Exhibit
10.29


SONTERRA
RESOURCES, INC.


2008
EQUITY COMPENSATION PLAN








ARTICLE
I.


PURPOSE,
ADOPTION AND TERM OF THE PLAN





1.01           Purpose.  The
purpose of the Sonterra Resources, Inc. 2008 Equity Compensation Plan
(hereinafter referred to as the “Plan”) is to advance the interests of the
Company as hereinafter defined) and its Subsidiaries as hereinafter defined) by
encouraging and providing for the acquisition of an equity interest in the
Company by non-employee directors, officers, key employees, and other persons
that provide consulting services to us or to our subsidiaries
through  grants and awards of Equity Compensation (as hereinafter
defined).  The Plan will enable the Company to retain the services of
non-employee directors, officers, key employees, and  other persons
that provide consulting services to us or to our subsidiaries and upon whose
judgment, interest, and special effort the successful conduct of our operations
is largely dependent and to compete effectively with other enterprises for the
services of such non-employee directors, officers, key employees, and other
persons that provide consulting services to us or to our subsidiaries as may be
needed for the continued improvement of its business. All Grants and Awards of
Equity Compensation made under the Plan shall be based upon attainment of
specified Performance Objectives as set forth in Section 5.02 and may qualify as
performance-based compensation under Section 162(m) of the Code.





1.02           Adoption and
Term.  The Plan shall become effective on March 31, 2009, and
no Equity Compensation shall be awarded after the tenth anniversary of the Plan.
The term of each Grant or Award of Equity Compensation shall terminate ten (10)
years from the date of such Grant or Award, or such earlier date as shall be
determined in the Option Agreement (as hereinafter defined) approved by the
Board ( as hereinafter defined).





ARTICLE
II.


DEFINITIONS





For
purposes of the Plan, capitalized terms shall have the meanings prescribed
therefore in the body of the Plan or, if not prescribed herein, shall have the
following meanings:





2.01           “Applicable
Law” means any federal, state, or local laws, rules, and regulations that apply
to the person or subject matter under the relevant circumstances.





2.02           “Award”
means an award of Performance Stock Options.





2.03           “Beneficiaries”
means an individual, trust or estate that, by will or the laws of descent and
distribution, succeeds to the rights and obligations of the Participant under
the Plan and a Option Agreement upon the Participant's death.




1





2.04           “Board”
means the Board of Directors of the Company.





2.05           “Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor thereto. References to a section of the Code shall include that
section and any comparable section or sections of any future legislation that
amends, supplements, or supersedes said section.





2.06           “Committee”
means a committee of the Board as may be appointed, from time to time, by the
Board to administer the Plan.





(a)           The
Board may appoint more than one Committee to administer the Plan.  If
it appoints more than one Committee, one Committee (the “Compensation
Committee”) shall have the authority to grant Options to a Participant who is
either, at the Date of Grant of the Option, a “covered employee” as defined in
Section 162(m) or who is subject to Section 16 of the Exchange Act; however,
such Committee shall also have the authority to grant Options to other
Participants. The Compensation Committee shall be composed of at least two
directors of the Company, each of whom is a “non-employee director” as defined
in Rule 16b-3 and an “outside director” within the meaning of Section 162(m).
If, however, at least two of the Company's directors are not both “non-employee
directors” and “outside directors,” the Board may grant Options to a Participant
who is either a “covered employee” or subject to Section 16 of the Exchange Act,
in which case the Board may also administer the Plan and the term “Committee” as
used herein shall also include the Board. The other Committee (the “Select
Committee”) shall be composed of at least one director, who may be an officer of
the Company. The Select Committee shall have authority to grant Options to a
Participant who is not, at the Date of Grant, either a “covered employee” as
defined in Section 162(m) or subject to Section 16 of the Exchange Act. Awards
may only be made to “covered employees” by joint action of the Compensation
Committee and the Select Committee.





(b)           The
Board may, from time to time, appoint members of each Committee in substitution
for those members who were previously appointed and may fill vacancies, however
caused, in the Committee.





(c)           The
Compensation Committee and the Select Committee shall each have the power and
authority to administer the Plan in accordance with Article III with respect to
particular classes of Participants as specified in Section 2.04(a)) and, when
used herein, the term “Committee” shall mean either the Compensation Committee
or the Select Committee if the Board appoints more than one Committee to
administer the Plan. If, however, there is a conflict between the determinations
made by the Compensation Committee and the Select Committee, the determinations
made by the Compensation Committee shall control.





