**Exhibit****10.1****BPI ENERGY HOLDINGS, INC**.**SENIOR EXECUTIVE SEVERANCE PLAN****I.****DEFINITIONS AND CONSTRUCTION**1.1 **Definitions**. As used in this Plan, the following terms have the meanings set forthbelow.       (a) **“Base Salary”**means the highest annual rate of base compensation paid by the Company toa Covered Employee at any time before termination of the Covered Employee’s employment withthe Company (including amounts that the Covered Employee could have received in cash had henot elected to contribute to an employee benefit plan maintained by the Company), excludingovertime pay, bonuses, employee benefits, automobile allowances, added premiums,differentials, and all forms of incentive compensation.       (b) “**Accounting Firm**” means the independent auditors of the Company for the Fiscal Yearpreceding the Fiscal Year in which a Change of Control occurred and that firm’s successor orsuccessors; except that if that firm is unable or unwilling to serve and perform in thecapacity contemplated by this Plan, the Company will select another national accounting firmof recognized standing to serve and perform in that capacity under the Plan, but that otheraccounting firm may not be the then independent auditors for the Company or any of itsaffiliates (as defined in Rule 12b-2 promulgated under the Exchange Act).       (c) **“Board”**means the Board of Directors of the Company.       (d) **“Cause”**means a Covered Employee’s (1) conviction of any felony or entering a plea of*nolo contendre*to a felony charge, (2) involvement in any act of material fraud, theft, orother material misconduct detrimental to the best interests of the Company, (3) engagementby a Covered Employee in gross negligence or willful misconduct with respect to his dutiesto the Company that results in material harm to the Company, (4) engagement in competitivebehavior against the Company, misappropriation or assisting in the misappropriation of amaterial opportunity of the Company, securing or attempting to secure a personal benefit notfully disclosed to and approved by a majority of the Board in connection with any transitionof or on behalf of the Company, or (5) failure to substantially perform his duties.       (e) **“Change of Control”**will be deemed to have occurred upon any of the following events:(1) A merger or consolidation involving the Company if the Persons who werestockholders of the Company immediately before the effective date of the merger orconsolidation have, immediately after the effective date, as a result of theirstockholdings immediately before the effective date, beneficial ownership (asdefined in Rule 13d-3 under the Exchange Act) of less than 50% of the total combinedvoting power for the election of directors of the surviving corporation (or, if thesurviving corporation is a subsidiary of another corporation, less than 50% of thetotal combined voting power for the election of directors of the ultimate parent ofthe surviving corporation) immediately after the effective date of the merger orconsolidation.(2) Except as provided in the last sentence of this Section 1.1(e)(2), theacquisition or holding of direct or indirect beneficial ownership (as defined underRule 13d-3 of the
 

 
Exchange Act) of securities of the Company representing, in the aggregate, 30% ormore of the total combined voting power for the election of directors of theCompany’s then issued and outstanding voting securities by any Person (other than anemployee benefit plan of the Company or of any subsidiary of the Company, or anyPerson holding such securities for or pursuant to the terms of any such plan). TheDirectors may, by a majority vote, determine the acquisition or holding of 30%-49.9%of the total combined voting power for the election of the Company is not a hostileaction and therefore does not trigger a change of control.(3) At any time during any period of 24 consecutive months, individuals who weredirectors at the beginning of the 24-month period no longer constitute a majority ofthe members of the Board, unless the election, or the nomination for election by theCompany’s shareholders, of each director who was not a director at the beginning ofthe period is approved by at least a majority of the directors who (i) are in officeat the time of the election or nomination and (ii) were directors at the beginningof the period.(4) The sale of all or substantially all of the assets of the Company to any Personthat is not a wholly owned subsidiary of the Company.(5) The approval by the stockholders of the Company of any plan or proposal for theliquidation of the Company or its material subsidiaries, other than into theCompany.(f)**“COBRA Continuation Period”**means the period of time (generally, the 18-month periodfollowing the Termination Date) during which a Covered Employee would be entitled tocontinuation coverage under a group health plan sponsored by the Company under Section 4980Bof the Code if the Covered Employee elected that coverage and paid the applicable premiums.(g) **“Code”**means the Internal Revenue Code of 1986, as amended.(h) **“Committee”**means the committee appointed by the Company to administer the Plan.(i) **“Company”**means BPI Energy Holdings, Inc.(j) **“Covered Employee”**means:(1) any individual serving from time to time as Chief Executive Officer or ChiefOperating Officer of the Company; and(2) any other executive officer of the Company who is designated by the Committee asa Covered Employee. Any designation by the Committee pursuant to this Section1.1(j)(2) will be effective on such date as the Committee may specify in a notice tothe executive officer.(k) **“Disability”**means a physical or mental infirmity that impairs a Covered Employee’sability to substantially perform the Covered Employee’s duties and continues for a period ofat least 180 continuous days.(l) **“Effective Date”**means June 7, 2007.(m) “**Exchange Act”**means the Securities Exchange Act of 1934, as amended.
