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Exhibit 10.1    
    




ELLORA ENERGY INC.

AMENDED AND RESTATED

2006 STOCK INCENTIVE PLAN  









 
 TABLE OF CONTENTS  



	 
	 	 
	 	 
	 	 
	 	Page

	1.	 	PURPOSE	 	1
	2.	 	DEFINITIONS	 	1
	3.	 	ADMINISTRATION OF THE PLAN	 	4
	 	 	3.1.	 	Board	 	4
	 	 	3.2.	 	Committee	 	4
	 	 	3.3.	 	Terms of Awards	 	4
	 	 	3.4.	 	Deferral Arrangement	 	5
	 	 	3.5.	 	No Liability	 	5
	 	 	3.6.	 	Book Entry	 	6
	4.	 	STOCK SUBJECT TO THE PLAN	 	6
	5.	 	EFFECTIVE DATE, DURATION AND AMENDMENTS	 	6
	 	 	5.1.	 	Effective Date	 	6
	 	 	5.2.	 	Term	 	6
	 	 	5.3.	 	Amendment and Termination of the Plan	 	6
	6.	 	AWARD ELIGIBILITY AND LIMITATIONS	 	7
	 	 	6.1.	 	Service Providers and Other Persons	 	7
	 	 	6.2.	 	Successive Awards and Substitute Awards	 	7
	 	 	6.3.	 	Limitation on Shares of Stock Subject to Awards and Cash Awards	 	7
	7.	 	AWARD AGREEMENT	 	7
	8.	 	TERMS AND CONDITIONS OF OPTIONS	 	8
	 	 	8.1.	 	Option Price.	 	8
	 	 	8.2.	 	Vesting	 	8
	 	 	8.3.	 	Term	 	8
	 	 	8.4.	 	Termination of Service	 	8
	 	 	8.5.	 	Limitations on Exercise of Option	 	8
	 	 	8.6.	 	Method of Exercise	 	8
	 	 	8.7.	 	Rights of Holders of Options	 	9
	 	 	8.8.	 	Delivery of Stock Certificates	 	9
	 	 	8.9.	 	Transferability of Options	 	9
	 	 	8.10.	 	Family Transfers	 	9
	 	 	8.11.	 	Limitations on Incentive Stock Options	 	9
	9.	 	TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS	 	9
	 	 	9.1.	 	Right to Payment and Grant Price	 	9
	 	 	9.2.	 	Other Terms	 	10
	10.	 	TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS	 	10
	 	 	10.1.	 	Grant of Restricted Stock or Stock Units	 	10
	 	 	10.2.	 	Restrictions	 	10
	 	 	10.3.	 	Restricted Stock Certificates	 	10
	 	 	10.4.	 	Rights of Holders of Restricted Stock	 	11
	 	 	10.5.	 	Rights of Holders of Stock Units	 	11
	 	 	 	 	10.5.1.	 	Voting and Dividend Rights	 	11
	 	 	 	 	10.5.2.	 	Creditor's Rights	 	11
	 	 	10.6.	 	Termination of Service	 	11
	 	 	10.7.	 	Purchase of Restricted Stock	 	11
	 	 	10.8.	 	Delivery of Stock	 	11
	11.	 	TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS	 	12
	12.	 	FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK	 	12
	 	 	12.1.	 	General Rule	 	12
	 	 	 	 	 	 	 	 	 





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	 	 	12.2.	 	Surrender of Stock	 	12
	 	 	12.3.	 	Cashless Exercise	 	12
	 	 	12.4.	 	Other Forms of Payment	 	12
	13.	 	TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS	 	12
	 	 	13.1.	 	Dividend Equivalent Rights	 	12
	 	 	13.2.	 	Termination of Service	 	13
	14.	 	TERMS AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE AWARDS	 	13
	 	 	14.1.	 	Performance Conditions	 	13
	 	 	14.2.	 	Performance or Annual Incentive Awards Granted to Designated Covered Employees	 	13
	 	 	 	 	14.2.1.	 	Performance Goals Generally	 	13
	 	 	 	 	14.2.2.	 	Business Criteria	 	13
	 	 	 	 	14.2.3.	 	Timing For Establishing Performance Goals	 	14
	 	 	 	 	14.2.4.	 	Settlement of Performance or Annual Incentive Awards; Other Terms	 	14
	 	 	14.3.	 	Written Determinations	 	14
	 	 	14.4.	 	Status of Section 14.2 Awards Under Code Section 162(m)	 	14
	15.	 	PARACHUTE LIMITATIONS	 	14
	16.	 	REQUIREMENTS OF LAW	 	15
	 	 	16.1.	 	General	 	15
	 	 	16.2.	 	Rule 16b-3	 	16
	17.	 	EFFECT OF CHANGES IN CAPITALIZATION	 	16
	 	 	17.1.	 	Changes in Stock	 	16
	 	 	17.2.	 	Reorganization in Which the Company Is the Surviving Entity Which does not Constitute a Corporate Transaction	 	16
	 	 	17.3.	 	Corporate Transaction	 	17
	 	 	17.4.	 	Adjustments	 	17
	 	 	17.5.	 	No Limitations on Company	 	18
	18.	 	GENERAL PROVISIONS	 	18
	 	 	18.1.	 	Disclaimer of Rights	 	18
	 	 	18.2.	 	Nonexclusivity of the Plan	 	18
	 	 	18.3.	 	Withholding Taxes	 	18
	 	 	18.4.	 	Captions	 	19
	 	 	18.5.	 	Other Provisions	 	19
	 	 	18.6.	 	Number and Gender	 	19
	 	 	18.7.	 	Severability	 	19
	 	 	18.8.	 	Governing Law	 	19
	 	 	18.9.	 	Section 409A of the Code	 	19




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ELLORA ENERGY INC.
  AMENDED AND RESTATED
  2006 STOCK INCENTIVE PLAN    
    



        Ellora Energy Inc., a Delaware corporation (the "Company"), sets forth herein the terms of its Amended and
Restated 2006 Stock Incentive Plan (the "Plan"), as follows: 


1.    PURPOSE    


        The
Plan is intended to enhance the Company's and its Affiliates' (as defined herein) ability to attract and retain highly qualified officers, directors, key employees, and other
persons, and to motivate such persons to serve the Company and its Affiliates and to expend maximum effort to improve the business results and earnings of the Company, by providing to such persons an
opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company. To this end, the Plan provides for the grant of stock options, stock appreciation
rights, restricted stock, stock units, unrestricted stock, dividend equivalent rights and cash awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of
annual or long-term performance goals in accordance with the terms hereof. Stock options granted under the Plan may be non-qualified stock options or incentive stock options,
as provided herein. 


2.    DEFINITIONS    



        For
purposes of interpreting the Plan and related documents (including Award Agreements), the following definitions shall apply: 


        2.1   "Affiliate" means, with respect to the Company, any company or other trade or business that controls, is controlled by or
is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary. 