2.07           “Common
Stock” means the Common Stock, par value $.001 per share, of the
Company.





2.08           “Company”
means Sonterra Resources, Inc. (fka River Capital Group, Inc.), a corporation
organized under the laws of the State of Delaware, and its
successors.




2





2.09           “Date
of Grant” means the date designated by the Committee as the date as of which it
makes an Option Grant, which shall not be earlier than the date on which the
Committee approves the granting of such Grant or Award.





2.10           “Disability”
has the meaning specified in Section 22(e) (3) of the Code.





2.11           “Disability
Date” means the date, as determined by the Committee, as of which an Employee
Participant has a Disability.





2.12           “Employee
Participant” means a Participant who is not a Non-Employee
Director.





2.13           “Equity
Compensation” means Performance Option Grants.





2.14           “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.





2.15           “Exchange
Act” means the Securities Exchange Act of 1934, as amended.





2.16           “Fair
Market Value” of a share of Common Stock means, as of any given date, the
closing sales price of a share of Common Stock on such date on the principal
national securities exchange on which the Common Stock is then traded or, if the
Common Stock is not then traded on a national securities exchange, the closing
sales price or, if none, the average of the bid and asked prices of the Common
Stock on such date as reported on the Over-The-Counter Bulletin Board (the
“OTCBB”); provided, however, that, if there were no sales reported as of such
date, Fair Market Value shall be computed as of the last date preceding such
date on which a sale was reported; provided, further, that, if any such exchange
or quotation system is closed on any day on which Fair Market Value is to be
determined, Fair Market Value shall be determined as of the first date
immediately preceding such date on which such exchange or quotation system was
open for trading. If the Common Stock is not admitted to trade on a securities
exchange or quoted on OTCBB, the Fair Market Value of a share of Common Stock as
of any given date shall be as determined in good faith by the Committee, in its
sole and absolute discretion, which determination may be based on, among other
things, the opinion of one or more independent and


reputable
appraisers qualified to value companies in the Company's line of
business.  Notwithstanding the foregoing, the Fair Market Value of a
share of Common Stock shall never be less than par value per share.





2.17           “Grant”
means the grant of Options to a Participant under the Plan as set forth in an
Option Agreement.





2.18           “Initial
Option Price” means the option price of $1.04 per share of Common Stock.
Notwithstanding the foregoing, the option price per share of common stock shall
never be less than the Fair Market Value on the date of the Option
Grant.





2.19           “Non-Employee
Director” means each member of the Board or of the Board of Directors of a
Subsidiary, in each case who is not an employee of the Company or of any of its
Subsidiaries.




3





2.20           “Option
Agreement” means a written agreement between the Company and a Participant
specifically setting forth the terms and conditions of Options granted to a
Participant under the Plan.





2.21           “Option
Grant” means the grant of Options to a Participant under the Plan as set forth
in an Option Agreement.





2.22           “Option”
means any option to purchase Common Stock granted under the Plan to an Employee
Participant or to a Non-Employee Director. All Options granted under the Plan
shall be performance-based Options that do not qualify as incentive stock
options under Section 422 of the Code.





2.23           “Participant”
means any employee, Non-Employee Director, or other person that provides
consulting services to us or to our subsidiaries of the Company or any of its
Subsidiaries selected by the Committee to receive an Option Grant under the Plan
in accordance with Articles V and/or VI.





2.24           “Plan”
means the Sonterra Resources, Inc. 2008 Equity Compensation Plan as set forth
herein, and as the same may be amended from time to time.





2.25           “Option
Agreement” means an Option Agreement.





2.26           “Rule
16b-3” means Rule 16b-3 promulgated by the SEC under Section 16 of the Exchange
Act and any successor rule.





2.27           “SEC”
means the Securities and Exchange Commission.





2.28           “Section
162(m)” means Section 162(m) of the Code and the regulations
thereunder.





2.29           “Section
409A” means Section 409A of the Code and the regulations
thereunder.





2.30           “Securities
Act” means the Securities Act of 1933, as amended.





2.31           “Securities
Exchange Agreement” means the Securities Exchange and Additional Note Purchase
Agreement dated August 3, 2007, entered into by and between the Company and The
Longview Fund, L.P., as may be amended from time to time hereafter and/or the
Securities Exchange Agreement dated November 10, 2008, entered into by and
between the Company and Longview Marquis Master Fund, L.P., as the context
indicates.