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(n) “**Fiscal Year**” means the fiscal year of the Company as in effect from time to time. Asof the Effective Date, the Company uses a fiscal year ending July 31 of each calendar year.(o) **“Good Reason”**means the occurrence, without the consent of the Covered Employee, of anyof the following conditions specified below in this definition, but only if (x) the CoveredEmployee provides notice to the Company of the existence of the condition not later than 90days after the initial existence of the condition, and (y) the Company fails to remedy thecondition within 30 days of the date on which the Covered Employee provides that notice:(1) A material diminution in the Covered Employee’s Base Salary or in the value ofthe Covered Employee’s Maximum Annual Bonus opportunity.(2) A material diminution in the Covered Employee’s authority, duties, orresponsibilities.(3) A material change in the geographic location at which the Covered Employee mustperform services, including any requirement that a Covered Employee’s principalplace of employment with the Company be moved to a location that is more than 50miles from the Covered Employee’s prior principal place of employment.(4) Any other action or inaction that constitutes a material breach by the Companyof the written employment agreement, if any, under which the Covered Employeeprovides services to the Company.A Covered Employee will be deemed to have terminated employment with the Company for GoodReason only if the Termination Date is not later than the second anniversary of the date onwhich the Covered Employee gave the notice to the Company that is contemplated in clause(x) above.(p) **“Maximum Annual Bonus”**as of any date means the dollar amount equal to the sum of (1)the dollar value of the Maximum Cash Bonus Component as of that date plus (2) the dollarvalue of the Stock Bonus Component as of that date.(q) “**Maximum Cash Bonus Component**” as of any date means the dollar amount equal to thehigher of (1) the maximum cash bonus that would have been payable to the Covered Employeewith respect to the Fiscal Year most recently ended before that date if all criteriarelevant to the amount of the cash bonus payable to the Covered Employee for that FiscalYear had been satisfied to the fullest extent possible, or (2) the maximum cash bonus thatwould be payable to the Covered Employee with respect to the current Fiscal Year if allcriteria relevant to the amount of the cash bonus payable to the Covered Employee for thecurrent Fiscal Year were satisfied to the fullest extent possible. If, in a Fiscal Yearspecified in clause (1) or clause (2) above, a Covered Employee is entitled to a cash bonusbut there is no upper limit on the amount of the cash bonus that might become payable to theCovered Employee, the maximum cash bonus that would be payable for that Fiscal Year (forpurposes of this definition only) will be deemed to be an amount equal to two times BaseSalary.(r) “**Payment**” has the meaning assigned to that term in Section 2.5(a).(s) “**Person**” has the meaning ascribed to that term in Section 3(a)(9) of the Exchange Actand used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section13(d).
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(t) **“Plan”**means this BPI Energy Holdings, Inc. Senior Executive Severance Plan.(u) “**Pro-rated Current Year Bonus**” means, with respect to any Covered Employee for theFiscal Year in which the Termination Date occurs, the dollar amount equal to the sum of:(1) an amount equal to the Covered Employee’s Target Cash Bonus Component as of theTermination Date multiplied by a fraction, the numerator of which is the number ofdays in that Fiscal Year through the Termination Date and the denominator of whichis 365; plus(2) an amount equal to the Covered Employee’s Stock Bonus Component multiplied by afraction, the numerator of which is the number of days between the date of the mostrecent grant of shares of Common Stock to that Covered Employee that included atleast some unrestricted shares and the Termination Date (but not more than 365) andthe denominator of which is 365.(v) **“Section 409A”**means Section 409A of the Code.(w) “**Stock Bonus Component**” for any Covered Employee as of any date means the dollar value,determined as of the grant date, of the unrestricted (as of the grant date) shares of CommonStock of the Company granted to that Covered Employee as part of the then most recent grantof shares of Common Stock to that Covered Employee that included atleast some unrestricted shares, except that if the most recent such grant of shares of Common Stock to the CoveredEmployee was more than two years before the Termination Date, the amount of the Stock BonusComponent for all purposes of this Agreement will be deemed to be zero.For example, if a Covered Employee were granted 300 shares of Common Stock of theCompany on January 15, 2008, the value of the stock was then $1 per share, and onethird of those 300 shares were unrestricted as of the grant date, the Stock BonusComponent for that Covered Employee for the period from January 15, 2008 until thefirst to occur of January 15, 2010 and the date on which the Covered Employee wasgranted additional shares, at least some of which were unrestricted as of the grantdate, would be $100 (i.e.: the product of the 100 immediately unrestricted sharesmultiplied by $1 per share).If, in the next year, the same Covered Employee was granted 270 shares of CommonStock of the Company on January 18, 2009, the value of the stock was then $2 pershare, and one third of those 270 shares were unrestricted as of the grant date, theStock Bonus Component for that Covered Employee from January 18, 2009 forward (untilthe first to occur of January 18, 2011 or the date of a new grant to the CoveredExecutive of shares, at least some of which were unrestricted as of the grant date)would be $180 (i.e.: the product of the 90 immediately unrestricted sharesmultiplied by $2 per share).If the same Covered Employee never received another grant of shares, at least someof which were unrestricted as of the grant date, the Covered Employee’s Stock BonusComponent from and after January 18, 2011 (the date two years after the last grantdate) would be deemed to be zero.(x) **“Target Annual Bonus”**as of any date means the dollar amount equal to the sum of (1) thehigher of (A) the dollar value of the Target Cash Bonus Component as of the end of theimmediately preceding Fiscal Year, or (B) the dollar value of the Target Cash BonusComponent