        2.2   "Annual Incentive Award" means an Award made subject to attainment of performance goals (as described in  Section 14) over a performance period of up to one
(1) year (the fiscal year, unless otherwise specified by the Committee). 


        2.3   "Award" means a grant of an Option, Stock Appreciation Right, Restricted Stock, Unrestricted Stock, Stock Unit, Dividend
Equivalent Rights, or cash award under the Plan. 


        2.4   "Award Agreement" means the written agreement between the Company and a Grantee that evidences and sets out the terms and
conditions of an Award. 


        2.5   "Benefit Arrangement" shall have the meaning set forth in  Section 15 hereof. 


        2.6   "Board" means the Board of Directors of the Company. 


        2.7   "Cause" means, as determined by the Board and unless otherwise provided in an applicable agreement with the Company or an
Affiliate, (i) gross negligence or willful misconduct in connection with the performance of duties; (ii) conviction of a criminal offense (other than minor traffic offenses); or
(iii) material breach of any term of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreements, if any, between the Service
Provider and the Company or an Affiliate. 


        2.8   "Code" means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. 


        2.9   "Committee" means a committee of, and designated from time to time by resolution of, the Board, which shall be
constituted as provided in Section 3.2. 


        2.10 "Company" means Ellora Energy, Inc. 


        2.11 "Corporate Transaction" means (i) the dissolution or liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one or more other entities in which the Company is not the surviving entity, (ii) a sale of substantially all of the assets of the Company to another person
or entity, or (iii) any transaction (including without limitation a merger or reorganization in which the Company is the surviving entity) which results in any person or entity (other than
persons who are 







 



stockholders
or Affiliates immediately prior to the transaction) owning fifty percent (50%) or more of the combined voting power of all classes of stock of the Company. 


        2.12 "Covered Employee" means a Grantee who is a Covered Employee within the meaning of Section 162(m)(3) of the Code. 


        2.13 "Disability" means the Grantee is unable to perform each of the essential duties of such Grantee's position by reason of
a medically determinable physical or mental impairment which is potentially permanent in character or which can be expected to last for a continuous period of not less than twelve (12) months;  provided, however, that, with respect to rules regarding expiration of an Incentive Stock Option
following termination of the Grantee's Service, Disability shall mean the Grantee is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. 


        2.14 "Dividend Equivalent Right" means a right, granted to a Grantee under  Section 13 hereof, to receive cash, Stock, other Awards or other property equal in value to
dividends paid with respect to a specified number of
shares of Stock, or other periodic payments. 


        2.15 "Effective Date" means that day one day prior to the date on which the Company's first registration statement on
Form S-1 under the Securities Act is declared effective by the Securities and Exchange Commission. 


        2.16 "Exchange Act" means the Securities Exchange Act of 1934, as now in effect or as hereafter amended. 



        2.17 "Fair Market Value" means the value of a share of Stock, determined as follows: if on the Grant Date or other
determination date the Stock is listed on an established national or regional stock exchange, is admitted to quotation on The Nasdaq Stock Market, Inc. or is publicly traded on an established
securities market, the Fair Market Value of a share of Stock shall be the closing price of the Stock on such exchange or in such market (if there is more than one such exchange or market the Board
shall determine the appropriate exchange or market) on the Grant Date or such other determination date (or if there is no such reported closing price, the Fair Market Value shall be the mean between
the highest bid and lowest asked prices or between the high and low sale prices on such trading day) or, if no sale of Stock is reported for such trading day, on the next preceding day on which any
sale shall have been reported. If the Stock is not listed on such an exchange, quoted on such system or traded on such a market, Fair Market Value shall be the value of the Stock as determined by the
Board in good faith. 


        2.18 "Family Member" means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent,
grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships, of the Grantee, any person sharing the Grantee's household (other than a tenant or
employee), a trust in which any one or more of these persons have more than fifty percent of the beneficial interest, a foundation in which any one or more of these persons (or the Grantee) control
the management of assets, and any other entity in which one or more of these persons (or the Grantee) own more than fifty percent of the voting interests. 


        2.19 "GAAP" means U.S. generally accepted accounting principles. 


        2.20 "Grant Date" means, as determined by the Board, the latest to occur of (i) the date as of which the Board
approves an Award, (ii) the date on which the recipient of an Award first becomes eligible to receive an Award under Section 6 hereof, or
(iii) such other date as may be specified by the Board. 


        2.21 "Grantee" means a person who receives or holds an Award under the Plan. 


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        2.22 "Incentive Stock Option" means an "incentive stock option" within the meaning of Section 422 of the Code, or the
corresponding provision of any subsequently enacted tax statute, as amended from time to time. 


        2.23 "Non-qualified Stock Option" means an Option that is not an Incentive Stock Option. 


        2.24 "Option" means an option to purchase one or more shares of Stock pursuant to the Plan. 


        2.25 "Option Price" means the exercise price for each share of Stock subject to an Option. 



        2.26 "Other Agreement" shall have the meaning set forth in Section 15
hereof. 


        2.27 "Outside Director" means a member of the Board who is not an officer or employee of the Company. 


        2.28 "Performance Award" means an Award made subject to the attainment of performance goals (as described in  Section 14) over a performance period of up to ten
(10) years. 



        2.29 "Plan" means this Ellora Energy, Inc. Amended and Restated 2006 Stock Incentive Plan. 


        2.30 "Purchase Price" means the purchase price for each share of Stock pursuant to a grant of Restricted Stock or
Unrestricted Stock. 


        2.31 "Reporting Person" means a person who is required to file reports under Section 16(a) of the Exchange Act. 



        2.32 "Restricted Stock" means shares of Stock, awarded to a Grantee pursuant to  Section 10 hereof. 


        2.33 "SAR Exercise Price" means the per share exercise price of an SAR granted to a Grantee under  Section 9 hereof. 


        2.34 "Securities Act" means the Securities Act of 1933, as now in effect or as hereafter amended. 



        2.35 "Service" means service as a Service Provider to the Company or an Affiliate. Unless otherwise stated in the applicable
Award Agreement, a Grantee's change in position or duties shall not result in interrupted or terminated Service, so long as such Grantee continues to be a Service Provider to the Company or an
Affiliate. Subject to the preceding sentence, whether a termination of Service shall have occurred for purposes of the Plan shall be determined by the Board, which determination shall be final,
binding and conclusive. 



        2.36 "Service Provider" means an employee, officer or director of the Company or an Affiliate, or a consultant or adviser
currently providing services to the Company or an Affiliate. 


        2.37 "Stock" means the common stock, par value $.001 per share, of the Company. 


        2.38 "Stock Appreciation Right" or "SAR" means a right granted to a Grantee
under Section 9 hereof. 