2.32           “Subsidiary”
means a company more than 50% of the equity interests of which are beneficially
owned, directly or indirectly, by the Company.





2.33           “Termination
of Employment” means, with respect to an Employee Participant, the voluntary or
involuntary termination of a Participant's employment with the Company or any of
its Subsidiaries for any reason, including, without limitation, death,
Disability, retirement or as the result of the sale or other divestiture of the
Participant's employer or any similar transaction in which the Participant's
employer ceases to be the Company or one of its Subsidiaries. Whether entering
military or other government service shall constitute Termination of Employment,
and whether a Termination of Employment is a result of Disability, shall be
determined in each case by the Committee in its sole and absolute discretion,
subject to ERISA and other Applicable Law.




4




ARTICLE
III.


ADMINISTRATION





3.01           Committee.  The
Plan shall be administered by the Committee, which shall have exclusive and
final authority in each determination, interpretation, or other action affecting
the Plan and its Participants. The Committee shall have the sole and absolute
discretion to interpret the Plan, to establish and modify administrative rules
for the Plan, to select the Non-Employee Directors, officers, key employees, and
other persons that provide consulting services to us or to our subsidiaries to
whom Options may be granted, to determine the terms and provisions
of  Option Grants and Option Agreements (which need not be identical),
to determine all claims for benefits under the Plan, to impose such conditions
and restrictions on Equity Compensation as it determines appropriate, to
determine whether the shares delivered on the exercise of Options will be
treasury shares or will be authorized but previously unissued shares, and to
take such steps in connection with the Plan and Equity Compensation granted
hereunder as it may deem necessary or advisable. No action of the Committee will
be effective if it contravenes or amends the Plan in any respect.





3.02           Actions of the
Committee.  Except when the “Committee” is the “Board” in the
circumstance described in the fourth sentence of Section 2.04(a), all
determinations of the Committee shall be made by a majority vote of its members.
A majority of a Committee's members shall constitute a quorum. Any decision or
determination reduced to writing and signed


by all of
the members shall be fury as effective as if it had been made by a majority vote
at a meeting duly called and held. The Committee shall also have express
authorization to hold Committee meetings by conference telephone, or similar
communication equipment by means of which all persons participating in the
meeting can hear each other.








ARTICLE
IV.


SHARES
OF COMMON STOCK





4.01           Options on Shares of Common
Stock Issuable.  Subject to adjustments as provided in Section
9.05, the maximum number of options available for Grants under the Plan shall be
three million (3,000,000).  Employee Participants, Non-Employee
Directors, and other persons that provide consulting services to us or to our
subsidiaries are eligible for Option Grants under the Plan. The Common Stock to
be offered under the Plan shall be authorized and unissued Common Stock or
issued Common Stock that shall have been reacquired by the Company and held in
its treasury.




5





4.02           Number of Shares of Common
Stock Awarded to any Participant.  In the event the purchase
price of an Option is paid, or related tax or withholding payments are
satisfied, in whole or in part through the delivery of shares of Common Stock
issuable in connection with the exercise of the Option, a Participant will be
deemed to have received an Option with respect to those shares of Common
Stock.





4.03           Shares of Common Stock
Subject to Terminated Options.  The Common Stock covered by any
unexercised portions of terminated Options may again be subject to new Options
under the Plan.





ARTICLE
V.


PARTICIPATION





5.01           Eligible
Participants.  Employee Participants shall be such officers and
other key employees of the Company or its Subsidiaries, whether or not directors
of the Company, as the Committee, in its sole and absolute discretion, may
designate from time to time. Non-Employee Director Participants shall be such
Non-Employee Directors as the Committee, in its sole and absolute discretion,
may designate from time to time. Consulting Participants shall be such persons
who render consulting services to the Company or its subsidiaries as the
Committee, in its sole and absolute discretion, may designate from time to
time.  In making such designations, the Committee may take into
account the nature of the services rendered by the officers, key employees and
Non-Employee Directors, their present and potential contributions to the success
of the Company and its Subsidiaries, and such other factors as the Committee, in
its sole and absolute discretion, may deem relevant. The Committee's designation
of a Participant in any year shall not require the Committee to designate such
person to receive Equity Compensation in any other year. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in
determining the amounts of their respective Option Grants. A Participant may
hold more than one Option Grant awarded under the Plan. Subject to adjustments
as provided in Section 9.05, during the term of the Plan, no Employee
Participant may receive Options to purchase more than 400,000 shares of Common
Stock under the Plan in any given year, and the total number of Options awarded
to all Employee Participants shall not exceed 1,300,000 in any given
year.