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for the current Fiscal Year, plus (2) the dollar value of the Stock Bonus Component as ofthat date.(y) “**Target Cash Bonus Component**” for any Covered Employee for any Fiscal Year means thedollar amount that would be payable to that Covered Employee as a cash bonus with respect tothat Fiscal Year if all criteria relevant to the amount of the cash bonus payable to theCovered Employee for that Fiscal Year had been satisfied exactly at target levels and theCovered Employee had remained in the active employ of the Company through the date on whichcash bonuses for that Fiscal Year are to be paid generally.(z) **“Termination Date”**means the date on which the Covered Employee’s employment with theCompany and its affiliates is terminated in a manner that constitutes a “separation fromservice” under Section 409A.(aa) “**Unpaid Completed Year Cash Bonus**” means, in any instance in which the Termination Datefor a Covered Employee occurs after the end of a Fiscal Year but before cash bonuses withrespect to that Fiscal Year have been paid, an amount equal to the cash bonus the Companywould have paid to the Covered Employee with respect to that completed Fiscal Year if theCovered Employee had remained in the active employ of the Company through the date on whichcash bonuses for that Fiscal Year are to be paid generally.**II.****SEVERANCE BENEFITS**2.1 **Severance Benefits****.**The Company will provide severance benefits to each CoveredEmployee upon termination of the Covered Employee’s employment with the Company as provided belowin this Section 2.1:(a) Death or Disability. If a Covered Employee’s employment with the Company isterminated by reason of death or Disability, the Company will pay to the Covered Employee orhis personal representative the following amount:(1) The Covered Employee’s accrued Base Salary through the Termination Date inaccordance with the Company’s regular payroll practices.(2) Any Unpaid Completed Year Cash Bonus.(3) A Pro-rated Current Year Bonus.In the case of termination by reason of Disability, the Company will pay the amounts, ifany, specified in Sections 2.1(a)(2) and 2.1(a)(3) to the Covered Employee not earlier thansix months after the Termination Date and not later than six months and ten days after theTermination Date. In the case of termination by reason of death, the Company will pay theamounts, if any, specified in Sections 2.1(a)(2) and 2.1(a)(3) to the personalrepresentative of the Covered Employee by not later than 60 days after the Termination Date.(b) Before a Change of Control – Termination by the Company without Cause or by theCovered Employee for Good Reason. If a Covered Employee’s employment is terminatedbefore a Change of Control by the Company without Cause or by the Covered Employee for Good
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Reason, the Company will pay and provide to the Covered Employee the following amounts andbenefits:(1) The Covered Employee’s accrued Base Salary through the Termination Date inaccordance with the Company’s regular payroll practices.(2) Any Unpaid Completed Year Cash Bonus.(3) A Pro-rated Current Year Bonus.(4) A lump sum cash payment equal to two times the sum of (x) Base Salary plus (y)Target Annual Bonus.The Company will pay the amounts, if any, specified in Sections 2.1(b)(2), 2.1(b)(3), and2.1(b)(4) to the Covered Employee not earlier than six months after the Termination Date andnot later than six months and ten days after the Termination Date.(5) Subject to Section 2.1(d), reimbursement for the cost of continued group medicaland dental insurance coverage for the Covered Employee and his immediate family onthe same basis as in effect immediately before the Termination Date through thefirst to occur of the second anniversary of the Termination Date and the date onwhich the Covered Employee becomes employed by a new employer and eligible forsimilar benefits under a plan sponsored by that new employer.(6) Reimbursement of up to $20,000 for outplacement services utilized and relatedexpenses incurred by the Covered Employee before the first anniversary of theTermination Date. All reimbursements under this Section 2.1(b)(6) will be made aspromptly as practicable after delivery of an appropriate reimbursement request bythe Covered Employee to the Company and in all events by not later than the secondanniversary of the Termination Date.Upon any such termination, the Covered Employee’s rights with respect to any stock options,restricted stock, or other equity compensation awards will be subject to the terms of theparticular grant agreement and plan under which the awards were made.(c) After a Change of Control – Termination by the Company without Cause, by a CoveredEmployee for Good Reason, or by a Covered Employee voluntarily during the Window Period. If a Covered Employee’s employment is terminated (x) by the Company without Cause atany time within two years after a Change of Control, (y) by the Covered Employee for GoodReason at any time within two years after a Change of Control, or (y) by the CoveredEmployee voluntarily (whether or not the Covered Employee then has Good Reason) at any timeduring the 60 day period that begins exactly six months after the date of a Change ofControl (the “Window Period”), the Company will pay and provide to the Covered Employee thefollowing amounts and benefits:(1) The Covered Employee’s accrued Base Salary through the Termination Date inaccordance with the Company’s regular payroll practices.(2) Any Unpaid Completed Year Cash Bonus.(3) A Pro-rated Current Year Bonus.