        2.39 "Stock Unit" means a bookkeeping entry representing the equivalent of one or more share of Stock as indicated in the
Award Agreement awarded to a Grantee pursuant to Section 10 hereof. 


        2.40 "Subsidiary" means any "subsidiary corporation" of the Company within the meaning of Section 424(f) of the Code. 


        2.41 "Substitute Awards" means Awards granted upon assumption of, or in substitution for, outstanding awards previously
granted by a company or other entity acquired by the Company or any Affiliate or with which the Company or any Affiliate combines. 


        2.42 "Ten Percent Stockholder" means an individual who owns more than ten percent (10%) of the total combined voting power of
all classes of outstanding stock of the Company, its parent or any of its 


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Subsidiaries.
In determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied. 


        2.43 "Unrestricted Stock" means an Award pursuant to Section 11
hereof. 


3.    ADMINISTRATION OF THE PLAN    



        3.1.    Board.    


        The
Board shall have such powers and authorities related to the administration of the Plan as are consistent with the Company's certificate of incorporation and by-laws and
applicable law. The Board shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award or any Award Agreement, and shall
have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of the Plan that the Board deems to be
necessary or appropriate to the administration of the Plan, any Award or any Award Agreement. All such actions and determinations shall be by the affirmative vote of a majority of the members of the
Board present at a meeting or by unanimous consent of the Board executed in writing in accordance with the
Company's certificate of incorporation and by-laws and applicable law. The interpretation and construction by the Board of any provision of the Plan, any Award or any Award Agreement shall
be final, binding and conclusive. 


        3.2.    Committee.    



        The
Board from time to time may delegate to the Committee such powers and authorities related to the administration and implementation of the Plan, as set forth in  Section 3.1 above and other
applicable provisions, as the Board shall determine, consistent with the certificate of incorporation and
by-laws of the Company and applicable law. 



          (i)  Except
as provided in Subsection (ii) and except as the Board may otherwise determine, the Committee, if any, appointed by the Board to administer the Plan shall
consist of two (2) or more Outside Directors of the Company who: (a) qualify as "outside directors" within the meaning of Section 162(m) of the Code and (b) meet such other
requirements as may be established from time to time by the Securities and Exchange Commission for plans intended to qualify for exemption under Rule 16b-3 (or its successor) under
the Exchange Act. 


         (ii)  The
Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not be Outside Directors, who
may administer the Plan with respect to employees or other Service Providers who are not officers or directors of the Company, may grant Awards under the Plan to such employees or other Service
Providers, and may determine all terms of such Awards. 




In
the event that the Plan, any Award or any Award Agreement entered into hereunder provides for any action to be taken by or determination to be made by the Board, such action may be taken or such
determination may be made by the Committee if the power and authority to do so has been delegated to the Committee by the Board as provided for in this Section. Unless otherwise expressly determined
by the Board, any such action or determination by the Committee shall be final, binding and conclusive. To the extent permitted by law, the Committee may delegate its authority under the Plan to a
member of the Board. 


        3.3.    Terms of Awards.    



        Subject
to the other terms and conditions of the Plan, the Board shall have full and final authority to: 



          (i)  designate
Grantees, 



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         (ii)  determine
the type or types of Awards to be made to a Grantee, 


        (iii)  determine
the number of shares of Stock to be subject to an Award, 


        (iv)  establish
the terms and conditions of each Award (including, but not limited to, the exercise price of any Option, the nature and duration of any restriction or
condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock subject thereto, and any terms or conditions that may be
necessary to qualify Options as Incentive Stock Options), 


         (v)  prescribe
the form of each Award Agreement evidencing an Award, 


        (vi)  make
Awards to Grantees who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards
to Employees employed in the United States as may, in the judgment of the Board, be necessary or desirable in order to recognize differences in local law or tax policy. The Board also may impose
conditions on the exercise or vesting of Awards in order to minimize the Company's obligation with respect to tax equalization for Employees on assignments outside their home country; and 


       (vii)  amend,
modify, or supplement the terms of any outstanding Award. 




        Notwithstanding
the foregoing, no amendment, modification or supplement of any Award shall, without the consent of the Grantee, impair the Grantee's rights under such Award. 



        The
Company may retain the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee on account of actions taken by the Grantee in violation or breach of or in
conflict with any employment agreement, non-competition agreement, any agreement prohibiting solicitation of employees or clients of the Company or any Affiliate thereof or any
confidentiality obligation with respect to the Company or any Affiliate thereof or otherwise in competition with the Company or any Affiliate thereof, to the extent specified in such Award Agreement
applicable to the Grantee. Furthermore, the Company may annul an Award if the Grantee is an employee of the
Company or an Affiliate thereof and is terminated for Cause as defined in the applicable Award Agreement or the Plan, as applicable. The grant of any Award shall be contingent upon the Grantee
executing the appropriate Award Agreement. 


        Notwithstanding
the foregoing, no amendment or modification may be made to an outstanding Option or SAR which reduces the Option Price or SAR Exercise Price, either by lowering the
Option Price or SAR Exercise Price or by canceling the outstanding Option or SAR and granting a replacement Option or SAR with a lower exercise price without the approval of the stockholders of the
Company, provided, that, appropriate adjustments may be made to outstanding Options and SARs pursuant to Section 17. 


        3.4.    Deferral Arrangement.    



        The
Board may permit or require the deferral of any award payment into a deferred compensation arrangement, subject to such rules and procedures as it may establish, which may include
provisions for the payment or crediting of interest or dividend equivalents, including converting such credits into deferred Stock equivalents, restricting deferrals to comply with hardship
distribution rules affecting 401(k) plans. Any such deferrals shall be made in a manner that complies with Code Section 409A. 


        3.5.    No Liability.    



        No
member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award or Award Agreement. 


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        3.6.    Book Entry.    



        Notwithstanding
any other provision of this Plan to the contrary, the Company may elect to satisfy any requirement under this Plan for the delivery of stock certificates through the use
of book-entry. 


4.    STOCK SUBJECT TO THE PLAN    


        Subject
to adjustment as provided in Section 17 hereof, the number of shares of Stock available for issuance under the Plan shall
be 6,306,910. Stock issued or to be issued under the Plan shall be authorized but unissued shares; or, to the extent permitted by applicable law, issued shares that have been reacquired by the
Company. If any shares covered by an Award are not purchased or are forfeited, or if an Award otherwise terminates without delivery of any Stock subject thereto, then the number of shares of Stock
counted against the aggregate number of shares available under the Plan with respect to such Award shall, to the extent of any such forfeiture or termination, again be available for making Awards
under the Plan. 


        If
any Award of SARs is settled in shares of Stock, then the number of SARs subject to the Award shall be deemed delivered for purposes of determining the maximum number of share of
Stock available for delivery under the Plan, regardless of the number of shares of Stock that are issued upon the settlement of such SARs. 



