which allows affected
Participants the ability to participate in the Change in Control transactions
with respect to the Common Stock subject to their Awards.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      14.    Amendment and
Termination.

       

      (a)    Amendment and Termination of
the Plan.  The Board may amend, alter, suspend, discontinue, or
terminate the Plan or any portion thereof at any time; provided, that, no such
amendment, alteration, suspension, discontinuation or termination shall be made
without stockholder approval if such approval is necessary to comply with any
tax or regulatory requirement applicable to the Plan (including, without
limitation, as necessary to comply with any rules or requirements of any
securities exchange or inter-dealer quotation system on which the shares of
Common Stock may be listed or quoted); provided, further, that any
such amendment, alteration, suspension, discontinuance or termination that would
materially and adversely affect the rights of any Participant or any holder or
beneficiary of any Award theretofore granted shall not to that extent be
effective without the consent of the affected Participant, holder or
beneficiary.

       

      (b)    Amendment of Award
Agreements.  The Committee may, to the extent consistent with
the terms of any applicable Award Agreement, waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate,
any Award theretofore granted or the associated Award Agreement, prospectively
or retroactively; provided that, except as
otherwise provided in Section 12, any such waiver, amendment, alteration,
suspension, discontinuance, cancellation or termination that would materially
and adversely affect the rights of any Participant with respect to any Award
theretofore granted shall not to that extent be effective without the consent of
the affected Participant.

       

      15.    Unfunded
Plan.  The Plan is intended to constitute an “unfunded” plan
for incentive compensation.  With respect to any payments not yet made
to a Participant pursuant to an Award, nothing contained in the Plan or any
Award Agreement shall give the Participant any rights that are greater than
those of a general unsecured creditor of the Company or any
Affiliate.  To the extent applicable, the Plan is intended to comply
with Section 409A of the Code and the Committee shall interpret the Plan in
accordance therewith.

       

      16.    General
Provisions.

       

      (a)    Nontransferability.  No
Award may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant other than by will or by the laws of
descent and distribution and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or an Affiliate; provided, that, the designation
of a beneficiary shall not constitute an assignment, alienation, pledge,
attachment, sale, transfer or encumbrance.

       

      (b)    No Claim to Awards; No
Rights to Continued Employment; Waiver.  No employee of
the Company or an Affiliate, or other person, shall have any claim or right to
be granted an Award under the Plan or, having been selected for the grant of an
Award, to be selected for a grant of any other Award.  There is no
obligation for uniformity of treatment of Participants or holders or
beneficiaries of Awards.  The terms and conditions of Awards and the
Committee’s determinations and interpretations with respect thereto need not be
the same with respect to each Participant and may be made selectively among
Participants, whether or not such Participants are similarly
situated.  

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      The
Company or any of its Affiliates may at any time dismiss a Participant from
employment or discontinue any consulting relationship, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan or
any Award Agreement.  By accepting an Award under the Plan, a
Participant shall thereby be deemed to have waived any claim to continued
exercise or vesting of an Award or to damages or severance entitlement related
to non-continuation of the Award beyond the period provided under the Plan or
any Award Agreement, notwithstanding any provision to the contrary in any
written employment contract or other agreement between the Company and its
Affiliates and the Participant, whether any such agreement is executed before,
on or after the Date of Grant.

       

      (c)    Designation and Change of
Beneficiary.  Each Participant may file with the Committee a
written designation of one or more persons as the beneficiary(ies) who shall be
entitled to receive the amounts payable with respect to an Award, if any, due
under the Plan upon his death.  A Participant may, from time to time,
revoke or change his beneficiary designation without the consent of any prior
beneficiary by filing a new designation with the Committee.  The last
such designation received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless received
by the Committee prior to the Participant’s death, and in no event shall it be
effective as of a date prior to such receipt.  If no beneficiary
designation is filed by a Participant, the beneficiary shall be deemed to be his
or her spouse or, if the Participant is unmarried at the time of death, his or
her estate.

       

      (d)    No Rights as a
Stockholder.  Except as otherwise specifically provided in the
Plan or any Award Agreement, no person shall be entitled to the privileges of
ownership in respect of shares of Common Stock that are subject to Awards
hereunder until such shares have been issued or delivered to that
person.

       

      (e)    Government and Other
Regulations.