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(4) A lump sum cash payment equal to three times the sum of (x) Base Salary plus (y)Maximum Annual Bonus.The Company will pay the amounts, if any, specified in Sections 2.1(c)(2), 2.1(c)(3), and2.1(c)(4) to the Covered Employee not earlier than six months after the Termination Date andnot later than six months and ten days after the Termination Date.(5) Subject to Section 2.1(d), reimbursement for the cost of continued group medicaland dental insurance coverage for the Covered Employee and his immediate family onthe same basis as in effect immediately before the Termination Date through thefirst to occur of the third anniversary of the Termination Date and the date onwhich the Covered Employee becomes employed by a new employer and eligible forsimilar benefits under a plan sponsored by that new employer.(6) Reimbursement of up to $20,000 for outplacement services utilized and relatedexpenses incurred by the Covered Employee before the first anniversary of theTermination Date. All reimbursements under this Section 2.1(c)(6) will be made aspromptly as practicable after delivery of an appropriate reimbursement request bythe Covered Employee to the Company and in all events by not later than the secondanniversary of the Termination Date.Upon any such termination, the Covered Employee’s rights with respect to any stock options,restricted stock, or other equity compensation awards that are not cashed out in connectionwith the Change of Control will be subject to the terms of the particular grant agreementand plan under which the awards were made, except that: (x) all restrictions on anyrestricted stock of the Company held by the Covered Employee will lapse as of immediatelybefore the Termination Date; (y) all options that vest solely on the basis of theexpiration of time will vest fully immediately before the Termination Date and all optionsthat vest in whole or in part on the basis of Company or individual performance will bevested proportionately as of the Termination Date; and (z) the period during which theCovered Employee may exercise any stock option that vested on or before the Termination Datewill be extended through the first to occur of (I) the third anniversary of the TerminationDate, or (II) the original expiration date of the option. The extent to which aperformance based option is “vested proportionately” as of the Termination Date under theimmediately preceding sentence will be determined by (A) extending, on a pro forma basis,the performance during all relevant periods ending before the Termination Date through theend of all relevant performance periods under the particular performance option and (B)vesting the Covered Employee with that portion of the performance options equal to thenumber of options that would have vested through the end of the last relevant performanceperiod on that pro forma basis multiplied by a fraction, the numerator of which is thenumber of full years between the date on which the options were granted and the TerminationDate (treating any partial year ending on the Termination Date as a full year), and thedenominator of which is the number of full years in the relevant performance period.(d) Requirements Regarding Reimbursement of Costs re Group Medical and DentalInsurance. The reimbursement for costs of group medical and dental insurance undereither of Section 2.1(b)(5) or Section 2.1(c)(5) that are incurred beyond the COBRAContinuation Period is intended to satisfy the requirements under Treasury RegulationsSection 1.409A-3 for payments made on a specified date or fixed scheduled of payments.Accordingly reimbursements will be made by the Company under either of these sectionssubject to the following conditions:
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(1) The objectively determinable nondiscretionary definition of the expenseseligible for reimbursement under this Section is as follows: “group medical anddental insurance coverage for the Covered Employee and his immediate family on thesame basis as in effect immediately before the Termination Date.”(2) The objectively and specifically prescribed period for reimbursement of expensesunder Section 2.1(b)(5) is the period from the Termination Date through the first tooccur of the second anniversary of the Termination Date and the date on which theCovered Employee becomes employed by a new employer and eligible for similarbenefits under a plan sponsored by that new employer and under Section 2.1(c)(5) isthe period from the Termination Date through the first to occur of the thirdanniversary of the Termination Date and the date on which the Covered Employeebecomes employed by a new employer and eligible for similar benefits under a plansponsored by that new employer.(3) The amount of the expenses eligible for reimbursement under either of these twosections during the Covered Employee’s taxable year will not affect the amount ofsuch expenses eligible for reimbursement in any other taxable year.(4) The reimbursement of any expense eligible under either of these two sectionswill be made as promptly as reasonably practicable after the expenses are incurredand in all events by not later than the last day of the Covered Employee’s taxableyear following the taxable year in which the expense was incurred.