[INTENTIONALLY
LEFT BLANK]












6




5.01           Performance Objectives
Necessary for Options to Vest.  Vesting of Options granted to
all Participants in a given year shall be based upon the achievement of each
performance objective set forth in the following table (“Performance
Objective”):








Percentage of  Options
      That Vest Each Year for Shares Earned Under the Option
      Agreement*
                              
                              Compounded Annual Net Reserve
      Growth Performance Objective**
                              
                              Maximum Number of Options that
      Vest Each Year Based on Achievement of  Reserve Growth
      Performance Objective
                              
                              Maximum Number of Options That
      Vest Each Year Based on Achievement of 75% of Reserve Growth Performance
      Objective
                              
                              Maximum Number of Options
      That Vest Each Year Based on Achievement  of  50% of
      Reserve Growth Performance Objective
                              
                              Maximum Number of Options That
      Vest Each Year Based on Achievement of <50% of Reserve Growth
      Performance Objective33-1/3%
                              
                              36%
                              
                              433,334
                              
                              325,000
                              
                              216,667
                              
                              033-1/3%
                              
                              36%
                              
                              433,333
                              
                              325,000
                              
                              216,666
                              
                              033-1/3%
                              
                              36%
                              
                              433,333
                              
                              325,000
                              
                              216,666
                              
                              0100%
                              
                              
                              
                              1,300,000
                              
                              975,000
                              
                              650,000
                              
                              0





* Once
the applicable compounded Annual Net Reserve Growth Performance Objective Target
has been achieved for a given year at the 100% Target Level (36% or greater),
75% of Target Level (between 24% and 36%), 50% of Target Level (between 18% and
24%), and 0% for 18% or less Compounded Annual Net Reserve Growth,
the Options awarded will vest in full over 3 years at 33-1/3% per
annum.





**The
compounded Annual Net Reserve Growth Performance Objective is based upon the
total Proved, Probable and Possible reserves net to Sonterra’s interest,
adjusted for production, farmouts, and other dispositions of the underlying oil
and gas assets, as each reserve category is defined under industry standard SPE
reserve definitions.





*** For
every given year during the Plan, the applicable Prior Period shall commence
April 1, 2008, and shall end as of the end of the calendar quarter ended March
31st
of that given year.








ARTICLE
VI.


STOCK
OPTIONS





6.01           Grant of
Option.  Any Option granted under the Plan shall have such
terms as the Committee may, from time to time, approve, and the terms and
conditions of Options need not be the same with respect to each
Participant.





6.02           Terms of
Options.  Options granted under the Plan shall be subject to
the following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:


7





(a)           Option
Price.  The Options under the Plan shall be granted at the
Initial Option Price; provided, however, that, except as required by Rule 16b-3
with respect to Options granted to persons subject to Section 16 of the Exchange
Act, no amendment of an Option shall be deemed to be the grant of a new Option
for purposes of this Section 6.02(a). Notwithstanding the foregoing, the option
price per share of Common Stock of an Option shall never be less than Fair
Market Value.





(b)           Option
Term.  The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than ten (10) years after the Date of
Grant.





(c)           Exercisability.  An
Option Agreement with respect to Options may contain such Performance Objective
targets, waiting periods, exercise dates and restrictions on exercise
(including, but not limited to, a requirement that an Option is exercisable in
periodic installments), and restrictions on transfer of the underlying shares of
Common Stock, if any, as may be determined by the Committee at the time of
grant. To the extent not exercised, installments shall cumulate and be
exercisable, in whole or in part, at any time after becoming exercisable,
subject to the limitations set forth in Sections 6.02(b), (d), (g), (h) and
(i).





(d)           Vesting
Schedules.  All Options shall vest in accordance with the terms
and conditions of the Option Agreement executed as of the Date of
Grant.