       

      (i)    The
obligation of the Company to settle Awards in Common Stock or other
consideration shall be subject to all applicable laws, rules, and regulations,
and to such approvals by governmental agencies as may be
required.  Notwithstanding any terms or conditions of any Award to the
contrary, the Company shall be under no obligation to offer to sell or to sell,
and shall be prohibited from offering to sell or selling, any shares of Common
Stock pursuant to an Award unless such shares have been properly registered for
sale pursuant to the Securities Act with the Securities and Exchange Commission
or unless the Company has received an opinion of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of
such exemption have been fully complied with.  

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      The
Company shall be under no obligation to register for sale under the Securities
Act any of the shares of Common Stock to be offered or sold under the
Plan.  The Committee shall have the authority to provide that all
certificates for shares of Common Stock or other securities of the Company or
any Affiliate delivered under the Plan shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
Plan, the applicable Award Agreement, the federal securities laws, or the rules,
regulations and other requirements of the Securities and Exchange Commission,
any securities exchange or inter-dealer quotation system upon which such shares
or other securities are then listed or quoted and any other applicable federal,
state, local or non-U.S. laws, and, without limiting the generality of
Section 7 of the Plan, the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.  Notwithstanding any provision in the Plan to the
contrary, the Committee reserves the right to add any additional terms or
provisions to any Award granted under the Plan that it in its sole discretion
deems necessary or advisable in order that such Award complies with the legal
requirements of any governmental entity to whose jurisdiction the Award is
subject.

       

      (ii)    The
Committee may cancel an Award or any portion thereof if it determines, in its
sole discretion, that legal or contractual restrictions and/or blockage and/or
other market considerations would make the Company’s acquisition of shares of
Common Stock from the public markets, the Company’s issuance of Common Stock to
the Participant, the Participant’s acquisition of Common Stock from the Company
and/or the Participant’s sale of Common Stock to the public markets, illegal,
impracticable or inadvisable.  If the Committee determines to cancel
all or any portion of an Award in accordance with the foregoing, the Company
shall pay to the Participant an amount equal to the excess of (A) the
aggregate Fair Market Value of the shares of Common Stock subject to such Award
or portion thereof canceled (determined as of the date that the shares would
have been vested or delivered, as applicable), over (B) any amount payable
as a condition of delivery of shares of Common Stock.  Such amount
shall be delivered to the Participant as soon as practicable following the
cancellation of such Award or portion thereof.

       

      (f)    Payments to Persons Other
Than Participants.  If the Committee shall find that any person
to whom any amount is payable under the Plan is unable to care for his affairs
because of illness or accident, or is a minor, or has died, then any payment due
to such person or his estate (unless a prior claim therefor has been made by a
duly appointed legal representative) may, if the Committee so directs the
Company, be paid to his spouse, child, relative, an institution maintaining or
having custody of such person, or any other person deemed by the Committee to be
a proper recipient on behalf of such person otherwise entitled to
payment.  Any such payment shall be a complete discharge of the
liability of the Committee and the Company therefor.

       

      (g)    Nonexclusivity of the
Plan.  Neither the
adoption of this Plan by the Board nor the submission of this Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the granting of stock
options or other equity-based awards otherwise than under this Plan, and such
arrangements may be either applicable generally or only in specific
cases.

       

      (h)    No Trust or Fund
Created.  Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate, on the one hand, and a
Participant or other person or entity, on the other
hand.  

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      No
provision of the Plan or any Award shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor shall the Company maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes.  Participants shall
have no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.

       

      (i)    Reliance on
Reports.  Each member of
the Committee and each member of the Board shall be fully justified in acting or
failing to act, as the case may be, and shall not be liable for having so acted
or failed to act in good faith, in reliance upon any report made by the
independent public accountant of the Company and its Affiliates and/or any other
information furnished in connection with the Plan by any agent of the Company or
the Committee or the Board, other than himself.

       

      (j)    Relationship to Other
Benefits.  No payment under the Plan shall be taken into
account in determining any benefits under any pension, retirement, profit
sharing, group insurance or other benefit plan of the Company except as
otherwise specifically provided in such other plan.

       

      (k)    Governing Law.  The Plan shall
be governed by and construed in accordance with the internal laws of the State
of Washington applicable to contracts made and performed wholly within the State
of Washington, without giving effect to the conflict of laws provisions
thereof.

       

      (l)    Severability.  If any provision
of the Plan or any Award or Award Agreement is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any person or
entity or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to the applicable laws, or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be construed or deemed
stricken as to such jurisdiction, person or entity or Award and the remainder of
the Plan and any such Award shall remain in full force and effect.