(5) The Covered Employee’s right to reimbursement for expenses eligible forreimbursement under either of these two sections is not subject to liquidation orexchange for any other benefit.2.2 **Special Provision Applicable Only if a Covered Employee’s Termination Occurs both inAdvance of and in Connection with a Change of Control**. If (a) a Covered Employee’s employmentis terminated by the Company (i) after representatives of the Company have engaged in seriousdiscussions with a third party regarding a possible Change of Control (which discussions may, forexample, be evidenced by a confidentiality agreement, a letter of interest, or similar documents)and a Change of Control (the “actual Change of Control”) thereafter occurs either as a result ofthose discussions or in reaction to those discussions, (ii) at a time that is not more than twelvefull calendar months before the occurrence of the actual Change of Control, and (iii) undercircumstances such that, if the termination had occurred immediately after the actual Change ofControl, the Covered Employee would have been entitled to severance benefits under Section 2.1(c)above and (b) the actual Change of Control constitutes a “change in control event” as that term isused in Treasury Regulation Section 1.409A-3(i)(5), then the Company will pay and provide to theCovered Employee all of the amounts and benefits specified in Section 2.1(c), reduced by suchamounts and such benefits, if any, that the Company has otherwise paid and provided to the CoveredEmployee pursuant to Section 2.1(b). The Company will pay the amount specified in this Section 2.2to the Covered Employee not earlier than six months after the Termination Date and not later thanten days after the last to occur of (x) the date that is exactly six months after the TerminationDate and (y) the date on which the actual Change of Control occurs.2.3 **Withholding**. All severance payments provided pursuant to the Plan herein will besubject to any required tax withholding.2.4 **Release, Confirmation of Confidentiality, Non-competition, and Non-solicitationObligations, and Resignation**. As a condition to the receipt of any severance benefits underthis Plan, the Company, in its sole discretion, may require a Covered Employee:
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(a) to execute (and not timely revoke) a release, in such reasonable form as may be providedby the Company, releasing the Company, its shareholders, partners, officers, directors,employees, attorneys, and agents from any and all claims and causes of action of any kind orcharacter, including but not limited to all claims or causes of action arising out of theCovered Employee’s employment with the Company and/or the termination of that employment,other than performance by the Company of its obligations under this Plan and under any otherplan that, by its terms, provides benefits to the Covered Employee after termination ofemployment;(b) to confirm the Covered Employee’s continued obligations of confidentiality,non-competition, and non-solicitation pursuant to Sections 2.6,2.7, and 2.8 of this Plan;and(c) to resign from his position, if any, as a member of the Board, effective as of theTermination Date.The Company may require Covered Employees to confirm the Covered Employee’s obligations underSections 2.6, 2.7, and 2.8 of this Plan in connection with the initial implementation of this Planand/or the designation of an individual as a Covered Employee under this Plan as well as after theTermination Date. If the Company in fact requires a release and or resignation from a CoveredEmployee after the Termination Date as a condition to receipt of severance benefits under thisPlan, the Company will take such steps as may be necessary to insure that the form of the releaseis provided to the Covered Employee in ample time for his review and execution before the time (asprovided above in this Plan) on which any payments or benefits that are conditioned on receipt ofthat release and/or resignation are to be made. In no event will the Company take any action thatwill cause any of the payments or benefits that are so conditioned on receipt of a release and/orresignation to be paid or provided later than the time (as provided above in this Plan) on whichthe payments or benefits are to be made without reference to this Section 2.4.2.5 **Gross-Up of Payments Deemed to be Excess Parachute Payments**. The provisions of thisSection 2.5 will in all events be applied in such a manner as to satisfy the timing requirementsspecified in Section 2.5(e).(a) Acknowledgement. The Company acknowledges that, following a Change of Control,one or more payments or distributions to be made by the Company to or for the benefit of aCovered Employee (whether paid or payable or distributed or distributable pursuant to theterms of this Plan, under some other plan, agreement, or arrangement, or otherwise, andincluding, without limitation, any income recognized by the Covered Employee upon exerciseof any stock option granted by the Company) (a “Payment”) may be determined to be an “excessparachute payment” that is not deductible by the Company for federal income tax purposes andwith respect to which the Covered Employee will be subject to an excise tax because ofSections 280G and 4999, respectively, of the Code (hereinafter referred to respectively as“Section 280G” and “Section 4999”). If a Covered Employee’s employment is terminated aftera Change of Control occurs, the Accounting Firm, which, subject to any inconsistent positionasserted by the Internal Revenue Service, will make all determinations required to be madeunder this Section 2.5(a), will determine whether any Payment would be an excess parachutepayment and will communicate its determination, together with detailed supportingcalculations, to the Company and to the Covered Employee within 30 days after theTermination Date or such earlier time as is requested by the Company. The Company and theCovered Employee will cooperate with each other and the Accounting Firm and will providenecessary information so that the Accounting Firm may make all such determinations. TheCompany will pay all of the fees of the Accounting Firm for services performed by theAccounting Firm as contemplated in this Section 2.5(a).