        If
the Option Price of any Option granted under the Plan, or if pursuant to Section 18.3 the withholding obligation of any Grantee
with respect to an Option or other Award, is satisfied by tendering shares of Stock to the Company (by either actual delivery or by attestation) or by withholding shares of Stock, the number of shares
of Stock issued net of the shares of Stock tendered or withheld shall be deemed delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan. 


        The
Board shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code
applies. The number of shares of Stock reserved pursuant to Section 4 shall be increased by the corresponding number of Awards assumed and, in
the case of a substitution, by the net increase in the number of shares of Stock subject to Awards before and after the substitution. 


5.    EFFECTIVE DATE, DURATION AND AMENDMENTS    


        5.1.    Effective Date.    



        The
Plan shall be effective as of the Effective Date, subject to approval of the Plan by the Company's stockholders within one (1) year of the Effective Date. Upon approval of the
Plan by the stockholders of the Company as set forth above, all Awards made under the Plan on or after the Effective Date shall be fully effective as if the stockholders of the Company had approved
the Plan on the Effective Date. If the stockholders fail to approve the Plan within one (1) year after the Effective Date, any Awards made hereunder shall be null and void and of no effect. 


        5.2.    Term.    



        The
Plan shall terminate automatically ten (10) years after its adoption by the Board and may be terminated on any earlier date as provided in  Section 5.3. 


        5.3.    Amendment and Termination of the Plan.    


        The
Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any shares of Stock as to which Awards have not been made. An amendment shall be contingent
on approval of the Company's stockholders to the extent stated by the Board, required by applicable law or required by applicable stock exchange listing requirements. In addition, an amendment will be
contingent on approval of the Company's stockholders if the amendment would: (i) materially increase 


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the
benefits accruing to participants under the Plan, (ii) materially increase the aggregate number of shares of Stock that may be issued under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan. No Awards shall be made after termination of the Plan. No amendment, suspension, or termination of the Plan shall, without the consent of
the Grantee, impair rights or obligations under any Award theretofore awarded under the Plan. 


6.    AWARD ELIGIBILITY AND LIMITATIONS    


        6.1.    Service Providers and Other Persons.    



        Subject
to this Section 6, Awards may be made under the Plan to: (i) any Service Provider to the Company or of any
Affiliate, including any Service Provider who is an officer or director of the Company, or of any Affiliate, as the Board shall determine and designate from time to time, (ii) any Outside
Director, and (iii) any other individual whose participation in the Plan is determined to be in the best interests of the Company by the Board. 


        6.2.    Successive Awards and Substitute Awards.    



        An
eligible person may receive more than one (1) Award, subject to such restrictions as are provided herein. Notwithstanding  Sections 8.1 and 9.1 the Option Price of an Option or the grant price
of an SAR that is a Substitute Award may be less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock on the original date of grant provided that the Option Price or
grant price in determined in accordance with the principles of Code Section 424 and the regulations thereunder. 


        6.3.    Limitation on Shares of Stock Subject to Awards and Cash
Awards.    


        During
any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, but only after such time as the reliance period described in
Treas. Reg. Section 1.162-27(f)(2) has expired: 



          (i)  the
maximum number of shares of Stock subject to Options or SARs that can be awarded under the Plan to any person eligible for an Award under  Section 6 hereof is 333,333 per calendar year; 


         (ii)  the
maximum number of shares that can be awarded under the Plan, other than pursuant to an Option or SARs, to any person eligible for an Award under  Section 6 hereof is 333,333 per calendar year; and



        (iii)  the
maximum amount that may be earned as an Annual Incentive Award or other cash Award in any calendar year by any one (1) Grantee shall be $2,000,000 and the
maximum amount that may be earned as a Performance Award or other cash Award in respect of a performance period by any one (1) Grantee shall be $5,000,000. 




        The
preceding limitations in this Section 6.3 are subject to adjustment as provided in  Section 17 hereof. 


7.    AWARD AGREEMENT    


        Each
Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in such form or forms as the Board shall from time to time determine. Award Agreements granted from time
to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such
Options are intended to be Non-qualified Stock Options or Incentive Stock Options, and in the absence of such specification such options shall be deemed Non-qualified Stock
Options. 


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8.    TERMS AND CONDITIONS OF OPTIONS    


        8.1.    Option Price.    



        The
Option Price of each Option shall be fixed by the Board and stated in the Award Agreement evidencing such Option. The Option Price of each Option shall be at least the Fair Market
Value on the Grant Date of a share of Stock; provided, however, that in the event that a Grantee is a
Ten Percent Stockholder, the Option Price of an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less than one hundred and ten percent (110%) of the Fair
Market Value of a share of Stock on the Grant Date. In no case shall the Option Price of any Option be less than the par value of a share of Stock. 



        8.2.    Vesting.    


        Subject
to Sections 8.3 and 17.3 hereof, each Option granted under the Plan shall become
exercisable at such times and under such conditions as shall be determined by the Board and stated in the Award Agreement. For purposes of this  Section 8.2, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest whole number. No Option shall
be exercisable in whole or in part prior to the date the Plan is approved by the stockholders of the Company as provided in Section 5.1 hereof. 


        8.3.    Term.    


        Each
Option granted under the Plan shall terminate, and all rights to purchase shares of Stock thereunder shall cease, upon the expiration of ten (10) years from the date such
Option is granted, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Board and stated in the Award Agreement relating to such Option;  provided, however, that in the event that the Grantee is a Ten Percent Stockholder, an Option granted to
such Grantee that is intended to be an Incentive Stock Option shall not be exercisable after the expiration of five (5) years from its Grant Date. 


        8.4.    Termination of Service.    


        Each
Award Agreement shall set forth the extent to which the Grantee shall have the right to exercise the Option following termination of the Grantee's Service. Such provisions shall be
determined in the sole discretion of the Board, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. 



        8.5.    Limitations on Exercise of Option.    


        Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in whole or in part, prior to the date the Plan is approved by the stockholders of the Company
as provided herein or after the occurrence of an event referred to in Section 17 hereof which results in termination of the Option. 


        8.6.    Method of Exercise.    



        An
Option that is exercisable may be exercised by the Grantee's delivery to the Company of written notice of exercise on any business day, at the Company's principal office, on the form
specified by the Company. Such notice shall specify the number of shares of Stock with respect to which the Option is being exercised and shall be accompanied by payment in full of the Option Price of
the shares for which the Option is being exercised plus the amount (if any) of federal and/or other taxes which the Company may, in its judgment, be required to withhold with respect to an Award. The
minimum number of shares of Stock with respect to which an Option may be exercised, in whole or in part, at any time shall be the lesser of (i) one hundred (100) shares or such lesser
number set forth in the applicable Award Agreement and (ii) the maximum number of shares available for purchase under the Option at the time of exercise. 