       

      (m)    Obligations Binding on
Successors.  The obligations of the Company under the Plan
shall be binding upon any successor corporation or organization resulting from
the merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Company.

       

      (n)    Expenses; Gender; Titles and
Headings. The
expenses of administering the Plan shall be borne by the Company and its
Affiliates.  Masculine pronouns and other words of masculine gender
shall refer to both men and women.  The titles and headings of the
sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings shall
control.

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      (o)    Other
Agreements.  Notwithstanding the above, the Committee may
require, as a condition to the grant of and/or the receipt of shares of Common
Stock under an Award, that the Participant execute lock-up, stockholder or other
agreements, as it may determine in its sole and absolute
discretion.

       

      (p)    Payments. Participants shall be
required to pay, to the extent required by applicable law, any amounts required
to receive shares of Common Stock under any Award made under the
Plan.  The law of the State of Washington shall apply to all Awards
and interpretations under the Plan regardless of the effect of such state’s
conflict of laws principles.

       

      17.    Term of
Plan.  Subject to earlier termination pursuant to Section 14,
the Plan shall have a term of 10 years from its Effective Date.

       

      *           *           *

       

      As
adopted by the Board of Directors of Daybreak Oil and Gas, Inc. on April 6,
2009.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      15dbrm_ex46-90406.htm

    Exhibit
4.6

     

    DAYBREAK
OIL AND GAS, INC.

    2009
RESTRICTED STOCK AND RESTRICTED UNIT PLAN

    RESTRICTED
STOCK AWARD AGREEMENT

    

    

    This
Restricted Stock Award Agreement (the “Agreement”) is made,
effective as of the _____ day of _________, 2___ (the “Grant Date”), by and
between Daybreak Oil and Gas, Inc. (the “Company”)
and _______________ (the
“Grantee”).

    

    RECITALS:

    

    WHEREAS, the Company has
adopted the 2009 Daybreak Oil and Gas, Inc. Restricted Stock and Restricted
Stock Unit Plan (the “Plan”) pursuant to
which awards of restricted shares of Common Stock  of the
Company  may be granted; and

    

    WHEREAS, the Committee has
determined that it is in the best interests of the Company and its stockholders
to grant the award of restricted shares of Common Stock provided for herein (the
“Restricted Stock
Award”) to the Grantee in recognition of the Grantee’s services to the
Company, such grant to be subject to the terms set forth herein.

    

    NOW, THEREFORE, in
consideration for the mutual covenants hereinafter set forth, the parties hereto
agree as follows:

    

    
      	
              1.  

            	
              Grant
      of Restricted Stock Award.  Pursuant to
      Section 7 of the Plan, the Company
      hereby issues to the Grantee on the Grant Date a Restricted Stock Award
      consisting of, in the aggregate, ____ shares of Common Stock in the
      capital of the Company (hereinafter called the “Restricted
      Stock”).

            

    

     

    
      	
              2.  

            	
              Incorporation
      by Reference.  The provisions of the Plan are hereby
      incorporated herein by reference.  Except as otherwise expressly
      set forth herein, this Agreement shall be construed in accordance with the
      provisions of the Plan and any capitalized terms not otherwise defined in
      this Agreement shall have the definitions set forth in the
      Plan.  The Committee shall have the authority to interpret and
      construe the Plan and this Agreement and to make any and all
      determinations thereunder, and its decision shall be binding and
      conclusive upon the Grantee and his/her legal representative in respect of
      any questions arising under the Plan or this
  Agreement.

            

    

     

    
      	
              3.  

            	
              Restrictions.  Except
      as provided in the Plan or this Agreement, the restrictions on the
      Restricted Stock are that they will be forfeited by the Grantee and all of
      the Grantee’s rights to such shares shall immediately terminate without
      any payment or consideration by the Company, in the event of any sale,
      assignment, transfer, hypothecation, pledge or other alienation of such
      Restricted Stock made or attempted, whether voluntary or involuntary, and
      if involuntary whether by process of law in any civil or criminal suit,
      action or proceeding, whether in the nature of an insolvency or bankruptcy
      proceeding or otherwise, without the written consent of the
      Board.

            

    

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      	
              4.  

            	
              Vesting.