(e)           Method of
Exercise.  Subject to whatever installment exercise and waiting
period provisions that apply under Section 6.02(c) and subject to Sections
6.02(b), (d), (g), (h) and (i), Options may be exercised in whole or in part at
any time during the term of the Option, by giving written notice of exercise to
the Company specifying the number of shares of Common Stock to be purchased.
Such notice shall be accompanied by payment in full of the purchase price in
such form as the Committee may accept (including payment in accordance with a
cashless exercise program approved by the Committee). If and to the extent the
Committee determines in its sole and absolute discretion at or after grant,
payment in full or in part may also be made in the form of shares of Common
Stock already owned by the Participant and for which the Participant has good
title, free and clear of any liens or encumbrances) based on the Fair Market
Value of the shares of Common Stock on the date the Option is exercised;
provided, however, that any already owned Common Stock used for payment must
have been held by the Participant for at least six months. No Common Stock shall
be issued on exercise of an Option until payment, as provided herein, therefor
has been made. A Participant shall generally have the right to dividends or
other rights of a stockholder with respect to Common Stock subject to the Option
only when certificates for shares of Common Stock are issued to the Participant,
or, if the Common Stock shall be uncertificated, when such shares of Common
Stock are credited to the direct registration system account of such
Participant.





(f)           Non-Transferability of
Options.  No Option shall be transferable by the Participant
otherwise than by will, by trust, by the laws of descent and distribution, or
pursuant to a domestic relations order.




8





(g)           Acceleration or Extension of
Exercise Time.  The Committee, in its sole and absolute
discretion, shall have the right (but shall not in any case be obligated) to
permit purchases of Common Stock subject to any Option granted to a Participant
prior to the time such Option would otherwise become exercisable under the terms
of the Option Agreement. In addition, the Committee, in its sole and absolute
discretion, shall have the right (but shall not in any case be obligated) to
permit any Option granted to a Participant to be exercised after the day the
Option would otherwise expire, subject, however, to the limitation set forth in
Section 6.02(b).





(h)           Exercise of Options Upon
Termination of Employment.  The following provisions apply to
Options granted to Employee Participants:





(i) Exercise of Vested Options
Upon Termination of Employment.





(A)           Termination.  Unless
the Committee, in its sole and absolute discretion, provides for a shorter or
longer period of time in an Option Agreement or a longer period of time in
accordance with Section 6.02(g), upon an Employee Participant's Termination of
Employment other than by reason of death or Disability, the Employee Participant
may, within 90 days from the date of such termination of Employment, exercise
all or any part of his or her Options as were exercisable at the date of
Termination of Employment. In no event, however, may any Option be exercised
later than the date determined pursuant to Section 6.02(b).





(B)           Disability.  Unless
the Committee, in its sole and absolute discretion, provides for a shorter or
longer period of time in an Option Agreement or a longer period of time in
accordance with Section 6.02(g), upon an Employee Participant's Disability Date,
the Employee Participant may, within one (1) year after the Disability Date,
exercise all or a part of his or her Options, whether or not such Option was
exercisable on the Disability Date, but only to the extent not previously
exercised. In no event; however, may any Option be exercised later than the date
determined pursuant to Section 6.02(b).





(C)           Death.  Unless
the Committee, in its sole and absolute discretion, provides for a shorter
period of time in an Option Agreement, in the event of the death of an Employee
Participant while employed by the Company or a Subsidiary, the Employee
Participant's Beneficiary shall, within one (1) year after the Disability Date,
be entitled to exercise any Options that were vested at the date of the Employee
Participant's death. In no event, however, may any Option be exercised later
than the date determined pursuant to Section 6.02(b).





(ii)           Expiration of Unvested
Options Upon Termination of Employment.  Subject to Sections
6.02(g) and 6.02(h)(i)(B) and (C), to the extent all or any part of an Option
granted to an Employee Participant was not exercisable as of the date of
Termination of Employment, such right shall expire at the date of such
Termination of Employment. Notwithstanding the foregoing, the Committee, in its
sole and absolute discretion and under such terms as it deems appropriate, may
permit an Employee Participant to continue to accrue service with respect to the
right to exercise his or her Options.




9





(i)           Exercise of Options Upon
Termination of Service.  Unless the Committee, in its sole and
absolute discretion, provides for a shorter or longer period of time in an
Option Agreement or a longer period of time in accordance with Section 6.02(g),
if a Non-Employee Director's service or Consulting Participant’s service with
the Company or a Subsidiary terminates for any reason or if such person ceases
to be a Non-Employee Director or consultant, such Option may be exercised to the
extent it was exercisable on the date of such termination of service until the
expiration of the stated term of the Option, but only to the extent it was not
previously exercised.





ARTICLE
VII.


TERMS
APPLICABLE TO ALL OPTIONS GRANTED UNDER THE PLAN





9.01           Plan Provisions Control
Terms of Grants.  The terms of the Plan shall govern all
Options granted under the Plan, and in no event shall the Committee have the
power to grant to a Participant any Options under the Plan in contravention with
any provisions of the Plan. If any provision of any Option Grant awarded under
the Plan conflicts with any of the terms in the applicable Option Agreement (as
defined in Section 9.02 below) or in the Plan itself as constituted on the Date
of Grant of such Options, the terms in the Plan as constituted on the Date of
Grant of such Options shall control over the terms in any Option
Agreement.





9.02           Option
Agreements.  No person shall have any rights under any grant of
Options granted under the Plan unless and until the Company and the Participant
to whom such Option shall have been granted shall have executed and delivered an
Option Agreement to the Committee which expressly granted the
Options.





9.03           Modification of Options
after Grant.  Except as provided by the Committee, in its sole
and absolute discretion, in the Option Agreement or as provided in Section 9.05,
no Option  granted under the Plan to a Participant may be modified
(unless such modification does not materially decrease the value of the Option)
after the Date of Grant, except by express written agreement between the Company
and the Participant so long as any such change (a) shall not be inconsistent
with the terms of the Plan or Applicable Law and (b) shall be approved by the
Committee.





9.04           Taxes.  The
Company shall be entitled, if the Committee deems it necessary or desirable, to
withhold (or secure payment from the Participant in lieu of withholding) the
amount of any withholding or other tax required by law to be withheld or paid by
the Company with respect to any Common Stock issuable under such Participant’s
Option Grant issued to an Employee Participant, and the Company may defer
issuance of such shares of Common Stock unless indemnified to its satisfaction
against any liability for any such tax. The amount of such withholding or tax
payment shall be determined by the Committee or its delegate and shall be
payable by the Participant at such time as the Committee determines. A
Participant shall be permitted to satisfy his or her tax or withholding
obligation by (a) having cash withheld from the Participant's salary or other
compensation payable by the Company or a Subsidiary, (b) the payment of cash by
the Participant to the Company, (c) the payment in shares of Common Stock
already owned by the Participant valued at Fair Market Value, and/or (d) the
withholding from the Option, at the appropriate time, of a number of shares of
Common Stock sufficient, based upon the Fair Market Value of such Common Stock,
to satisfy such tax or withholding requirements. The Committee shall be
authorized, in its sole and absolute discretion, to establish rules and
procedures relating to any such withholding methods it deems necessary or
appropriate (including, without limitation, rules and procedures relating to
elections by Participants who are subject to the provisions of Section 16 of the
Exchange Act to have shares of Common Stock withheld from an Award to meet those
withholding obligations).


10





9.05           Adjustments to Reflect
Capital Changes; Change in Control.





(a)           Recapitalization.  The
number and kind of shares subject to outstanding Option Grants, the purchase
price or exercise price of such Options, the limits set forth in Sections 4.01,
5.01, 6.01, 7.01, and 9.03 of the Plan, and the number and kind of shares
available for Options subsequently granted under the Plan shall be appropriately
adjusted to reflect any stock dividend, stock split, combination or exchange of
shares, merger, consolidation or other change in capitalization with a similar
or comparable substantive effect upon the Plan or the Option Grants awarded
under the Plan. The Committee shall have the power and sole and absolute
discretion to determine the nature and amount of the adjustment to be made in
each case to effectuate such similar or comparable substantive
effect.





(b)           Sale or
Reorganization.  After any reorganization, merger, or
consolidation in which the Company is the surviving entity, each Participant
shall, at no additional cost, be entitled upon the exercise of Options
outstanding prior to such event to receive (subject to any required action by
stockholders), in lieu of the number of shares of Common Stock receivable on
exercise pursuant to such Option Grant, the number and class of shares of stock
or other securities to which such Participant would have been entitled pursuant
to the terms of the reorganization, merger, or consolidation if, at the time of
such reorganization, merger, or consolidation, such Participant had been the
holder of record of a number of shares of Common Stock equal to the number of
shares of Common Stock receivable on exercise pursuant to such Option Grant.
Comparable rights shall accrue to each Participant in the event of successive
reorganizations, mergers, or consolidations of the character described above in
order to effectuate such similar or comparable substantive effect.





(c)           Options to Purchase Stock of
Acquired Companies.  After any reorganization, merger, or
consolidation in which the Company shall be a surviving entity, the Committee
may grant substituted Options under the provisions of the Plan or replace old
options, shares of restricted stock, or other equity compensation granted under
a plan of another party to the reorganization, merger, or consolidation whose
stock subject to the old options, restricted stock, or other equity compensation
may no longer be issued following such reorganization, merger, or consolidation.
The foregoing adjustments and manner of application of the foregoing provisions
in order to effectuate such similar or comparable substantive effect shall be
determined by the Committee in its sole and absolute discretion. Any such
adjustments may provide for the elimination of any fractional shares of Common
Stock that might otherwise become subject to any Options.




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(d)           Changes in
Control.  (i) Upon the dissolution or liquidation of the
Company, (ii) upon a reorganization, merger, or consolidation in which the
Company is not the surviving corporation, (iii) upon the sale of substantially
all of the property or assets of the Company to another corporation, or (iv) if
at least 50% or more of the voting stock of the Company is sold either through a
tender offer or otherwise to a party or an affiliated group of parties, then the
Plan, together with all Options granted hereunder and not exercised as provided
in this 9.05 (d) (except for Options already vested or which would otherwise
vest within one year after the Change of Control), shall terminate, unless
provisions are made in connection with such transaction for the assumption of
Options theretofore granted, or for the substitution for such Options of new
options of the successor corporation or a parent or subsidiary thereof, with
appropriate adjustment as to the number and kinds of shares and the per share
exercise prices and/or for any other appropriate comparable adjustment with
respect to the issuance of shares of the successor corporation in substitution
for said restricted shares in order to effectuate such similar or comparable
substantive effect.  In the event such Options shall be terminated,
all outstanding Options shall be exercisable in full for at least 30 days prior
to such termination date, whether or not exercisable during such period,
subject, however, to the limitation set forth in Section 6.02(b). For purposes
of this Article IX, including without limitation this Section 9.05(d), the
Company refers to Velocity Energy Inc., formerly known as Sonterra Resources,
Inc. The Committee shall determine the date on which Options may become
exercisable pursuant to this Section 9.05(d).





9.06           Surrender of
Options.  Any Options granted to a Participant under the Plan
may be surrendered to the Company for cancellation on such terms as the
Committee may approve in compliance with the terms of this Plan and ERISA, SEC,
or other Applicable Law.





9.07           No Right to Options; No
Right to Employment.  No director, employee or other person
shall have any claim or right to be granted any Options. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee any right
to be retained in the employ of the Company or any of its
Subsidiaries.





9.08           Options Not Includable for
Benefit Purposes.  Income recognized by a Participant pursuant
to the provisions of the Plan shall not be included in the determination of
benefits under any employee pension benefit plan as such term is defined in
Section 3(2) of ERISA) or group insurance or other benefit plans applicable to
the Participant that are maintained by the Company


or any of
its Subsidiaries, except as may be provided under the terms of such plans or
determined


by
resolution of the Board.





9.09           Governing
Law.  The Plan and all determinations made and actions taken
pursuant to the Plan shall be governed by the laws of the State of Delaware
other than the conflict of laws provisions of such laws, and shall be construed
in accordance therewith.





9.10           No Strict
Construction.  No rule of strict construction shall be implied
against the Company, the Committee, or any other person in the interpretation of
any of the terms of the Plan, any Option granted under the Plan or any rule or
procedure established by the Committee.




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9.11           Compliance.  It
is intended that the Plan be applied and administered in compliance with Rule
16b-3, Section 162(m), Section 409A, and other Applicable Law.  If any
provision of the Plan would be in violation of Section 162(m) and Section 409A
if applied as written, such provision shall not have effect as written and shall
be given effect so as to comply with Section 162(m) and Section 409A as
determined by the Committee in its sole and absolute discretion. The Board is
authorized to amend the Plan and the Committee is authorized to make any such
modifications to Option Agreements to comply with Rule 16b-3, Section 162(m) and
Section 409A, as each may be amended from time to time, and to make any other
such amendments or modifications deemed necessary or appropriate to better
accomplish the purposes of the Plan in light of any amendments made to Rule
16b-3, Section 162(m) and Section 409A. Notwithstanding the foregoing, the Board
may amend the Plan so that it (or certain of its provisions) no longer comply
with any or all of Rule 16b-3, Section 162(m) or Section 409A if the Board
specifically determines that such compliance is no longer necessary or desired
and the Committee may grant Options that do not comply with Rule 16b-3, Section
162(m) and/or Section 409A if the Committee determines, in its sole and absolute
discretion, that it is in the interest of the Company to do
so.  Except as set forth on Schedule 3(ff), every Option issued by the
Company (I) has (or, if no longer outstanding, had), with respect to each share
of Common Stock into which it was or is convertible or for which it was or is
exercisable or exchangeable, an exercise price equal to or greater than the fair
market value per share of Common Stock on the date of grant of such Option, (II)
was issued in compliance with the terms of the plan under which it was issued
and in compliance with applicable Laws, rules and regulations, including the
rules and regulations of each of the Principal Markets (as defined above), and
(III) has been accounted for in accordance with GAAP and otherwise been
disclosed accurately and completely and in accordance with the requirements of
the securities laws, including Rule 402 of Regulation S-B promulgated under the
1933 Act and Rule 402 of Regulation S-K promulgated under the 1933 Act, as
applicable, and the Company has paid, or properly reserved for, all taxes
payable with respect to such Options (including taxes payable, if any, with
respect to the issuance and exercise thereof), and has not deducted any amounts
from its taxable income that it is not entitled to deduct with respect to any
such stock options (including the issuance and exercise thereof).  As
used in this Agreement, “Options” means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities; and
“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exchangeable or exercisable for
Common Stock.





9.12           Captions.  The
captions (i.e., all Article and Section headings) used in the Plan are for
convenience only, do not constitute a part of the Plan, and shall not be deemed
to limit, characterize, or affect in any way any provisions of the Plan, and all
provisions of the Plan shall be construed as if no captions have been used in
the Plan.





9.13           Severability.  Whenever
possible, each provision in the Plan and every grant or award of Equity
Compensation at any time granted or awarded under the Plan shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of the Plan or any Option granted under the Plan shall at any time be
held to be prohibited by or invalid under applicable law, then (a) such
provision shall be deemed amended to accomplish the objectives of the provision
as originally written to the fullest extent permitted by law, and (b) all other
provisions of the Plan and every other Option Grant at any time granted under
the Plan shall remain in full force and effect.




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9.14           Legends.  All
certificates for Common Stock delivered under the Plan shall be subject to such
transfer restrictions set forth in the Plan and such other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the SEC, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law (“Legend”). The
Committee may cause a Legend or Legends to be put on any such certificates to
make appropriate references to stock restrictions.





9.15           Investment
Representation.  The Committee may, in its sole and absolute
discretion, demand that any Participant granted an Option deliver to the
Committee at the time of grant or exercise of such Option Grant written
representation that the shares of Common Stock to be acquired upon exercise are
to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such written representation
by the Participant prior to the delivery of any shares of Common Stock pursuant
to the exercise thereof shall be a condition precedent to the Participant's
right to purchase or otherwise acquire such shares of Common Stock by such
Grant, or the exercise thereof. The Company is not legally obliged hereunder if
fulfillment of its obligations under the Plan would violate federal or state
securities laws or other Applicable Law.





9.16           Amendment and
Termination.





(a)           Amendment.  The
Board shall have complete power and authority to amend the Plan at any time it
is deemed necessary or appropriate; provided, however, that the Board shall not,
without the affirmative approval of a simple majority of the holders of Common
Stock, represented, by person or by proxy, and entitled to vote at an annual or
special meeting of the holders of Common Stock, make any amendment that requires
stockholder approval under applicable law or rule, unless the Board determines
that compliance with such law or rule is not desired with respect to the Plan as
a whole or the provision to be amended; and further, provided that the option
prices set forth in Section 6.02(a) shall not be increased. No termination or
amendment of the Plan may, without the consent of the Participant to whom any
Options shall theretofore have been granted under the Plan, adversely affect the
right of such individual under such Option Grants; provided, however, that the
Committee may, in its sole and absolute discretion, make provision in an Option
Agreement for such amendments that, in its sole and absolute discretion, it
deems appropriate.





(b)           Termination.  The
Board shall have the right and the power to terminate the Plan at any time. No
Options shall be granted under the Plan after the termination of the Plan, but
the termination of the Plan shall not have any other effect, and any Options
outstanding at the time of the termination of the Plan may be amended and
exercised and may vest after termination of the Plan at any time prior to the
expiration date of such Options to the same extent such Options could have been
amended and would have been exercisable or would have vested had the Plan not
terminated.




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9.17           Costs and
Expenses.  All costs and expenses incurred in administering the
Plan shall be borne by the Company.





9.18           Unfunded
Plan.  The Company shall not be required to establish any
special or separate fund or make any other segregation of assets to assure the
payment of any Equity Compensation under the Plan, unless otherwise required
under Applicable Law.










By
      Order of the Board of Directors of Sonterra
                Resources,
      Inc.














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