8







 



        8.7.    Rights of Holders of Options.    


        Unless
otherwise stated in the applicable Award Agreement, an individual holding or exercising an Option shall have none of the rights of a stockholder (for example, the right to receive
cash or dividend payments or distributions attributable to the subject shares of Stock or to direct the voting of the subject shares of Stock) until the shares of Stock covered thereby are fully paid
and issued to him. Except as provided in Section 17 hereof, no adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date of such issuance. 


        8.8.    Delivery of Stock Certificates.    



        Promptly
after the exercise of an Option by a Grantee and the payment in full of the Option Price, such Grantee shall be entitled to the issuance of a stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject to the Option. 


        8.9.    Transferability of Options.    


        Except
as provided in Section 8.10, during the lifetime of a Grantee, only the Grantee (or, in the event of legal incapacity or
incompetency, the Grantee's guardian or legal representative) may exercise an Option. Except as provided in Section 8.10, no Option shall be
assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution. 


        8.10.    Family Transfers.    


        If
authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or part of an Option which is not an Incentive Stock Option to any Family Member. For the
purpose of this Section 8.10, a "not for value" transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic
relations order in settlement of marital property rights; or (iii) a transfer to an entity in which more than fifty percent of the voting interests are owned by Family Members (or the Grantee)
in exchange for an interest in that entity. Following a transfer under this Section 8.10, any such Option shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred Options are prohibited except to Family Members of the original Grantee in accordance
with this Section 8.10 or by will or the laws of descent and distribution. The events of termination of Service of  Section 8.4 hereof shall
continue to be applied with respect to the original Grantee, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods specified, in Section 8.4. 


        8.11.    Limitations on Incentive Stock Options.    


        An
Option shall constitute an Incentive Stock Option only (i) if the Grantee of such Option is an employee of the Company or any Subsidiary of the Company; (ii) to the
extent specifically provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair Market Value (determined at the time the Option is granted) of the shares of Stock
with respect to which all Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year (under the Plan and all other plans of the Grantee's employer and
its Affiliates) does not exceed $100,000. This limitation shall be applied by taking Options into account in the order in which they were granted. 


9.    TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS    


        9.1.    Right to Payment and Grant Price.    



        An
SAR shall confer on the Grantee to whom it is granted a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one share of Stock on the date of
exercise over (ii) the grant price of the SAR as determined by the Board. The Award Agreement for an SAR shall specify the grant price of the SAR, which shall be at least the Fair Market Value
of a share of Stock on the date of grant. SARs may be granted in conjunction with all or part of an Option granted under the Plan or at any subsequent time during the term of such Option, in
conjunction with all or part of any 


9







 



other
Award or without regard to any Option or other Award. An SAR granted in tandem with an outstanding Option following the Grant Date of such Option may have a grant price that is equal to the
Option Price, even if such grant price is less than the Fair Market Value of a share of Stock on the grant date of the SAR.


        9.2.    Other Terms.    


        The
Board shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which an SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time or times at which SARs shall cease to be or become exercisable following termination of Service or upon other conditions,
the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Grantees, whether or not an
SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR. 


10.    TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS    



        10.1.    Grant of Restricted Stock or Stock Units.    


        Awards
of Restricted Stock or Stock Units may be made for no consideration (other than par value of the shares which is deemed paid by Services already rendered). Stock Units may also be
referred to as performance shares. If so indicated in the Award Agreement at the time of grant, a Grantee may vest in more than one hundred percent (100%) of the number of Stock Units awarded to the
Grantee. 


        10.2.    Restrictions.    


        At
the time a grant of Restricted Stock or Stock Units is made, the Board may, in its sole discretion, establish a period of time (a "restricted period") applicable to such Restricted
Stock or Stock Units. Each Award of Restricted Stock or Stock Units may be subject to a different restricted period. The Board may, in its sole discretion, at the time a grant of Restricted Stock or
Stock Units is made, prescribe restrictions in addition to or other than the expiration of the restricted period, including the satisfaction of corporate or individual performance objectives, which
may be applicable to all or any portion of the Restricted Stock or Stock Units in accordance with Sections 14.1 and  14.2. Notwithstanding the foregoing,
Restricted Stock and Stock Units that vest solely by the passage of time shall not vest in full in less than three
(3) years from the Grant Date. Restricted Stock and Stock Units for which vesting may be accelerated by achieving performance targets shall not vest in full in less than one (1) year
from the Grant Date. Neither Restricted Stock nor Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the restricted period or prior to the
satisfaction of any other restrictions prescribed by the Board with respect to such Restricted Stock or Stock Units. 



        10.3.    Restricted Stock Certificates.    


        The
Company shall issue, in the name of each Grantee to whom Restricted Stock has been granted, stock certificates representing the total number of shares of Restricted Stock granted to
the Grantee, as soon as reasonably practicable after the Grant Date. The Board may provide in an Award Agreement that either (i) the Secretary of the Company shall hold such certificates for
the Grantee's benefit until such time as the Restricted Stock is forfeited to the Company or the restrictions lapse, or (ii) such certificates shall be delivered to the Grantee,  provided,
however, that such certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the restrictions imposed under the Plan and the Award Agreement. 


10







 



        10.4.    Rights of Holders of Restricted Stock.    


        Unless
the Board otherwise provides in an Award Agreement, holders of Restricted Stock shall have the right to vote such Stock and the right to receive any dividends declared or paid
with respect to such Stock. The Board may provide that any dividends paid on Restricted Stock must be reinvested in shares of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any, received by a Grantee with respect to Restricted Stock as a result of any stock split, stock dividend, combination of
shares, or other similar transaction shall be subject to the restrictions applicable to the original Grant. 


        10.5.    Rights of Holders of Stock Units.    



        10.5.1.    Voting and Dividend Rights.    




        Unless
the Board otherwise provides in an Award Agreement, holders of Stock Units shall have no rights as stockholders of the Company. The Board may provide in an Award Agreement
evidencing a grant of Stock Units that the holder of such Stock Units shall be entitled to receive, upon the Company's payment of a cash dividend on its outstanding Stock, a cash payment for each
Stock Unit held equal to the per-share dividend paid on the Stock. Such Award Agreement may also provide that such cash payment will be deemed reinvested in additional Stock Units at a
price per unit equal to the Fair Market Value of a share of Stock on the date that such dividend is paid. 



        10.5.2.    Creditor's Rights.    




        A
holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to
the terms and conditions of the applicable Award Agreement. 


        10.6.    Termination of Service.    


        Unless
the Board otherwise provides in an Award Agreement or in writing after the Award Agreement is issued, upon the termination of a Grantee's Service, any Restricted Stock or Stock
Units held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of
Restricted Stock or Stock Units, the Grantee shall have no further rights with respect to such Award, including but not limited to any right to vote Restricted Stock or any right to receive dividends
with respect to shares of Restricted Stock or Stock Units. 


        10.7.    Purchase of Restricted Stock.    


        The
Grantee shall be required, to the extent required by applicable law, to purchase the Restricted Stock from the Company at a Purchase Price equal to the greater of (i) the
aggregate par value of the shares of Stock represented by such Restricted Stock or (ii) the Purchase Price, if any, specified in the Award Agreement relating to such Restricted Stock. The
Purchase Price shall be payable in a form described in Section 12 or, in the discretion of the Board, in consideration for past Services rendered
to the Company or an Affiliate. 


        10.8.    Delivery of Stock.    


        Upon
the expiration or termination of any restricted period and the satisfaction of any other conditions prescribed by the Board, the restrictions applicable to shares of Restricted
Stock or Stock Units settled in Stock shall lapse, and, unless otherwise provided in the Award Agreement, a stock certificate for such shares shall be delivered, free of all such restrictions, to the
Grantee or the Grantee's beneficiary or estate, as the case may be. 


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11.    TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS    



        The
Board may, in its sole discretion, grant (or sell at par value or such other higher purchase price determined by the Board) an Unrestricted Stock Award to any Grantee pursuant to
which such Grantee may receive shares of Stock free of any restrictions ("Unrestricted Stock") under the Plan. Unrestricted Stock Awards may be granted
or sold as described in the preceding sentence in respect of past services and other valid consideration, or in lieu of, or in addition to, any cash compensation due to such Grantee. 


12.    FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK    



        12.1.    General Rule.    


        Payment
of the Option Price for the shares purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock shall be made in cash or in cash equivalents
acceptable to the Company. 


        12.2.    Surrender of Stock.    



        To
the extent the Award Agreement so provides, payment of the Option Price for shares purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock may be
made all or in part through the tender to the Company of shares of Stock, which shares, if acquired from the Company and if so required by the Company, shall have been held for at least six months at
the time of tender and which shall be valued, for purposes of determining the extent to which the Option Price or Purchase Price has been paid thereby, at their Fair Market Value on the date of
exercise or surrender. 


        12.3.    Cashless Exercise.    



        With
respect to an Option only (and not with respect to Restricted Stock), to the extent permitted by law and to the extent the Award Agreement so provides, payment of the Option Price
for shares purchased pursuant to the exercise of an Option may be made all or in part by delivery (on a form acceptable to the Board) of an irrevocable direction to a licensed securities broker
acceptable to the Company to sell shares of Stock and to deliver all or part of the sales proceeds to the Company in payment of the Option Price and any withholding taxes described in  Section 18.3.



        12.4.    Other Forms of Payment.    



        To
the extent the Award Agreement so provides, payment of the Option Price for shares purchased pursuant to exercise of an Option or the Purchase Price for Restricted Stock may be made
in any other form that is consistent with applicable laws, regulations and rules. 


13.    TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS    


        13.1.    Dividend Equivalent Rights.    



        A
Dividend Equivalent Right is an Award entitling the recipient to receive credits based on cash distributions that would have been paid on the shares of Stock specified in the Dividend
Equivalent Right (or other award to which it relates) if such shares had been issued to and held by the recipient. A Dividend Equivalent Right may be granted hereunder to any Grantee as a component of
another Award or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the grant. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on
the date of reinvestment. Dividend Equivalent Rights may be settled in cash or Stock or a combination thereof, in a single installment or installments, all determined in the sole discretion of the
Board. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend 


12







 



Equivalent
Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other award. 



        13.2.    Termination of Service.    


        Except
as may otherwise be provided by the Board either in the Award Agreement or in writing after the Award Agreement is issued, a Grantee's rights in all Dividend Equivalent Rights or
interest equivalents shall automatically terminate upon the Grantee's termination of Service for any reason. 


14.    TERMS AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE AWARDS    



        14.1.    Performance Conditions.    


        The
right of a Grantee to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Board.
The Board may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited under Sections 14.2 hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m). If and to the extent required under Code Section 162(m), any power or authority relating to a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m), shall be exercised by the Committee and not the Board. 


        14.2.    Performance or Annual Incentive Awards Granted to Designated Covered
Employees.    


        If
and to the extent that the Committee determines that a Performance Award or Annual Incentive Award to be granted to a Grantee who is designated by the Committee as likely to be a
Covered Employee should qualify as "performance-based compensation" for purposes of Code Section 162(m), the grant, exercise and/or settlement of such Performance Award or Annual Incentive
Award shall be contingent upon achievement of pre-established performance goals and other terms set forth in this Section 14.2. 



        14.2.1.    Performance Goals Generally.    




        The
performance goals for such Performance Awards or Annual Incentive Awards shall consist of one (1) or more business criteria and a targeted level or levels of performance with
respect to each of such criteria, as specified by the Committee consistent with this Section 14.2. Performance goals shall be objective and shall
otherwise meet the requirements of Code Section 162(m) and regulations thereunder including the requirement that the level or levels of performance targeted by the Committee result in the
achievement of performance goals being "substantially uncertain." The Committee may determine
that such Performance Awards or Annual Incentive Awards shall be granted, exercised and/or settled upon achievement of any one (1) performance goal or that two (2) or more of the
performance goals must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards or Annual Incentive Awards. Performance goals may differ for Performance Awards or
Annual Incentive Awards granted to any one Grantee or to different Grantees. 



        14.2.2.    Business Criteria.    




        One
or more of the following business criteria for the Company, on a consolidated basis, and/or specified subsidiaries or business units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used exclusively by the Committee in establishing performance goals for such Performance or Annual Incentive Awards: (i) total
stockholder return; (ii) such total stockholder return as compared to total return (on a comparable basis) of a publicly available index such as, but not limited to, the Standard &
Poor's 500 Stock Index; (iii) net income; 


13







 

(iv) pretax
earnings; (v) earnings before interest expense, taxes, depreciation and amortization; (vi) pretax operating earnings after interest expense and before bonuses, service
fees, and extraordinary or special items; (vii) operating margin; (viii) earnings per share; (ix) return on equity; (x) return on capital; (xi) return on investment;
(xii) operating earnings; (xiii) working capital; (xiv) ratio of debt to stockholders' equity and (xv) revenue. Business criteria may be measured on an absolute basis or on
a relative basis (i.e., performance relative to peer companies) and on a GAAP or non-GAAP basis. 



        14.2.3.    Timing For Establishing Performance Goals.    




        Performance
goals shall be established not later than ninety (90) days after the beginning of any performance period applicable to such Performance or Annual Incentive Awards, or
at such other date as may be required or permitted for "performance-based compensation" under Code Section 162(m). 



        14.2.4.    Settlement of Performance or Annual Incentive Awards; Other
Terms.    




        Settlement
of such Performance or Annual Incentive Awards shall be in cash, Stock, other Awards or other property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection with such Performance or Annual Incentive Awards. The Committee shall specify the circumstances in which such
Performance or Annual Incentive Awards shall be paid or forfeited in the event of termination of Service by the Grantee prior to the end of a performance period or settlement of Performance Awards. 


        14.3.    Written Determinations.    



        All
determinations by the Committee as to the establishment of performance goals, the amount of any Performance Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards, and the amount of any Annual Incentive Award pool or potential individual Annual Incentive Awards and the amount of final Annual
Incentive Awards, shall be made in writing in the case of any Award intended to qualify under Code Section 162(m). To the extent required to comply with Code Section 162(m), the
Committee may delegate any responsibility relating to such Performance Awards or Annual Incentive Awards. 



        14.4.    Status of Section 14.2 Awards Under Code
Section 162(m).    


        It
is the intent of the Company that Performance Awards and Annual Incentive Awards under Section 14.2 hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the meaning of Code Section 162(m) and regulations thereunder shall, if so designated by the Committee, constitute
"qualified performance-based compensation" within the meaning of Code Section 162(m) and regulations thereunder. Accordingly, the terms of  Section 14.2, including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner consistent with Code
Section 162(m) and regulations thereunder. The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Grantee will be a Covered Employee with respect
to a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean only a person designated by the Committee, at the time of grant of Performance Awards or an Annual
Incentive Award, as likely to be a Covered Employee with respect to that fiscal year. If any provision of the Plan or any agreement relating to such Performance Awards or Annual Incentive Awards does
not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to
such requirements. 


15.    PARACHUTE LIMITATIONS    


        Notwithstanding
any other provision of this Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by a Grantee with the Company or any
Affiliate, except an agreement, contract, or understanding entered into that expressly provides tax gross-up payments for the excise tax imposed by Section 4999 of the Code, (an
"Other Agreement"), and 


14







 



notwithstanding
any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Grantee (including groups or classes of Grantees or beneficiaries of which
the Grantee is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Grantee (a "Benefit
Arrangement"), if the Grantee is a "disqualified individual," as defined in Section 280G(c) of the Code, any Option, Restricted Stock or Stock Unit held by that Grantee
and any right to receive any payment or other benefit under this Plan shall not become exercisable or vested (i) to the extent that such right to exercise, vesting, payment, or benefit, taking
into account all other rights, payments, or benefits to or for the Grantee under this Plan, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to the Grantee under
this Plan to be considered a "parachute payment" within the meaning of Section 280G(b)(2) of the Code as then in effect (a "Parachute Payment")
and (ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by the Grantee from the Company under this Plan, all Other Agreements, and all
Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Grantee without causing any such payment or benefit to be considered a Parachute Payment.
In the event that the receipt of any such right to exercise, vesting, payment, or benefit under this Plan, in conjunction with all other rights, payments, or benefits to or for the Grantee under any
Other Agreement or any Benefit Arrangement would cause the Grantee to be considered to have received a Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Grantee as described in clause (ii) of the preceding sentence, then the Grantee shall have the right, in the Grantee's sole discretion, to designate
those rights, payments, or benefits under this Plan, any Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the payment or benefit to the Grantee
under this Plan be deemed to be a Parachute Payment. 


16.    REQUIREMENTS OF LAW    



        16.1.    General.    


        The
Company shall not be required to sell or issue any shares of Stock under any Award if the sale or issuance of such shares would constitute a violation by the Grantee, any other
individual exercising an Option, or the Company of any provision of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any shares subject to an Award upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares hereunder, no shares of Stock may be issued or sold to the Grantee
or any other individual exercising an Option pursuant to such Award unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Award. Specifically, in connection with the Securities Act, upon the exercise of any
Option or the delivery of any shares of Stock underlying an Award, unless a registration statement under such Act is in effect with respect to the shares of Stock covered by such Award, the Company
shall not be required to sell or issue such shares unless the Board has received evidence satisfactory to it that the Grantee or any other individual exercising an Option may acquire such shares
pursuant to an exemption from registration under the Securities Act. Any determination in this connection by the Board shall be final, binding, and conclusive. The Company may, but shall in no event
be obligated to, register any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or
the issuance of shares of Stock pursuant to the Plan to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that an Option
shall not be exercisable until the shares of Stock covered by such Option are registered or are exempt from registration, the exercise of such Option 


15







 



(under
circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption. 


        16.2.    Rule 16b-3.    


        During
any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Company that Awards pursuant to the Plan
and the exercise of Options granted hereunder will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by
the Board does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify this Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the revised exemption or its replacement. 


17.    EFFECT OF CHANGES IN CAPITALIZATION    


        17.1.    Changes in Stock.    



        If
the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number or kind of shares or other securities
of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of shares for which grants of
Options and other Awards may be made under the Plan shall be adjusted proportionately and accordingly by the Company. In addition, the number and kind of shares for which Awards are outstanding shall
be adjusted proportionately and accordingly so that the proportionate interest of the Grantee immediately following such event shall, to the extent practicable, be the same as immediately before such
event. Any such adjustment in outstanding Options or SARs shall not change the aggregate Option Price or SAR Exercise Price payable with respect to shares that are subject to the unexercised portion
of an outstanding Option or SAR, as applicable, but shall include a corresponding proportionate adjustment in the Option Price or SAR Exercise Price per share. The conversion of any convertible
securities of the Company shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company's
stockholders of securities of any other entity or other assets (including an extraordinary cash dividend but excluding a non-extraordinary dividend payable in cash or in stock of the
Company) without receipt of consideration by the Company, the Company may, in such manner as the Company deems appropriate, adjust (i) the number and kind of shares subject to outstanding
Awards and/or (ii) the exercise price of outstanding Options and Stock Appreciation Rights to reflect such distribution. 


        17.2.    Reorganization in Which the Company Is the Surviving Entity Which does not Constitute a
Corporate Transaction.    


        Subject
to Section 17.3 hereof, if the Company shall be the surviving entity in any reorganization, merger, or consolidation of the
Company with one or more other entities which does not constitute a Corporate Transaction, any Option or SAR theretofore granted pursuant to the Plan shall pertain to and apply to the securities to
which a holder of the number of shares of Stock subject to such Option or SAR would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price or SAR Exercise Price per share so that the aggregate Option Price or SAR Exercise Price thereafter shall be the same as the aggregate Option Price or SAR
Exercise Price of the shares remaining subject to the Option or SAR immediately prior to such reorganization, merger, or consolidation. Subject to any contrary language in an Award Agreement
evidencing an Award, any restrictions applicable to such Award shall apply as well to any 


16







 



replacement
shares received by the Grantee as a result of the reorganization, merger or consolidation. In the event of a transaction described in this  Section 17.2, Stock Units shall be adjusted so as to apply
to the securities that a holder of the number of shares of Stock subject to the Stock
Units would have been entitled to receive immediately following such transaction. 



        17.3.    Corporate Transaction.    


        Upon
the occurrence of a Corporate Transaction, subject to the exceptions set forth in the last sentence of this Section 17.3 and
the last sentence of Section 17.4,: 



          (i)  all
outstanding shares of Restricted Stock shall be deemed to have vested, and all Stock Units shall be deemed to have vested and the shares of Stock subject thereto
shall be delivered, immediately prior to the occurrence of such Corporate Transaction, and 


         (ii)  either
of the following two (2) actions shall be taken: 



        (A)  fifteen
(15) days prior to the scheduled consummation of a Corporate Transaction, all Options and SARs outstanding hereunder shall become immediately exercisable
and shall remain exercisable for a period of fifteen (15) days, or 



        (B)  the
Board may elect, in its sole discretion, to cancel any outstanding Awards of Options, Restricted Stock, Stock Units, and/or SARs and pay or deliver, or cause to be
paid or delivered, to the holder thereof an amount in cash or securities having a value (as determined by the Board acting in good faith), in the case of Restricted Stock or Stock Units, equal to the
formula or fixed price per share paid to holders of shares of Stock and, in the case of Options or SARs, equal to the product of the number of shares of Stock subject to the Option or SAR (the
"Award Shares") multiplied by the amount, if any, by which (I) the formula or fixed price per share paid to holders of shares of Stock pursuant
to such transaction exceeds (II) the Option Price or SAR Exercise Price applicable to such Award Shares. 





        With
respect to the Company's establishment of an exercise window, (i) any exercise of an Option or SAR during such fifteen-day period shall be conditioned upon the
consummation of the event and shall be effective only immediately before the consummation of the event, and (ii) upon consummation of any Corporate Transaction the Plan, and all outstanding but
unexercised Options and SARs shall terminate. The Board shall send written notice of an event that will result in such a termination to all individuals who hold Options and SARs not later than the
time at which the Company gives notice thereof to its stockholders. This Section 17.3 shall not apply to any Corporate Transaction to the extent
that provision is made in writing in connection with such Corporate Transaction for the assumption or continuation of the Options, SARs, Stock Units and Restricted Stock theretofore granted, or for
the substitution for such Options, SARs, Stock Units and Restricted Stock for new common stock options and stock appreciation rights and new common stock stock units and restricted stock relating to
the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number of shares (disregarding any consideration that is not common stock) and option and
stock appreciation right exercise prices, in which event the Plan, Options, SARs, Stock Units and Restricted Stock theretofore granted shall continue in the manner and under the terms so provided. 



        17.4.    Adjustments.    


        Adjustments
under this Section 17 related to shares of Stock or securities of the Company shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the nearest whole share. The Board shall determine the effect of a Corporate Transaction upon Awards other than Options, SARs,
Stock Units and Restricted Stock, and such effect shall be set forth in the 


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appropriate
Award Agreement. The Board may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, for different provisions to apply to an Award
in place of those described in Sections 17.1, 17.2 and 17.3. 



        17.5.    No Limitations on Company.    


        The
making of Awards pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of
its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets. 


18.    GENERAL PROVISIONS    



        18.1.    Disclaimer of Rights.    


        No
provision in the Plan or in any Award or Award Agreement shall be construed to confer upon any individual the right to remain in the employ or service of the Company or any Affiliate,
or to interfere in any way with any contractual or other right or authority of the Company either to increase or decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the Company. In addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the
applicable Award Agreement, no Award granted under the Plan shall be affected by any change of duties or position of the Grantee, so long as such Grantee continues to be a director, officer,
consultant or employee of the Company or an Affiliate. The obligation of the Company to pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the Company to transfer any amounts to a third party trustee or
otherwise
hold any amounts in trust or escrow for payment to any Grantee or beneficiary under the terms of the Plan. 


        18.2.    Nonexclusivity of the Plan.    



        Neither
the adoption of the Plan nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations upon the right and
authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of stock options otherwise than under the Plan. 


        18.3.    Withholding Taxes.    



        The
Company or an Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind
required by law to be withheld with respect to the vesting of or other lapse of restrictions applicable to an Award or upon the issuance of any shares of Stock upon the exercise of an Option or
pursuant to an Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to the Company or the Affiliate, as the case may be, any amount that the Company or the Affiliate may
reasonably determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Company or the Affiliate, which may be withheld by the Company or the Affiliate, as
the case may be, in its sole discretion, the Grantee may elect to satisfy such obligations, in whole or in part, (i) by causing the Company or the Affiliate to withhold shares of Stock
otherwise issuable to the Grantee or (ii) by delivering to the Company or the Affiliate shares of Stock already owned by the Grantee. The shares of Stock so delivered or withheld shall have an
aggregate Fair Market Value equal to such withholding obligations. The Fair Market Value of the shares of Stock used to satisfy such withholding obligation shall be determined by the Company or the
Affiliate as of the date that the amount of tax to be withheld is to 


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be
determined. A Grantee who has made an election pursuant to this Section 18.3 may satisfy his or her withholding obligation only with shares of
Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. 


        18.4.    Captions.    


        The
use of captions in this Plan or any Award Agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or such Award Agreement. 



        18.5.    Other Provisions.    


        Each
Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Board, in its sole discretion. 


        18.6.    Number and Gender.    



        With
respect to words used in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, etc., as the context requires. 


        18.7.    Severability.    


        If
any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and
thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. 



        18.8.    Governing Law.    


        The
validity and construction of this Plan and the instruments evidencing the Awards hereunder shall be governed by the laws of the State of Colorado, other than any conflicts or choice
of law rule or principle that might otherwise refer construction or interpretation of this Plan and the instruments evidencing the Awards granted hereunder to the substantive laws of any other
jurisdiction. 


        18.9.    Section 409A of the Code.    


        To
the extent that the Board determines that a Grantee would be subject to the additional twenty percent (20%) tax imposed on certain deferred compensation arrangements pursuant to
Section 409A of the Code, as a result of any provision of any Award granted under this Plan, such provision shall be deemed amended to the minimum extent necessary to avoid application of such
additional tax. The nature of any such amendment shall be determined by the Board. 


*      *      * 


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        To
record adoption of the Plan by the Board as of July 11, 2006, and approval of the Plan by the stockholders on July 11, 2006, the Company has caused its authorized
officer to execute the Plan. 



	 	 	ELLORA ENERGY INC.
	

 	
 	

By:	

/s/  T. SCOTT MARTIN      

	 	 	Name:	T. Scott Martin

	 	 	Title:	CEO





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Exhibit 10.1



ELLORA ENERGY INC. AMENDED AND RESTATED 2006 STOCK INCENTIVE PLAN