            

    

     

    
      	
            	
              (a)  

            	
              Except
      as otherwise provided herein, the restrictions described in Section 3
      above will lapse with respect to 25% of the Restricted Stock on each of
      the first four anniversaries of the Grant Date (each such date a “Vesting Date”);
      provided,
      that,
      except as otherwise provided herein, the Grantee is then employed by the
      Company.  If the Grantee’s Continuous Service is terminated at
      any time prior to a Vesting Date, the unvested Restricted Stock shall
      terminate and be forfeited upon such cessation of service, unless
      otherwise provided in this Section 4.  Notwithstanding the
      foregoing, in accordance with Section 4(b) of the Plan, the Committee may
      elect to accelerate the vesting of all or any portion of the Restricted
      Stock Award.

            

    

     

    
      	
            	
              (b)  

            	
              Change in
      Control.  At a time determined by the Committee prior to
      a Change in Control, all restrictions on this Restricted Stock Award shall
      expire and the Restricted Stock shall automatically become vested and
      immediately nonforfeitable in full.

            

    

     

    
      	
              5.  

            	
              Taxes.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Withholding.  The
      Grantee shall be required to pay to the Company or any Affiliate, and the
      Company or any Affiliate shall have the right and is hereby authorized to
      withhold, from any cash, shares of Common Stock, other securities or other
      property deliverable under this Restricted Stock Award, the amount (in
      cash, Common Stock, other securities or other property) of any required
      withholding taxes in respect of this Restricted Stock Award or any payment
      or transfer under this Restricted Stock Award or under the Plan and to
      take such other action as may be necessary in the opinion of the Committee
      or the Company to satisfy all obligations for the payment of such
      withholding and taxes.  The Grantee may satisfy this withholding
      liability by: (a) the delivery of shares of Common Stock (which are
      not subject to any pledge or other security interest and are Mature
      Shares) owned by the Grantee having a Fair Market Value equal to such
      withholding liability or (b) having the Company withhold from the
      number of shares of Common Stock otherwise issuable or deliverable
      pursuant to the settlement of the Restricted Stock Award a number of
      shares with a Fair Market Value equal to such withholding liability (but
      no more than the minimum required statutory withholding
      liability).

            

    

     

    
      	
               
      

            	
              (b)

            	
              Section 83(b) of the
      Code.  If the Grantee properly elects, within thirty (30)
      days of the Grant Date, to include in gross income for federal income tax
      purposes an amount equal to the Fair Market Value of the Restricted Stock
      as of the Grant Date pursuant to Section 83(b) of the Code, to the extent
      required by law, the Grantee shall pay to the Company, or make other
      arrangements satisfactory to the Committee to pay to the Company in the
      year of such grant, any federal, state or local taxes required to be
      withheld with respect to such shares.  If the Grantee fails to
      make such payments, the Company or its Affiliates shall, to the extent
      permitted by law, have the right to deduct from any payment of any kind
      otherwise due to the Grantee any federal, state or local taxes of any kind
      required by law to be withheld with respect to such
  shares.

            

    

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
              6.  

            	
              Rights
      as Stockholder; Dividends.  The Grantee shall be the
      record owner of the Restricted Stock unless and until such shares of
      Common Stock are sold or otherwise disposed of, and as record owner shall
      be entitled to all rights of a stockholder of the Company, including,
      without limitation, voting rights, if any, with respect to the Restricted
      Stock while the Restricted Stock is held in
  custody.

            

    

     

    
      	
              7.  

            	
              Certificates.  Reasonably
      promptly following the Grant Date, the Company shall cause to be issued to
      the Grantee a certificate in respect of the Restricted Stock which shall
      bear the following (or a similar) legend in addition to any other legends
      that may be required under federal or state securities
    laws:

            

    

     

    “TRANSFER
OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS
OF THE DAYBREAK OIL AND GAS, INC. 2009 RESTRICTED STOCK AND RESTRICTED STOCK
UNIT PLAN AND A RESTRICTED STOCK AWARD AGREEMENT DATED AS OF [INSERT DATE]
ENTERED INTO BETWEEN DAYBREAK OIL AND GAS, INC. AND THE REGISTERED
OWNER.  A COPY OF SUCH PLAN AND AWARD AGREEMENT IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF DAYBREAK OIL AND GAS, INC.”

     

    Upon the
expiration of the restrictions, the Company shall deliver to the Grantee (or
his/her legal representative, beneficiary or heir, if applicable) a stock
certificate for the shares of Common Stock that have not been forfeited free
from legend except as otherwise required by applicable law.