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(b) Gross-Up Payments. If the Accounting Firm determines that any Payment givesrise, directly or indirectly, to liability on the part of a Covered Employee for excise taxunder Section 4999 (and/or any penalties and/or interest with respect to any such excisetax), the Company will make additional cash payments to the Covered Employee, from time totime and at the same time as any Payment constituting an excess parachute payment is paid orprovided to the Covered Employee, in such amounts as are necessary to put the CoveredEmployee in the same position, after payment of all federal, state, and local taxes (whetherincome taxes, excise taxes under Section 4999, or otherwise, or other taxes) and any and allpenalties and interest with respect to any such excise tax, as the Covered Employee wouldhave been in after payment of all federal, state, and local income taxes if the Payments hadnot given rise to an excise tax under Section 4999 and no such penalties or interest hadbeen imposed.(c) Further Payments Upon Later Determination by the IRS. If the Internal RevenueService determines that any Payment gives rise, directly or indirectly, to liability on thepart of a Covered Employee for excise tax under Section 4999 (and/or any penalties and/orinterest with respect to any such excise tax) in excess of the amount, if any, previouslydetermined by the Accounting Firm, the Company will make further additional cash payments tothe Covered Employee not later than the due date of any payment indicated by the InternalRevenue Service with respect to these matters, in such amounts as are necessary to put theCovered Employee in the same position, after payment of all federal, state, and local taxes(whether income taxes, excise taxes under Section 4999, or otherwise, or other taxes) andany and all penalties and interest with respect to any such excise tax, as the CoveredEmployee would have been in after payment of all federal, state, and local income taxes ifthe Payments had not given rise to an excise tax under Section 4999 and no such penalties orinterest had been imposed.(d) Contest by the Company. If the Company desires to contest any determination bythe Internal Revenue Service with respect to the amount of excise tax under Section 4999with respect to any Payment to a Covered Employee, the Covered Employee will, upon receiptfrom the Company of an unconditional written undertaking to indemnify and hold the CoveredEmployee harmless (on an after tax basis) from any and all adverse consequences that mightarise from the contesting of that determination, cooperate with the Company in that contestat the Company’s sole expense. Nothing in this Section 2.5(d) will require the CoveredEmployee to incur any expense other than expenses with respect to which the Company has paidto the Covered Employee sufficient sums so that after the payment of the expense by theCovered Employee and taking into account the payment by the Company with respect to thatexpense and any and all taxes that may be imposed upon the Covered Employee as a result ofthe Covered Employee’s receipt of that payment, the net effect is no cost to the CoveredEmployee. Nothing in this Section 2.5(d) will require the Covered Employee to extend thestatute of limitations with respect to any item or issue in the Covered Employee’s taxreturns other than, exclusively, the excise tax under Section 4999. If, as the result ofthe contest of any assertion by the Internal Revenue Service with respect to excise taxunder Section 4999, the Covered Employee receives a refund of a Section 4999 excise taxpreviously paid and/or any interest with respect thereto, the Covered Employee will promptlypay to the Company such amount as will leave the Covered Employee, net of the repayment andall tax effects, in the same position, after all taxes and interest, that he would have beenin if the refunded excise tax had never been paid.(e) Specified Time or Fixed Schedule of Payments. Any tax gross-up payment (asthat term is used Treasury Regulations Section 1.409A-3(i)(1)(v)) made under this Section2.5 will be made by the end of the Covered Employee’s taxable year next following theCovered Employee’s taxable year in which the Covered Employee remits the related taxes. Anyreimbursement of
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expenses incurred due to a tax audit or litigation addressing the existence or amount of taxliability will be made by the end of the Covered Employee’s taxable year following theCovered Employee’s taxable year in which the taxes that are the subject of the audit orlitigation are remitted to the taxing authority, or where as a result of such audit orlitigation no taxes are remitted, the end of the Covered Employee’s taxable year followingthe Covered Employee’s taxable year in which the audit is completed or there is a final andnonappealable settlement or other resolution of the litigation. This Section 2.5(e)specifies the outside date by which tax gross-up payments and reimbursements must be made.Where another provision of this Section 2.5 specifies an earlier time for the payment and/orreimbursements, the Company will make the payments and/or reimbursements at the earliertime.2.6 **Confidential Information**. In consideration of the coverage provided by this Plan, eachCovered Employee shall not, without the prior written consent of the Company, for a period of twoyears following the Termination Date, except as may be required by any competent legal authority,use or disclose to any Person any confidential record, secret, or information related to theCompany or any of its subsidiaries.2.7 **Covenant Against Competition**. If a Covered Employee’s employment is terminated beforea Change of Control by the Company with or without Cause or by the Covered Employee for GoodReason, the Covered Employee shall not, at any time between the Termination Date and the firstanniversary of the Termination Date, have any interest in or be engaged by any business orenterprise that is in the business of exploring for, developing, or producing hydrocarbons inspecific areas where the Company has interest as of the Termination Date. For these purposes:(a) The Company will be deemed to have interests in an area within a ten mile radius of thecurrent owned acreage or active prospect area as of the Termination Date.