     

    
      	
              8.  

            	
              Compliance
      with Laws and Regulations. The issuance and
      transfer of shares of Common Stock shall be subject to compliance by the
      Company and the Grantee with all applicable requirements of securities
      laws and with all applicable requirements of any stock exchange on which
      the Company’s shares of Common Stock may be listed at the time of such
      issuance or transfer.

            

    

     

    
      	
              9.  

            	
              No
      Right to Continuous Service.  Nothing in
      this Agreement shall be deemed by implication or otherwise to impose any
      limitation on any right of the Company or any of its Affiliates to
      terminate the Grantee’s Continuous Service at any
  time.

            

    

     

    
      	
              10.  

            	
              Notices.  All
      notices, demands and other communications provided for or permitted
      hereunder shall be made in writing and shall be delivered by registered or
      certified first class mail, return receipt requested, telecopier, courier
      service or personal delivery:

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    If to the
Company:

     

    Daybreak Oil and Gas, Inc.

    601 West Main Suite 1012

    Spokane, Washington 99201

    Attention: Karol L. Adams

    (509) 232-7674

    

    If to the
Grantee, at the Grantee’s last known address on file with the
Company.

     

    All such
notices, demands and other communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; five (5) business days
after being deposited in the mail, postage prepaid, if mailed; and when receipt
is mechanically acknowledged, if telecopied.

     

    
      	
              11.  

            	
              Bound
      by Plan.  By signing this Agreement, the Grantee
      acknowledges that he/she has received a copy of the Plan and has had an
      opportunity to review the Plan and agrees to be bound by all of the terms
      and provisions of the Plan.

            

    

     

    
      	
              12.  

            	
              Beneficiary.  The
      Grantee may file with the Committee a written designation of a beneficiary
      on such form as may be prescribed by the Committee and may, from time to
      time, amend or revoke such designation.  If no designated
      beneficiary survives the Grantee, the executor or administrator of the
      Grantee’s estate shall be deemed to be the Grantee’s
      beneficiary.

            

    

     

    
      	
              13.  

            	
              Successors.  The
      terms of this Agreement shall be binding upon and inure to the benefit of
      the Company, its successors and assigns, and on the Grantee and the
      beneficiaries, executors and administrators, heirs and successors of the
      Grantee.

            

    

     

    
      	
              14.  

            	
              Amendment
      of Restricted Stock Award.  Subject to Section 15 of this
      Agreement, the Committee at any time and from time to time may amend the
      terms of this Restricted Stock Award; provided, however, the
      Grantee’s rights under this Restricted Stock Award shall not be materially
      and adversely affected by any such amendment without the Grantee’s
      consent.

            

    

     

    
      	
              15.  

            	
              Adjustments.  This
      Restricted Stock Award is subject to adjustment pursuant to Section 12 of
      the Plan.

            

    

     

    
      	
              16.  

            	
              Governing
      Law.  This
      Agreement shall be governed by the laws of the State of Washington without
      regard to conflict of laws
principles.

            

    

     

    
      	
              17.  

            	
              Interpretation.  Any
      dispute regarding the interpretation of this Agreement shall be submitted
      by the Grantee or the Company to the Committee for review.  The
      resolution of such a dispute by the Committee shall be binding on the
      Company and the Grantee.

            

    

     

    
      	
              18.  

            	
              Severability.  Every
      provision of this Agreement is intended to be severable and any illegal or
      invalid term shall not affect the validity or legality of the remaining
      terms.

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
              19.  

            	
              Headings.  The
      headings of the Sections hereof are provided for convenience only and are
      not to serve as a basis for interpretation of construction, and shall not
      constitute a part of this
Agreement.

            

    

     

    
      	
              20.  

            	
              Signature
      in Counterparts.  This Agreement may be signed in
      counterparts, each of which shall be deemed an original, with the same
      effect as if the signatures thereto and hereto were upon the same
      instrument.

            

    

    

    

    

    [SIGNATURE
PAGE FOLLOWS]

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
set forth below.

     

     

    
      
        	 	DAYBREAK
      OIL AND GAS, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	Name: 	 	 
	 	Title:
      	 	 
	 	 	 	 

      

    

    

      
        	 	GRANTEE	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	Name: 	 	 
	 	Title: 	 	 
	 	 	 	 

      

    

     

    

    

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    

    6

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