(b) The Covered Employee will be deemed to have an “interest in or be engaged by a businessor enterprise” if the Covered Employee acts (I) individually, (II) as a partner, officer,director, shareholder, employee, associate, agent, or owner of an entity, or (III) as anadvisor, consultant, leader, or other agent related, directly or indirectly, to any businessor entity that is engaging in, or is planning to engage in, exploring for, developing, orproducing hydrocarbon in specific areas where the Company has interests (“the ProhibitedActivity”).(c) Ownership of less than five percent (5%) of the outstanding capital stock of a publiclytraded entity that engages in any Prohibited Activity will not be deemed to be a violationof this Section 2.7.2.8 **Non-Solicitation**. In consideration of the coverage provided by this Plan, each CoveredEmployee shall refrain, during the one year period ending on the first anniversary of theTermination Date, from directly or indirectly, in any manner or capacity, from (a) inducing anyindividual to discontinue his or her employment with the Company or the Company’s successor and (b)interfering in any way with the business relationship of the Company or the Company’s successorwith any other Person or Persons.2.9 **Mitigation**. A Covered Employee will not be required to mitigate the amount of anypayment provided for in Section 2.1 by seeking other employment or otherwise, nor will the amountof any payment or benefit provided for in Section 2.1 be reduced by any compensation or benefitearned by the Covered Employee as the result of employment by another employer or by retirementbenefits.2.10 **Six-Month Delay for Specified Employees**. Notwithstanding any other provision of thisPlan to the contrary, no payments of any amount that is subject to Section 409A may be made to aCovered
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Employee who is specified employee (as the term “specified employee” is used in TreasuryRegulations Section 1.409A-1(c)(3)(v) and as that status is determined in accordance with themethodology established by the Company under the Treasury Regulations) before the date that is sixmonths after the Termination Date of that Covered Employee or, if earlier, the date of death ofthat Covered Employee. If payment of any amount payable under this Plan is delayed by thesix-month delay rule, the delayed amounts will be accumulated through and paid, with interest(equal to the short term applicable federal rate then in effect), during the ten day periodbeginning on the date that is six months after the Covered Employee’s Termination Date (or date ofdeath, as the case may be) and ending ten days later.**III.****ADMINISTRATION OF PLAN**3.1 **Plan Administration**. For the purposes of this Plan and the Employee Retirement IncomeSecurity Act of 1974, as amended, the Committee is the plan administrator and named fiduciary ofthe Plan. The Committee will hold such meetings and establish and follow such rules and proceduresas may be necessary to enable it to discharge its duties hereunder. Without limiting the foregoingobligation, the Committee will cause a written record to be maintained of all actions taken by theCommittee with respect to this Plan. The Committee will have all powers necessary or proper toadminister the Plan and to discharge its duties under the Plan, including, but not limited to, thefollowing powers:(a) To make and enforce such rules and regulations as it may deem necessary or proper forthe orderly and efficient administration of the Plan;(b) To interpret the Plan, its interpretation thereof in good faith to be final andconclusive on all Persons claiming benefits under the Plan;(c) To authorize the payment of benefits under the Plan;(d) To prepare and distribute information explaining the Plan;(e) To appoint or employ Persons to assist in the administration of the Plan; and(f) To obtain such information as may be necessary for the proper administration of thePlan.The Committee may allocate to others certain aspects of the management, operation, andresponsibilities of the Plan, including the employment of advisors and the delegation of anyministerial duties or functions to qualified individuals. The Company will indemnify the membersof the Committee against all liabilities, damages, costs, and expenses (including attorneys’ feesand amounts paid in settlement of any claims approved by the Company) occasioned by any act oromission to act in connection with the Plan if the act or omission was in good faith.3.2 **Claims Review**. For claims arising after a Change of Control, the Covered Employee willnot be required to follow the Plan’s claim procedures as set forth in this Section, instead theCovered Employee will be deemed to have satisfied his administrative remedies if the CoveredEmployee pursues any claim in court. For all other claims, the following claims procedures willapply. The Committee will advise each Covered Employee of any Plan benefits to which the CoveredEmployee is entitled. If the Covered Employee believes that the Committee has failed to advise himor her of any Plan benefits to which he or she is entitled, the Covered Employee may file a writtenclaim with the Committee. The Committee will review any such claim and respond thereto within areasonable time after receiving the claim. In any case in which a Covered Employee’s claim forPlan benefits is denied or modified, the Committee will:
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(a) state the specific reason for the denial or modification;(b) provide specific reference to pertinent Plan provisions on which the denial ormodification is based;(c) provide a description of any additional material or information necessary for theCovered Employee or his representative to perfect the claim and an explanation of why suchmaterial or information is necessary; and(d) explain the Plan’s claim review procedure as contained herein.If a request is denied or modified and a Covered Employee or his representative desires to havethat denial or modification reviewed, the Covered Employee or representative must, within 60 daysfollowing receipt of the notice of the denial or modification, submit a written request for reviewby the Committee of its initial decision. Within 60 days following such request for review theCommittee will render its final decision in writing to the Covered Employee or representativestating specific reasons for the decision. If special circumstances require an extension of the60-day period, the Committee’s decision will be rendered as soon as possible, but not later than120 days after receipt of the request for review. If an extension of time for review is required,written notice of the extension will be furnished to the Covered Employee or representative beforethe start of the extension period.**IV.****GENERAL PROVISIONS**4.1 **Funding**. Benefits under this Plan will be unfunded and will be provided from theCompany’s general assets.4.2 **Binding Nature of Plan**. The Company intends that the Plan will be binding upon theCompany and its successor in accordance with its terms and that each Covered Employee will beentitled to enforce rights under the Plan to the same extent as if the provisions of the Plan andall of its provisions, including those relating to amendment and termination, were contained in abilateral agreement executed by the Covered Employee and on behalf of the Company.4.3 **Cost of Plan**. The entire cost of the Plan will be borne by the Company and nocontributions will be required of any Covered Employees.4.4 **Plan Binding on Successors**. The Company will require any successor (whether direct orindirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of thebusiness and/or assets of the Company to expressly assume and agree to perform the Company’sobligations under this Plan in the same manner and to the same extent that the Company would berequired to perform them if no such succession had taken place.4.5 **Amendment and Termination**. The Plan may be amended from time to time, or terminatedand discontinued, at any time, in each case at the discretion of the Board, except that:(a) Except to the limited extent specified in Section 4.5(b), the Plan may not be terminatedor amended in any way adverse to any Covered Employee without the consent of that CoveredEmployee;
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(b) Between the Effective Date and the first to occur of (i) a Change of Control or (ii)December 31, 2007, the Plan may be amended to the extent, if any, that the Board deemsnecessary or advisable to comply with the requirements of Section 409A; and(c) During the two year period ending on the second anniversary of a Change of Control, thePlan may not be amended in any way with respect to any Covered Employee without the consentof that Covered Employee.4.6 **No Contract of Employment**. The adoption and maintenance of the Plan will not be deemedto be a contract of employment between the Company and any individual or to be consideration forthe employment of any individual. Nothing in the Plan will be deemed to give any individual theright to be retained in the employ of the Company or to restrict the right of the Company todischarge any individual at any time nor will the Plan be deemed to give the Company the right torequire any individual to remain in the employ of the Company or to restrict any individual’s rightto terminate his or her employment at any time.4.7 **Severability**. Any provision of the Plan that is prohibited or unenforceable in anyjurisdiction by reason of applicable law will, as to that jurisdiction, be ineffective to theextent (and only to the extent) of that prohibition or unenforceability without invalidating oraffecting the remaining provisions of the Plan, and any such prohibition or unenforceability in anyjurisdiction will not invalidate or render unenforceable any provision in any other jurisdiction.4.8 **Nonalienation**. Covered Employees will not have any right to pledge, hypothecate,anticipate, or assign benefits or rights under the Plan, except by will or the laws of descent anddistribution, or as may be required pursuant to a domestic relations order.4.9 **Governing Law**. The Plan will be interpreted and construed in accordance with the lawsof the State of Ohio except to the extent preempted by federal law.**IN WITNESS WHEREOF**, the Company has executed this Plan as of the 7th day of June, 2007.         **BPI ENERGY HOLDINGS, INC**.           By: