Document:

ex10_2.htm

    
      

    

    REVISED
AGREEMENT OF 12/1/2005

    

     

    FORM
OF DRILLING AND OPERATING AGREEMENT

     

     

    This
Agreement is entered into by and between Rockies Region Private Limited
Partnership, hereinafter designated and referred to as the "Partnership", and
Petroleum Development Corporation, hereinafter referred to and designated as
"PDC."

    Whereas,
the parties to this agreement desire to enter into an agreement to explore and
develop certain Prospects for the production of oil and gas as hereinafter
provided,

     

    It is
agreed as follows:

     

    ARTICLE
I

     

    DEFINITIONS

     

    As used
in this agreement, the following words and terms shall be defined as
follows:

     

    A.           The
term "oil and gas" shall mean oil, gas, casinghead gas, gas condensate, and all
other liquid or gaseous hydrocarbons and other marketable substances produced
therewith, unless an intent to limit the inclusiveness of this term is
specifically stated.

     

    B.       
    The term "Prospect" shall mean a spacing unit
established according to state regulatory guidelines and industry practice on
which the Partnership proposes to drill a well.  Generally, the
spacing unit for Colorado wells will encompass approximately 32 acres for wells
drilled in the Wattenberg Field and approximately 20 acres for wells drilled in
the Grand Valley Field; however, smaller units may be utilized, provided the
reduced spacing has been approved by the appropriate state regulatory
authority.

     

    C.           "Royalty"
shall mean a payment from gross revenues made to the owner of the oil and gas
mineral rights of a Prospect.

     

    D.           "Overriding
royalty" shall mean a payment from gross revenues to a party other than the
owner of oil and gas mineral rights of a Prospect.

     

    E.           "Proportionate
Working Interest" shall mean an interest in a well or Prospect of less than 100%
which bears that same percentage of costs of development and production as it
receives in production revenues after deducting for royalty and overriding
royalties.

     

    F.           "Non-operators"
shall mean all parties holding a proportionate working interest in a Prospect,
including the Additional General Partners and the Limited Partners, but
excluding PDC if it is also serving as Operator.

    

    ARTICLE
II

    

    EXHIBITS

     

    The
following exhibits are incorporated in and made a part of this
agreement:

    

    A.       
    Exhibit "A", Prospects.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.           Identification
of each Prospect to be drilled.

     

    2.           Target
formation.

     

    3.           The
Partnership fractional interest therein.

    

    
      	
               
      

            	
              B.

            	
              Exhibit
      "B", Insurance.

            

    

     

    
      	
               
      

            	
              C.

            	
              Exhibit
      "C", Additional Prospects.

            

    

     

    1.           Identification
of additional Prospects added or substituted after the original date of this
agreement, and if substituted, identification of the Prospect which is
replaced.

     

    2.           Target
formation.

     

    3.           The
Partnership fractional interest therein.

     

    4.           Approval
by the Partnership and PDC.

    

    ARTICLE
III

     

    OPERATOR

     

    A.          
 Designation and Responsibilities of Operator:

     

    PDC shall
be the Operator of the Prospects, and shall conduct and direct and have full
control of all operations on the Prospects as permitted and required by, and
within the limits of this agreement.  It shall conduct all such
operations in a good workmanlike manner, but it shall have no liability as
Operator to the Partnership for losses sustained or liabilities incurred, except
such as may result from negligence or misconduct.  The Managing
General Partner may subcontract with another operator or operators to perform
some of all of the duties of the operator, on Terms and conditions substantially
the same as those discussed herein.  The Managing General Partner will
supervise operations by other non-affiliated drilling contractors and
subcontractors.

     

    B.        
   Resignation or Removal of Operator and Selection of
Successor:

     

    1.           Resignation
or Removal of Operator:  PDC may resign as Operator at any time by
giving written notice thereof to the Partnership.  If PDC terminates
its legal existence, no longer owns an interest in the Prospects, has filed a
petition under the Federal bankruptcy laws or any state insolvency law or a
receiver, fiscal agent, or similar officer has been appointed by a court for the
business or property of PDC, or is otherwise no longer capable of serving as
Operator, PDC shall be deemed to have resigned without any action by the
Partnership, except the selection of a successor.  PDC may be removed
by the affirmative vote of Non-Operators owning a majority working interest in
each Prospect after excluding the voting interest of Operator.  Such
resignation or removal shall not become effective until 7:00 o'clock A.M.,
Eastern time, on the first day of calendar month following the expiration of
ninety (90) days
after the giving of notice of resignation of PDC or action by the Non-Operators
to remove PDC as Operator, unless a successor Operator has been selected and
assumes the duties of PDC at an earlier date.  PDC, after effective
date of resignation or removal, shall be bound by the terms hereof as a
Non-Operator.  A change of a corporate name or structure of PDC or
transfer of PDC's interest to any single subsidiary, parent or successor
corporation shall not be the basis for removal of PDC as Operator.

     

    2.           Selection
of Successor Operator: Upon the resignation or removal of PDC, a successor
Operator shall be selected by the parties.  The successor Operator
shall be selected by the affirmative vote of parties owning a majority working
interest in each Prospect; provided, however, if an Operator which has been
removed fails to vote or votes only to succeed itself, the successor Operator
shall be selected by the affirmative vote of parties owning a majority interest
after excluding the voting interest of the Operator that was
removed.

    
      
         

      

      
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    C.        
   Employees:

     

    The
number of employees used by PDC in conducting operations hereunder, their
selection, and the hours of labor and the compensation for services performed
shall be determined by PDC.

     

    ARTICLE
IV

     

    DRILLING
PROSPECTS

     

    A.           Prospects:

     

    Exhibit
"A" lists Prospects initially to be acquired by the Partnership, and its
proportionate working interest in each Prospect.  Most wells to be
drilled by the Partnerships will be offsets to producing
wells.  Therefore, it is unlikely that a well drilled on a Prospect
will prove up any additional acreage outside the Prospect.  If a
Partnership well does prove up additional acreage, PDC will assign the
Partnership a proportionate interest in such spacing units.  The
foregoing requirement to expand a Prospect will not apply if the managing
general partner assigns the Partnership a Prospect that has Proved Reserves in
the target geological formation and the drilling unit protects against drainage
or if the Prospect is located on PDC’s Puckett or Chevron acreage in Garfield
County, Colorado or on acreage in PDC’s Burbak Project acreage in Burke County,
North Dakota.

     

    B.         
  Cost:

     

    The
Partnership shall reimburse PDC for its proportionate share of the lesser
of:

     

    
      
        
          	 	
                  1.

                	The
      fair market value of the Prospect, or
	 	 	 
	
                	
                  2.

                	
                  The
      "Cost" of acquisition of the Prospect including: (a) the price paid by PDC
      for such property; (b) title examination, abstracting, brokers
      commissions, filing fees, recording costs, transfer taxes, and other
      charges incurred in connection with the acquisition of the property; (c)
      bonuses, rentals and ad valorem taxes paid by PDC with respect to the
      Prospect to the date of its transfer to the Partnership, interest on funds
      used to acquire or maintain such property, and such portion of PDC's
      expenses for geological, drafting, accounting, legal and other like
      services allocated to the Prospect in accordance with generally accepted
      accounting principles, not including for expenses incurred in the prior
      drilling of wells, and provided such expenses shall have been incurred not
      more than 36 months prior to the purchase by the
  program.

                

        

      

    

    

    C.        
   Substitution:

     

    As
drilling progresses other, more desirable Prospects may become may become less
desirable as a result of additional information not available as of the date of
this agreement.  For any undrilled Prospect, the Partnership may
request that PDC substitute another Prospect, in which case the entire
acquisition cost paid for the Prospect or a substitute thereof will be applied
against the cost of the substituted Prospect, and against other costs of this
contract if and to the extent the cost of the substitute Prospect is less than
the cost of the original Prospect it replaces.  An amendment to this
agreement in the form of Exhibit "C" shall be used for the addition or
substitution of a Prospect.

     

    D.           
Title Examination and Opinion:

     

    Title
examination shall be made by outside attorneys on the drillsite of any proposed
well prior to commencement of drilling operations.  The opinion will
include ownership of the working interest, mineral, royalty, overriding royalty,
and production payments under the applicable leases.  A copy of the
opinion will be furnished to the Partnership.

     

    PDC shall
take such steps as are necessary in its best judgment to render title to the
leases assigned to the Partnership acceptable for the purposes of the
Partnership.  No operation shall be commenced on leases acquired by
the Partnership unless the Partnership Manager is satisfied that necessary title
requirements have been satisfied by PDC and that the undertaking of such
operation would be in the interest of the Partnership.  PDC shall be
free, however, to use their own best judgment in waiving title requirements and
shall not be liable to the Partnership, or Participants for any mistakes of
judgment; nor shall PDC be deemed to be making any warranties or
representations, express or implied, as to the validity or merchantability of
the title to any lease assigned to the Partnership or the extent of the interest
covered thereby.

    
      
         

      

      
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    ARTICLE
V

     

    INTEREST
IN COSTS AND PRODUCTION

     

    A.        
   Royalties and Overriding Royalties:

     

    The
Partnership interest in production from drilling Prospects will be subject to
the payment to non-affiliated parties of royalties and overriding royalties ,
provided the weighted average of all royalties for all Partnership Prospects
drilled shall not exceed 25% gross revenues.  No such royalty or
overriding royalty will be paid to PDC or its affiliates.

     

    B.      
     Proportionate Working Interest:

     

    The
Partnership may acquire 100% of the working interest in a Prospect or a
proportionate interest of less than 100%.  In the event the
Partnership acquires a proportionate interest, the respective obligations and
benefits acquired by the Partnership will be proportionately the same as the
working interest acquired.  PDC and its affiliates may not retain any
overrides or other burdens on the interest conveyed to the
Partnership.  The Partnership will pay a proportionate share of the
total of lease, development, and operating costs, and will be entitled to
receive a proportionate share of production subject only to royalties and
overriding royalties discussed in Article V, A.

     

    C.          
 Joint Venture Activities:

     

    PDC may
retain an interest or convey interests in undrilled Prospects to other Joint
Venturers, retaining for its own account a profit or promotional interest on the
interest conveyed.  PDC shall require any party acquiring such an
interest to acquire a proportionate working interest and to assume and bear
alone all obligation associated with such an interest, and to bear alone and
hold the Partnership and other Joint Venturers harmless from all costs, claims,
and burdens associated with the interest acquired.  At the discretion
of the Managing General Partner, the Partnership may enter into joint ventures
which allow a functional allocation of tangible, intangible and lease costs,
where each joint venturer is responsible for its overhead costs, provided the
Partnerships interest in the revenues and income of such a joint venture is
proportional to its contribution to the total cost of such venture.

     

    D.          
 Adjustments:

     

    Payment
of any bill shall not prejudice the right of the Partnership to protest or
question the correctness thereof:  provided, however, all bills and
statements rendered to the Partnership by PDC during any calendar year shall
conclusively be presumed to be true and correct after a twenty-four (24) month
period unless the Partnership takes written exception thereto and makes claim on
PDC for adjustment.  No adjustment favorable to PDC shall be made
unless it is made within the same prescribed period.  The provisions
of this paragraph shall not prevent adjustments resulting from a physical
inventory of controllable material.

     

    E.         
  Audits:

     

    The
Partnership, upon notice in writing to PDC and all other Non-Operators, shall
have the right to audit PDC's accounts and records relating to the Partnership
wells for any calendar year within the twenty-four (24) month period following
the end of the calendar year to be audited; provided, however the making of an
audit shall not extend the time for the taking of written exception to and the
adjustments of account.  Where there are two or more Non-Operators,
the Non-Operators shall make every reasonable effort to conduct a joint audit in
a manner which will result in a minimum of inconvenience to PDC.  PDC
shall bear no portion of the Non-Operators audit cost incurred under this
paragraph unless agreed to by PDC.  The audits shall not be conducted
more than once each year without prior approval of PDC, except upon the
resignation or removal of PDC as operator, and shall be made at the expense of
those Non-Operators requesting such audit.

    
      
         

      

      
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    PDC shall
reply in writing to an audit report within 75 days after receipt of such
report.

     

    ARTICLE
VI

     

    DRILLING
AND DEVELOPMENT

     

    A.           Agreement
To Drill and Complete:

     

    PDC shall
commence drilling of a well or wells on each Prospect within 180 days of the
date of the initial formation of the Partnership, but in no case later than
March 30, 2006 and shall continue drilling thereafter with due diligence to the
Target formation unless a condition which renders further drilling impractical
is encountered at a lesser depth, or unless the Partnership agrees to complete
or abandon the well at a lesser depth.

     

    PDC shall
make reasonable tests of all formations encountered during drilling which give
indication of containing economic quantities of oil and/or gas.  If
such tests indicate the presence of economic quantities of oil and/or gas, PDC
shall complete the well and install such surface and well equipment, gathering
pipelines, heaters, separators, etc., as are necessary and normal in the area in
which the Prospect is located.  If it is determined that the well is
not likely to produce oil and/or gas in commercial quantities PDC shall plug and
abandon the well in accordance with applicable regulations.

     

    B.           Cost
of Drilling and Completion:

     

    The
Partnership shall bear its proportionate share of the cost of drilling and
completing or drilling and abandoning each Partnership well, where the Managing
General Partner serves as operator as follows:

     

    
      	
               
      

            	
              1.

            	
              The
      Cost of the Prospect, as defined;

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      intangible costs of drilling and completing the well, including the
      managing general partner’s compensation for acting as operator, equal to
      14% of the total direct well cost if the investor partners’ interest in
      the well is 70%, and proportionally reduced if the tangible costs exceed
      30% of the direct well costs on average for the Partnership’s wells, so
      the managing general partner’s contribution to and interest in the
      Partnership is increased above 30%;
and

            

    

    

    
      	
               
      

            	
              3.

            	
              The
      tangible Costs of drilling and completing the Partnership wells and of
      gathering pipelines necessary to connect the well to the nearest
      appropriate sales point or delivery
point.

            

    

    

    To the
extent that the Partnership acquires less than 100% of a Prospect, its Drilling
and Completion Costs of that Prospect will proportionately
decrease.

     

    Intangible
drilling costs will include a monthly drilling well fixed overhead based on the
most recently published Ernst & Young fixed rate overhead
survey.  The rate will be determined by state and well
depth.

     

    In
addition, the managing general partner may also provide direct services in the
drilling and completion of the wells, including land and legal services,
roustabout and construction services, supervision of drilling and completion
operations, engineering and geological services, and other
services.  Such services will be provided at the managing general
partner’s cost determined in accordance with generally accepted accounting
principles and subject to written agreements.

    
      
         

      

      
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    In the
event the foregoing rates for direct services exceed competitive rates available
from other non-affiliated persons in the area engaged in the business of
rendering or providing comparable services or equipment, the foregoing rates
will adjust to an amount equal to that competitive rate.

     

    
      	
               
      

            	
              C.

            	
              Completion
      By Less Than All Parties:

            

    

     

    In the
event not all Participants in a well wish to participate in a completion
attempt, the parties desiring to do so may pay all costs of the completion
attempt including the cost of necessary well equipment and a gathering pipeline,
and such parties shall receive all income and pay all operating costs from the
well until they have received an amount equal to 300% of the completion and
connection costs, after which time the non-consenting parties shall have the
right to receive their original interest in further revenues and
expenses.

     

    
      	
               
      

            	
              D.

            	
              Prepayment:

            

    

     

    The
Partnership agrees to pay PDC the full cost of all planned Prospects prior to
December 31, 2005 in order to assure the Partnership of the rates quoted in
Article VI, B, to arrange for the drilling equipment for the wells through
subcontractors and to provide PDC with working capital for the drilling of the
wells.

     

    
      	
               
      

            	
              E.

            	
              Refunds:

            

    

     

    In no
event shall PDC be obligated to refund any moneys paid to it by the Partnership
under this Agreement.  In the event any amounts paid under Article VI,
D exceed costs due under Article VI, B, such excess shall be credited to the
Partnership and shall be expended for additional drilling.

     

    ARTICLE
VII

     

    PRODUCTION
AND SUBSEQUENT OPERATIONS

     

    
      	
               
      

            	
              A.

            	
              Commencement
      of Production:

            

    

     

    For
purposes of this agreement, production will commence:

     

    
      	
               
      

            	
              1.

            	
              In
      the case of gas wells when gas is first delivered from the well through a
      pipeline or other delivery system to a
  purchaser;

            

    

    

    
      	
               
      

            	
              2.

            	
              In
      the case of oil wells when the well has produced 100 barrels;
      or

            

    

    

    
      	
               
      

            	
              3.

            	
              In
      the case of combination wells when either of criteria have been
      satisfied.

            

    

    

    A well
will be deemed to be "in production" in any month thereafter in which oil or gas
are produced in commercial quantities.

     

    
      	
               
      

            	
              B.

            	
              Production
      Operations:

            

    

     

    PDC shall
provide all necessary labor, vehicles, supervision, management, accounting, and
overhead services for normal production operations, and lease accounting, and
shall be entitled to deduct from Partnership revenues a monthly well-tending fee
of $400 per Wattenberg Field well, $700 per Piceance Basin, $950 for Sand Wash
Basin, Red Desert Basin or Williston Basin well and a monthly Partnership
Administration charge of $100 per well. If the Partnership has producing wells
in areas different from those above, the operator will charge a monthly
Partnership Administration fee of $100 per well plus a competitive industry rate
for operations and field supervision.  Nonroutine operations will be
billed to the Partnership at their proportionate cost.  Any nonroutine
operation with an estimated cost exceeding $10,000 will be authorized for
expenditure ("AFE" or "AFE'd") and submitted to the Non-Operators for
approval.  Approval of a majority of the working interest owners will
be required to authorize such operations.  If the Partnership
authorized such operations PDC shall have the right to deduct payment for the
cost from Partnership revenues.

    
      
         

      

      
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    C.       
    Abandonment of Wells That Have Produced:

     

    Any well
which has been completed as a producer shall not be plugged and abandoned
without the consent of all Non-Operators.  If all parties consent to
such abandonment, the well shall be plugged and abandoned in accordance with
applicable regulations and at the cost, risk of expense of all
owners.  If, within (30) days after receipt of the notice of the
proposed abandonment of any well, all parties do not agree to the abandonment of
such well, those wishing to continue its operations from the interval(s) of the
formation(s) then open to production shall tender to each of the other parties
its proportionate shale of the value of the wells salvageable material and
equipment, less the estimated cost of salvaging and assign the non-abandoning
parties, without warranty, express or implied, as to title or as to quantity, or
fitness for use of the equipment and material, all of its interest in the well
and related equipment, together with its interest in leasehold estate as to, but
only as to, the interval or intervals of the formation or formations then open
to production.

     

    D.          
 Marketing of Production:

     

    The
Partnership shall have the right to take in kind and separately dispose of its
share of all oil and gas produced from the Prospects, excluding its
proportionate share of production required for lease operations and production
unavoidably lost.  Initially the Partnership designates PDC as its
agent to market such production and authorizes PDC to enter into and bind the
Partnership in such agreements as it deems in the best interest of the
Partnership for the sale of such oil and/or gas.  The Partnership may
rescind the designation of PDC as its agent with regard to all subsequent
marketing agreements by written notice at any time, but agrees to be bound by
such agreements as may then be in effect during their terms.  The
Partnership shall bear its proportionate share of all marketing costs, if
any.  In the event PDC provides marketing services, its charge shall
be no greater than those charges made by unaffiliated marketers.  If
pipelines which have been built by PDC are used in the delivery of natural gas
to market, PDC may charge a gathering fee not to exceed that which would be
charged by a nonaffiliated third party for a similar service.

     

    E.        
    Escalation in the Event of Rising Costs:

     

    The
production and accounting charges provided in Article VII, B, may be adjusted
annually beginning January 1, 2007, to an amount equal to the rates from Article
VII, B, multiplied by the ratio of the then current average weekly earnings of
Crude Petroleum and Gas Production workers to the average weekly earnings of
Crude Petroleum and Gas Production workers for 2005, as published by the United
States Department of Labor, Bureau of Labor Statistics, provided that the charge
may not exceed the rate which would be charged by other comparable operators in
the area of operations.

     

    ARTICLE
VIII

     

    LIABILITY
OF PARTIES

     

    A.         
  Liability of Parties:

     

    If the
Partnership participates in a well with third parties the liability of the
parties shall be several, not joint or collective.  The Partnership
shall be responsible only for its obligations, and shall be liable only for its
proportionate share of the costs of developing and operating the
Prospects.  It is not the intention of the parties to create, nor
shall this agreement be construed as creating, a mining or other partnership or
association, or to render the parties liable as partners.

     

    B.         
   Liens and Payment Defaults:

     

    The
Partnership grants to PDC a lien upon its oil and gas rights in the Contract
Area, and a security interest in its share of oil and/or gas when extracted and
its interest in all equipment, to secure payment of its share of expense,
together with interest thereon.  To the extent that PDC has a security
interest under the Uniform Commercial Code of the state, PDC shall be
entitled  to exercise the rights and remedies of a secured party under
the Code.  The bringing of a suit and the obtaining of judgment by PDC
for the secured indebtedness shall not be deemed an election of remedies or
otherwise affect the lien rights or security interest as security for the
payment thereof.  In addition, upon default by the Partnership in the
payment of its share of expense, PDC shall have the right, without prejudice to
other rights or remedies, to collect from the purchaser the proceeds from the
sale of the Partnership's share of oil and/or gas until the amount owed by the
Partnership, plus interest, has been paid.  Each purchaser shall be
entitled to rely upon PDC's written statement concerning the amount of any
default.  PDC grants a like lien and security interest to the
Partnership to secure payment of PDC's proportionate share of
expenses.

    
      
         

      

      
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    If any
party fails or is unable to pay its share of expense within sixty (60) days
after rendition of a statement therefor by PDC, PDC shall pay the unpaid amount
in the proportion that the interest of each such party bears to the interest of
all such parties.

     

    C.       
    Payments and Accounting:

     

    Except as
herein otherwise specifically provided, PDC shall promptly pay and discharge
expenses incurred in the development and  operation of the Contract
Area pursuant to this agreement.  PDC shall keep an accurate record of
the account hereunder, showing expenses incurred and charges and credits made
and received.

     

    Regardless
of which party has contributed the lease(s) and/or oil and gas interest(s)
hereto on which royalty is due and payable, PDC shall pay or deliver or cause to
be paid or delivered the royalty and overriding royalty payments due under the
terms associated with the acquisition of each Prospect, and shall deduct such
payments from the revenue of the Partnership.

     

    D.           Taxes:

     

    Unless
the Partnership elects to take production in kind, PDC shall pay or cause to be
paid all production, severance, excise, gathering and other taxes imposed upon
or with respect to the production or handling of such party's share of oil
and/or gas produced under the terms of this agreement, and shall be entitled to
reimbursement for such taxes from partnership revenue.

     

    E.      
     Insurance:

     

    At all
times while operations are conducted hereunder, PDC shall comply with the
workmen's compensation laws of the state of West Virginia.  PDC shall
also carry or provide insurance as outlined in Exhibit "B", attached to and made
a part hereof.  PDC shall require all contractors engaged in work on
or for the Contract Area to comply with the workmen's compensation law of the
state where the operations are being conducted and to maintain such other
insurance as PDC may require.

     

    No
additional charge will be made for such insurance during drilling and completion
operations.  When wells have been placed in production PDC may bill
for the cost of providing such insurance, allocated among wells and operations
in accordance with generally accepted accounting principles.

     

    ARTICLE
IX

     

    INTERNAL
REVENUE CODE ELECTION

     

    This
agreement is not intended to create, and shall not be construed to create, a
relationship of partnership or an association for profit between or among the
parties hereto.  Notwithstanding any provision herein that the rights
and liabilities hereunder are several and not joint or collective, or that this
agreement and operations hereunder shall not constitute a partnership, if, for
federal income tax purposes, this agreement and the operations hereunder are
regarded as a partnership, each party hereby affected elects to be excluded from
the application of all of the provisions of Subchapter "K", Chapter 1, Subtitle
"A", of the Internal Revenue Code of 1986, as amended (the "Code") as permitted
and authorized by Code Section 761 and the regulations promulgated
thereunder.  PDC is authorized and directed to execute on behalf of
the Partnership such evidence of this election as may be required by the
Secretary of the Treasury of the United States or the Federal Internal Revenue
Service, including specifically, but not by way of limitation, all of the
returns, statements, and the data required by Regulations
1.761.  Should there be any requirement that each party hereby
affected to give further evidence of this election, each such party shall
execute such documents and furnish such other evidence as may be required by the
Federal Internal Revenue Service or as may be necessary to evidence this
election.  No such party shall give any notices or take any other
action inconsistent with the election made hereby.  If any present or
future income tax laws of the state or states in which the Contract Area is
located or any future income tax laws of the United States contain provisions
similar to those in Subchapter "K", Chapter l, Subtitle "A", of the Code, under
which an election similar to that provided by Section 761 of the Code is
permitted, each party hereby affected shall make such election as may be
permitted or required by such laws.  In making the foregoing election,
each such party states that the income derived by such party from operations
hereunder can be adequately determined without the computation of partnership
taxable income.

    
      
         

      

      
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    ARTICLE
X

     

    CLAIMS
AND LAWSUITS

     

    PDC may
settle any single uninsured third party damage claim or suit arising from
operations hereunder if the expenditure does not exceed One Thousand Dollars
($1,000.00) and if the payment is in complete settlement of such claim or
suit.  If the amount required for settlement exceeds the above amount,
the Partnership shall assume and take over the further handling of its interest
in the claim suit, unless such authority is delegated to PDC.  All
costs and expenses of handling, settling, or otherwise discharging such claim or
suit shall be at the joint expenses of the parties participating in the
operation from which the claim or suit arises.  If a claim is made
against any party or if any party is sued on account of any matter arising from
operations hereunder over which such individual has no control because of the
rights given Operator by this agreement, such party shall immediately notify all
other parties, and the claim or suit shall be treated as any other claim or suit
involving operations hereunder all claims and suits involving title to any
interest subject to this Agreement shall be treated as a claim or suit against
all parties participating in the Prospect so affected.

     

    ARTICLE
XI

     

    FORCE
MAJEURE

     

    If either
party is rendered unable, wholly or in part, by force majeure to carry out its
obligations under this agreement, other than the obligation to make money
payments, that party shall give to the other party prompt written notice of the
force majeure with reasonably full particulars concerning its; thereupon, the
obligations of the party giving the notice, so far as they are affected by the
force majeure, shall be suspended during, but no longer than, the continuance of
the force majeure.  The affected party shall use all reasonable
diligence to remove the force majeure situation as quickly as
practicable.

     

    The
requirement that any force majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes, lockouts, or other labor
difficulty by the party involved, contrary to its wishes; how all such
difficulties shall be handled shall be entirely within the discretion of the
party concerned.

     

    The term
"force majeure", as here employed, shall mean act of God, strike, lockout, or
other industrial disturbance act of the public enemy, war, blockade, public
riot, lightning, fire, storm, flood, explosion, governmental action,
governmental delay, restraint or inaction, unavailability of equipment or market
for oil and/or gas, and any other cause, whether of the kind specifically
enumerated above or otherwise, which is not reasonably within the control of the
party claiming suspension.

     

    ARTICLE
XII

     

    NOTICES

     

    All
notices required by this agreement shall be given in writing addressed to the
parties as follows:

     

    1.          
  For the Partnership:

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Petroleum
Development Corporation, Managing General Partner of Rockies Region Private
Limited Partnership, P.O. Box 26 Bridgeport, WV 26330

     

    2.           
 For PDC:

    

    Petroleum
Development Corporation

    P.O. Box
26

    Bridgeport,
WV 26330

     

    Each
party shall have the right to change its address at any time, by giving written
notice to all other parties.

     

    ARTICLE
XIII

     

    TERM OF
AGREEMENT

     

    In the
event a well drilled under any provision of this agreement, results in
production of oil and/or gas in paying quantities, this agreement shall continue
in force so long as any such well or wells produce, or are capable of
production, and for an additional period of 180 days from cessation of all
production; provided, however, if, prior to the expiration of such additional
period, one or more of the parties hereto are engaged in drilling, reworking,
deepening, plugging back, testing or attempting to complete a well or wells
hereunder, this agreement shall continue in force until such operations have
been completed and if production results therefrom, this agreement shall
continue in force as provided herein.

     

    It is
agreed, however, that the termination of this agreement shall not relieve any
party hereto from any liability which has accrued or attached prior to the date
of such termination.

     

    ARTICLE
XIV

     

    COMPLIANCE
WITH LAWS AND REGULATIONS

     

    A.        
   Laws, Regulations and Order:

     

    This
agreement shall be subject to the conservation laws of the state in which the
Prospects are located, to the valid rules, regulations, and orders of any duly
constituted regulatory body of said state; and to all other applicable federal,
state, and local laws, ordinances, rules, regulations, and orders.

     

    B.          
 Governing Law:

     

    This
agreement and all matters pertaining hereto, including, but not limited to,
matters of performance, non-performance, breach, remedies, procedures, rights,
duties and interpretation or construction, shall be governed and determined by
the law of the state in which the Prospect is located.

     

    C.         
  Regulatory Agencies:

     

    Nothing
herein contained shall grant, or be construed to grant, PDC the right or
authority to waive or release any rights, privileges, or obligations which the
Partnership may have federal or state laws or under rules, regulations or orders
promulgated under such laws in reference to oil, gas and mineral operations,
including the location, operation, or production of wells, on tracts offsetting
or adjacent to the Contract Area.

     

    With
respect to operations hereunder, the Partnership agrees to release PDC from any
and all losses, damages, injuries, claims and causes of action arising out of,
incident to or resulting directly or indirectly from Operator's interpretation
or application of rules, rulings, regulations, or orders of the Department of
Energy or predecessor or successor agencies to the extent such interpretation or
application was made in good faith.  The Partnership further agrees to
reimburse PDC for any amounts applicable to the Partnership’s share of
production that PDC may be required to refund, rebate or pay as a result of such
an incorrect interpretation or application.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    ARTICLE
XV

     

    MISCELLANEOUS

     

    This
agreement shall be binding upon and shall inure to the benefit of the parties
hereto and to their respective heirs, devisees, legal representative, successors
and assigns.

     

    This
instrument may be executed in any number of counterparts, each of which shall be
considered an original for all purposes.

     

    IN
WITNESS WHEREOF, this agreement shall be effective as of 1st day of December
2005.

     

    

      
        
          
            	
                    /s/ Darwin L. Stump

                  	 
      
	
                    Darwin
      L. Stump,

                  	 
      
	
                    CFO
      and Treasurer

                  	 
      
	
                    Petroleum
      Development Corporation

                  	 
      
	 
      	 
      
	 
      	 
      
	
                    /s/ Steven R. Williams

                  	 
      
	
                    Steven
      R. Williams, President

                  	 
      
	
                    Petroleum
      Development Corporation,

                  	 
      
	
                    Managing
      General Partner

                  	 
      
	
                    Rockies
      Region Private Limited Partnership

                  	 
      

          

        

      

    

     

     

    11APC
GROUP, INC.

    2009
STOCK PLAN

    

    ARTICLE
I — PREAMBLE

    

    1.1  This APC Group, Inc.
2009 Stock Plan is intended to secure for the Company and its Affiliates the
benefits arising from ownership of the Company's Common Stock by the Employees,
Officers, Directors and Consultants of the Company and its Affiliates, all of
whom are and will be responsible for the Company's future growth.  The
Plan is designed to help attract and retain for the Company and its Affiliates
personnel of superior ability for positions of exceptional responsibility, to
reward Employees, Officers, Directors and Consultants for their services and to
motivate such individuals through added incentives to further contribute to the
success of the Company and its Affiliates. With respect to persons subject to
Section 16 of the Act, transactions under this Plan are intended to satisfy the
requirements of Rule 16b-3 of the Act.

    

    1.2  Awards under the Plan
may be made to an Eligible Person in the form of (i) Incentive Stock Options (to
Eligible Employees only); (ii) Nonqualified Stock Options; (iii) Restricted
Stock; (iv) Stock Awards; (v) Performance Shares; or (vi) any combination of the
foregoing.

    

    1.3  The Company’s board of
directors adopted the Plan on March 23, 2009.  The Plan shall be
effective March 23, 2009 (the "Effective Date"), subject to approval by the
shareholders of the Company to the extent necessary to satisfy the requirements
of the Code, the Act, or other applicable federal or state
law.  Unless sooner terminated as provided elsewhere in this Plan,
this Plan shall terminate upon the close of business on the day next preceding
the tenth (10th) anniversary of the Effective Date and may be terminated on any
earlier date pursuant to this Section 1.3.  Award Agreements
outstanding on such date shall continue to have force and effect in accordance
with the provisions thereof.

    

    1.4  The Plan shall be
governed by, and construed in accordance with, the laws of the State of Alaska
(except its choice-of-law provisions).

    

    1.5 Capitalized terms shall have the
meaning provided in Article II unless otherwise provided in this Plan or any
related Award Agreement.

    

    ARTICLE
II — DEFINITIONS

    

    DEFINITIONS.  Except where
the context otherwise indicates, the following definitions apply:

    

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

    

    2.2  “Affiliate” means any
parent corporation or subsidiary corporation of the Company, whether now or
hereinafter existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code.

    

    2.3  "Award" means an award
granted to a Participant in accordance with the provisions of the Plan,
including, but not limited to, Stock Options, Restricted Stock, Stock Awards,
Performance Shares, or any combination of the foregoing.

    

    2.4  "Award Agreement" means
the separate written agreement evidencing each Award granted to a Participant
under the Plan.

    

    2.5  "Board of Directors" or
“Board” means the board of directors of the Company, as constituted from time to
time.

     

    
      
         

      

      
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    2.6  "Change of Control"
means (i) the adoption of a plan of merger or consolidation of the Company with
any other corporation or association as a result of which the holders of the
voting capital stock of the Company as a group would receive less than 50% of
the voting capital stock of the surviving or resulting corporation; (ii) the
approval by the Board of Directors of an agreement providing for the sale or
transfer (other than as security for obligations of the Company) of
substantially all the assets of the Company; or (iii) in the absence of a prior
expression of approval by the Board of Directors, the acquisition of more than
20% of the Company's voting capital stock by any person within the meaning of
Rule 13d-3 under the Act (other than the Company or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company).

    

    2.7  "Code" means the
Internal Revenue Code of 1986, as amended, and the regulations and
interpretations promulgated thereunder.

    

    2.8  "Committee" means a
committee of two or more members of the Board appointed by the Board in
accordance with Section 3.2 of the Plan.

    

    2.9  "Common Stock" means the
Company’s common stock, par value $.001 per share.

    

    2.10  "Company" means APC
Group, Inc., a Nevada corporation.

    

    2.11  “Consultant” means any
person, including an advisor engaged by the Company or an Affiliate to render
bona fide consulting or advisory services to the Company or an Affiliate, other
than as an Employee, Director or Non-Employee Director.

    

    2.12  "Director" means a
member of the Board of Directors of the Company.

    

    2.13  "Disability" means the
permanent and total disability of a person within the meaning of Section
22(e)(3) of the Code.

    

    2.14  "Effective Date" shall
be the date set forth in Section 1.3 of the Plan.

    

    2.15  "Eligible Employee"
means an Eligible Person who is an Employee of the Company or any
Affiliate.

    

    2.16  "Eligible Person" means
any Employee, Officer, Director, Non-Employee Director or Consultant of the
Company or any Affiliate, except for instances where services are in connection
with the offer or sale of securities in a capital-raising transaction, or they
directly or indirectly promote or maintain a market for the Company’s
securities, subject to any other limitations as may be provided by the Code, the
Act, or the Board.  In making such determinations, the Board may take
into account the nature of the services rendered by such person, his or her
present and potential contribution to the Company’s success, and such other
factors as the Board in its discretion shall deem relevant.

    

    2.17  “Employee” means an
individual who is a common-law employee of the Company or an Affiliate including
employment as an Officer.  Mere service as a Director or payment of a
director's fee by the Company or an Affiliate shall not be sufficient to
constitute "employment" by the Company or an Affiliate.

     

    
      
         

      

      
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    2.18  "ERISA" means the
Employee Retirement Income Security Act of 1974, as now in effect or as
hereafter amended.

    

    2.19  "Fair Market Value"
means:

    

    (a) for
purposes of an Incentive Stock Option, if there is a market for the Company’s
stock, on a stock exchange or in an over-the-counter market, or otherwise, the
Fair Market Value shall be the mean between the highest and lowest quoted
selling prices on the valuation date of the Incentive Stock Option, or if there
were no sales of the Company’s Common Stock on the valuation date, the Fair
Market Value shall be the weighted average of the means between the highest and
lowest sales on the nearest date before and the nearest date after the valuation
date.  If a valuation pursuant to this paragraph is not available, the
appropriate method described in Section 20.2031-2 of the Treasury Regulations
adopted under the Code shall be used for the Fair Market Value, and

    

    (b) for
all other purposes, the mean between the highest and lowest quoted selling
prices of the Common Stock (if actual sales price information on such trading
day is not available, the mean between the bona fide bid and asked prices on
such trading day shall be used) on the trading day immediately prior to the date
on which a determination is being made pursuant to this Section 2.19 (the “Mean
Selling Price”), as reported by the National Association of Securities Dealers
Automated Quotation System (“NASDAQ”), or if the Common Stock is not traded on
NASDAQ, the Mean Selling Price in the over-the-counter market; provided,
however, that if the Common Stock is listed on a stock exchange, the Fair Market
Value shall be the Mean Selling Price on such exchange; and, provided further,
that if the Common Stock is not quoted or listed by any organization, the fair
value of the Common Stock, as determined by the Board, whose determination shall
be conclusive, shall be used.  In no event shall the Fair Market Value
of any share of Common Stock be less than its par value.

    

    2.20  "Grant Date" means, as
to any Award, the latest of:

    

    (a) the date on which the Board
authorizes the grant of the Award; or

    

    (b) the date the Participant receiving
the Award becomes an Employee or a Director of the Company or its Affiliate, to
the extent employment status is a condition of the grant or a requirement of the
Code or the Act; or

    

    (c) such
other date (later than the dates described in (a) and (b) above) as the Board
may designate and as set forth in the Participant's Award
Agreement.

    

    2.21  "Immediate Family"
means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law and shall include adoptive
relationships.

    

    2.22  "Incentive Stock
Option" means a Stock Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and is granted under Article IV of
the Plan and designated as an Incentive Stock Option in a Participant's Award
Agreement.

    

    2.23  "Non-Employee Director"
shall have the meaning set forth in Rule 16b-3 under the Act.

    

    2.24  "Nonqualified Stock
Option" means a Stock Option not intended to qualify as an Incentive Stock
Option and is not so designated in the Participant's Award
Agreement.

     

    
      
         

      

      
        Page 3 of
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    2.25  “Officer” means a
person who is an officer of the Company within the meaning of Section 16 of the
Act.

    

    2.26  "Option Period" means
the period during which a Stock Option may be exercised from time to time, as
established by the Board and set forth in the Award Agreement for each
Participant who is granted a Stock Option.

    

    2.27  "Option Price" means
the purchase price for a share of Common Stock subject to purchase pursuant to a
Stock Option, as established by the Board and set forth in the Award Agreement
for each Participant who is granted a Stock Option.

    

    2.28  “Outside Director”
means a Director who either (i) is not a current employee of the Company or an
"affiliated corporation" (within the meaning of Treasury Regulations promulgated
under Section 162(m) of the Code), is not a former employee of the Company or an
"affiliated corporation" receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of the Company
or an "affiliated corporation" at any time and is not currently receiving direct
or indirect remuneration from the Company or an "affiliated corporation" for
services in any capacity other than as a Director or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the
Code.

    

    2.29  "Participant" means an
Eligible Person to whom an Award has been granted and who has entered into an
Award Agreement evidencing the Award or, if applicable, such other person who
holds an outstanding Award.

    

    2.30  "Performance
Objectives" shall have the meaning set forth in Article IX of the
Plan.

    

    2.31  "Performance Period"
shall have the meaning set forth in Article IX of the Plan.

    

    2.32  "Performance Share"
means an Award under Article IX of the Plan of a unit valued by reference to the
Common Stock, the payout of which is subject to achievement of such Performance
Objectives, measured during one or more Performance Periods, as the Board, in
its sole discretion, shall establish at the time of such Award and set forth in
a Participant's Award Agreement.

    

    2.33  "Plan" means this APC
Group, Inc. 2009 Stock Plan, as it may be amended from time to
time.

    

    2.34  “Reporting Person”
means a person required to file reports under Section 16(a) of the
Act.

    

    2.35  "Restricted Stock"
means an Award under Article VII of the Plan of shares of Common Stock that are
at the time of the Award subject to restrictions or limitations as to the
Participant's ability to sell, transfer, pledge or assign such shares, which
restrictions or limitations may lapse separately or in combination at such time
or times, in installments or otherwise, as the Board, in its sole discretion,
shall determine at the time of such Award and set forth in a Participant's Award
Agreement.

    

    2.36  "Restriction Period"
means the period commencing on the Grant Date with respect to such shares of
Restricted Stock and ending on such date as the Board, in its sole discretion,
shall establish and set forth in a Participant's Award Agreement.

     

    
      
         

      

      
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    2.37  "Retirement" means
retirement as determined under procedures established by the Board or in any
Award, as set forth in a Participant's Award Agreement.

    

    2.38  “Rule 16b-3” means Rule
16b-3 promulgated under the Act or any successor to Rule 16b-3, as in effect
from time to time.  Those provisions of the Plan which make express
reference to Rule 16b-3, or which are required in order for certain option
transactions to qualify for exemption under Rule 16b-3, shall apply only to a
Reporting Person.

    

    2.39  "Stock Award" means an
Award of shares of Common Stock under Article VIII of the Plan.

    

    2.40  "Stock Option" means an
Award under Article IV or Article V of the Plan of an option to purchase Common
Stock. A Stock Option may be either an Incentive Stock Option or a Nonqualified
Stock Option.

    

    2.41  "Ten Percent
Stockholder" means an individual who owns (or is deemed to own pursuant to
Section 424(d) of the Code), at the time of grant, stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any of its Affiliates.

    

    2.42  "Termination of
Service" means (i) in the case of an Eligible Employee, the discontinuance of
employment of such Participant with the Company or its Affiliates for any reason
other than a transfer to another member of the group consisting of the Company
and its Affiliates and (ii) in the case of a Director who is not an Employee of
the Company or any Affiliate, the date such Participant ceases to serve as a
Director. The determination of whether a Participant has discontinued service
shall be made by the Board in its sole discretion. In determining whether a
Termination of Service has occurred, the Board may provide that service as a
Consultant or service with a business enterprise in which the Company has a
significant ownership interest shall be treated as employment with the
Company.

    

    ARTICLE
III – ADMINISTRATION

    

    3.1  The Plan shall be
administered by the Board of Directors of the Company.  The Board
shall have the exclusive right to interpret and construe the Plan, to select the
Eligible Persons who shall receive an Award, and to act in all matters
pertaining to the grant of an Award and the determination and interpretation of
the provisions of the related Award Agreement, including, without limitation,
the determination of the number of shares subject to Stock Options and the
Option Period(s) and Option Price(s) thereof, the number of shares of Restricted
Stock or shares subject to Stock Awards or Performance Shares subject to an
Award, the vesting periods (if any) and the form, terms, conditions and duration
of each Award, and any amendment thereof consistent with the provisions of the
Plan.  The Board may adopt, establish, amend and rescind such rules,
regulations and procedures as it may deem appropriate for the proper
administration of the Plan, make all other determinations which are, in the
Board’s judgment, necessary or desirable for the proper administration of the
Plan, amend the Plan or a Stock Award as provided in Article XI, and terminate
or suspend the Plan as provided in Article XI.  All acts,
determinations and decisions of the Board made or taken pursuant to the Plan or
with respect to any questions arising in connection with the administration and
interpretation of the Plan or any Award Agreement, including the severability of
any and all of the provisions thereof, shall be conclusive, final and binding
upon all persons.

    

    3.2  The
Board may, to the full extent permitted by and consistent with applicable law
and the Company’s Bylaws, and subject to Subparagraph 3.2(b) hereinbelow,
delegate any or all of its powers with respect to the administration of the Plan
to a Committee consisting of not fewer than two members of the Board each of
whom shall qualify (at the time of appointment to the Committee and during all
periods of service on the Committee) in all respects as a Non-Employee Director
and as an Outside Director.

     

    
      
         

      

      
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    (a)  If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
the Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not consistent with the provisions of the
Plan, as may be adopted from time to time by the Board.

    

    (b)  The
Board may abolish the Committee at any time and reassume all powers and
authority previously delegated to the Committee.

    

    (c)  In
addition to, and not in limitation of, the right of any Committee so designated
by the Board to administer this Plan to grant Awards to Eligible Persons under
this Plan, the full Board of Directors may from time to time grant Awards to
Eligible Persons pursuant to the terms and conditions of this Plan, subject to
the requirements of the Code, Rule 16b-3 under the Act or any other applicable
law, rule or regulation. In connection with any such grants, the Board of
Directors shall have all of the power and authority of the Committee to
determine the Eligible Persons to whom such Awards shall be granted and the
other terms and conditions of such Awards.

    

    3.3  Without limiting the
provisions of this Article III, and subject to the provisions of Article X, the
Board is authorized to take such action as it determines to be necessary or
advisable, and fair and equitable to Participants and to the Company, with
respect to an outstanding Award in the event of a Change of Control as described
in Article X or other similar event. Such action may include, but shall not be
limited to, establishing, amending or waiving the form, terms, conditions and
duration of an Award and the related Award Agreement, so as to provide for
earlier, later, extended or additional times for exercise or payments, differing
methods for calculating payments, alternate forms and amounts of payment, an
accelerated release of restrictions or other modifications. The Board may take
such actions pursuant to this Section 3.3 by adopting rules and regulations of
general applicability to all Participants or to certain categories of
Participants, by including, amending or waiving terms and conditions in an Award
and the related Award Agreement, or by taking action with respect to individual
Participants from time to time.

    

    3.4  Subject to the
provisions of Section 3.9, the maximum aggregate number of shares of Common
Stock which may be issued pursuant to Awards under the Plan shall be Two Million
Five Hundred Thousand (2,500,000) shares. Such shares of Common Stock shall be
made available from authorized and unissued shares of the Company.

    

    (a) For all purposes under the Plan,
each Performance Share awarded shall be counted as one share of Common Stock
subject to an Award.

    

    (b) If, for any reason, any shares of
Common Stock (including shares of Common Stock subject to Performance Shares)
that have been awarded or are subject to issuance or purchase pursuant to Awards
outstanding under the Plan are not delivered or purchased, or are reacquired by
the Company, for any reason, including but not limited to a forfeiture of
Restricted Stock or failure to earn Performance Shares or the termination,
expiration or cancellation of a Stock Option, or any other termination of an
Award without payment being made in the form of shares of Common Stock (whether
or not Restricted Stock), such shares of Common Stock shall not be charged
against the aggregate number of shares of Common Stock available for Award under
the Plan and shall again be available for Awards under the Plan. In no event,
however, may Common Stock that is surrendered or withheld to pay the exercise
price of a Stock Option or to satisfy tax withholding requirements be available
for future grants under the Plan.

     

    
      
         

      

      
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    (c) The foregoing subsections (a) and
(b) of this Section 3.4 shall be subject to any limitations provided by the Code
or by Rule 16b-3 under the Act or by any other applicable law, rule or
regulation.

    

    3.5  Each Award granted under
the Plan shall be evidenced by a written Award Agreement, which shall be subject
to and shall incorporate (by reference or otherwise) the applicable terms and
conditions of the Plan and shall include any other terms and conditions (not
inconsistent with the Plan) required by the Board.

    

    3.6  The Company shall not be
required to issue or deliver any certificates for shares of Common Stock under
the Plan prior to:

    

    (a) any required approval of the Plan
by the shareholders of the Company; and

    

    (b) the completion of any registration
or qualification of such shares of Common Stock under any federal or state law,
or any ruling or regulation of any governmental body that the Company shall, in
its sole discretion, determine to be necessary or advisable.

    

    3.7  The Board may require
any Participant acquiring shares of Common Stock pursuant to any Award under the
Plan to represent to and agree with the Company in writing that such person is
acquiring the shares of Common Stock for investment purposes and without a view
to resale or distribution thereof.  Shares of Common Stock issued and
delivered under the Plan shall also be subject to such stop-transfer orders and
other restrictions as the Board may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed and any applicable federal
or state laws, and the Board may cause a legend or legends to be placed on the
certificate or certificates representing any such shares to make appropriate
reference to any such restrictions. In making such determination, the Board may
rely upon an opinion of counsel for the Company.

    

    3.8  Except as otherwise
expressly provided in the Plan or in an Award Agreement with respect to an
Award, no Participant shall have any right as a shareholder of the Company with
respect to any shares of Common Stock subject to such Participant's Award except
to the extent that, and until, one or more certificates representing such shares
of Common Stock shall have been delivered to the Participant. No shares shall be
required to be issued, and no certificates shall be required to be delivered,
under the Plan unless and until all of the terms and conditions applicable to
such Award shall have, in the sole discretion of the Board, been satisfied in
full and any restrictions shall have lapsed in full, and unless and until all of
the requirements of law and of all regulatory bodies having jurisdiction over
the offer and sale, or issuance and delivery, of the shares shall have been
fully complied with.

    

    3.9  The total amount of
shares with respect to which Awards may be granted under the Plan and rights of
outstanding Awards (both as to the number of shares subject to the outstanding
Awards and the Option Price(s) or other purchase price(s) of such shares, as
applicable) shall be appropriately adjusted for any increase or decrease in the
number of outstanding shares of Common Stock of the Company resulting from
payment of a stock dividend on the Common Stock, a stock split or subdivision or
combination of shares of the Common Stock, or a reorganization or
reclassification of the Common Stock, or any other change in the structure of
shares of the Common Stock. The foregoing adjustments and the manner of
application of the foregoing provisions shall be determined by the Board in its
sole discretion. Any such adjustment may provide for the elimination of any
fractional shares which might otherwise become subject to an Award. All
adjustments made as the result of the foregoing in respect of each Incentive
Stock Option shall be made so that such Incentive Stock Option shall continue to
be an Incentive Stock Option, as defined in Section 422 of the
Code.

     

    
      
         

      

      
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    3.10  No director or person
acting pursuant to authority delegated by the Board shall be liable for any
action or determination under the Plan made in good faith.  The
members of the Board shall be entitled to indemnification by the Company in the
manner and to the extent set forth in the Company's Articles of Incorporation,
as amended, Bylaws or as otherwise provided from time to time regarding
indemnification of Directors.

    

    3.11  The Board shall be
authorized to make adjustments in any performance based criteria or in the other
terms and conditions of outstanding Awards in recognition of unusual or
nonrecurring events affecting the Company (or any Affiliate, if applicable) or
its financial statements or changes in applicable laws, regulations or
accounting principles. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award Agreement in the manner and
to the extent it shall deem necessary or desirable to reflect any such
adjustment. In the event the Company (or any Affiliate, if applicable) shall
assume outstanding employee benefit awards or the right or obligation to make
future such awards in connection with the acquisition of another corporation or
business entity, the Board may, in its sole discretion, make such adjustments in
the terms of outstanding Awards under the Plan as it shall deem
appropriate.

    

    3.12  Subject to the express
provisions of the Plan, the Board shall have full power and authority to
determine whether, to what extent and under what circumstances any outstanding
Award shall be terminated, canceled, forfeited or suspended. Notwithstanding the
foregoing or any other provision of the Plan or an Award Agreement, all Awards
to any Participant that are subject to any restriction or have not been earned
or exercised in full by the Participant shall be terminated and canceled if the
Participant is terminated for cause, as determined by the Board in its sole
discretion.

    

    ARTICLE
IV — INCENTIVE STOCK OPTIONS

    

    4.1  The Board, in its sole
discretion, may from time to time on or after the Effective Date grant Incentive
Stock Options to Eligible Employees, subject to the provisions of this Article
IV and Articles III and VI and subject to the following conditions:

    

    (a) Incentive Stock Options shall be
granted only to Eligible Employees, each of whom may be granted one or more of
such Incentive Stock Options at such time or times determined by the
Board.

    

    (b) The Option Price per share of
Common Stock for an Incentive Stock Option shall be set in the Award Agreement,
but shall not be less than (i) one hundred percent (100%) of the Fair Market
Value of the Common Stock at the Grant Date, or (ii) in the case of an Incentive
Stock Option granted to a Ten Percent Stockholder, one hundred ten percent
(110%) of the Fair Market Value of the Common Stock at the Grant
Date.

    

    (c) An Incentive Stock Option may be
exercised in full or in part from time to time within ten (10) years from the
Grant Date, or such shorter period as may be specified by the Board as the
Option Period and set forth in the Award Agreement; provided, however, that, in
the case of an Incentive Stock Option granted to a Ten Percent Stockholder, such
period shall not exceed five (5) years from the Grant Date; and further,
provided that, in any event, the Incentive Stock Option shall lapse and cease to
be exercisable upon a Termination of Service or within such period following a
Termination of Service as shall have been determined by the Board and set forth
in the related Award Agreement; and provided, further, that such period shall
not exceed the period of time ending on the date three (3) months following a
Termination of Service, unless employment shall have terminated:

     

    
      
         

      

      
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    (i) as a result of Disability, in
which event such period shall not exceed the period of time ending on the date
twelve (12) months following a Termination of Service; or

    

    (ii) as a result of death, or if death
shall have occurred following a Termination of Service (other than as a result
of Disability) and during the period that the Incentive Stock Option was still
exercisable, in which event such period may not exceed the period of time ending
on the earlier of the date twelve (12) months after the date of
death;

    

    and
provided, further, that such period following a Termination of Service or death
shall in no event extend beyond the original Option Period of the Incentive
Stock Option.

    

    (d) The aggregate Fair Market Value of
the shares of Common Stock with respect to which any Incentive Stock Options
(whether under this Plan or any other plan established by the Company) are first
exercisable during any calendar year by any Eligible Employee shall not exceed
one hundred thousand dollars ($100,000), determined based on the Fair Market
Value(s) of such shares as of their respective Grant Dates; provided, however,
that to the extent permitted under Section 422 of the Code, if the aggregate
Fair Market Values of the shares of Common Stock with respect to which Stock
Options intended to be Incentive Stock Options are first exercisable by any
Eligible Employee during any calendar year (whether such Stock Options are
granted under this Plan or any other plan established by the Company) exceed one
hundred thousand dollars ($100,000), the Stock Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as  Nonqualified Stock Options.

    

    (e) No Incentive Stock Options may be
granted more than ten (10) years from the Effective Date.

    

    (f) The Award Agreement for each
Incentive Stock Option shall provide that the Participant shall notify the
Company if such Participant sells or otherwise transfers any shares of Common
Stock acquired upon exercise of the Incentive Stock Option within two (2) years
of the Grant Date of such Incentive Stock Option or within one (1) year of the
date such shares were acquired upon the exercise of such Incentive Stock
Option.

    

    4.2  Subject to the
limitations of Section 3.4, the maximum aggregate number of shares of Common
Stock subject to Incentive Stock Option Awards shall be the maximum aggregate
number of shares available for Awards under the Plan.

    

    4.3  The Board may provide
for any other terms and conditions which it determines should be imposed for an
Incentive Stock Option to qualify under Section 422 of the Code, as well as any
other terms and conditions not inconsistent with this Article IV or Articles III
or VI, as determined in its sole discretion and set forth in the Award Agreement
for such Incentive Stock Option.

    

    4.4  Each provision of this
Article IV and of each Incentive Stock Option granted hereunder shall be
construed in accordance with the provisions of Section 422 of the Code, and any
provision hereof that cannot be so construed shall be disregarded.

    

    ARTICLE
V — NONQUALIFIED STOCK OPTIONS

    

    5.1  The Board, in its sole
discretion, may from time to time on or after the Effective Date grant
Nonqualified Stock Options to Eligible Persons, subject to the provisions of
this Article V and Articles III and VI and subject to the following
conditions:

     

    
      
         

      

      
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    (a) Nonqualified Stock Options may be
granted to any Eligible Person, each of whom may be granted one or more of such
Nonqualified Stock Options, at such time or times determined by the
Board.

    

    (b) The Option Price per share of
Common Stock for a Nonqualified Stock Option shall be set in the Award Agreement
and may be less than one hundred percent (100%) of the Fair Market Value of the
Common Stock at the Grant Date; provided, however, that the exercise price of
each Nonqualified Stock Option granted under the Plan shall in no event be less
than the par value per share of the Company’s Common Stock.

    

    (c) A Nonqualified Stock Option may be
exercised in full or in part from time to time within the Option Period
specified by the Board and set forth in the Award Agreement; provided, however,
that, in any event, the Nonqualified Stock Option shall lapse and cease to be
exercisable upon a Termination of Service or within such period following a
Termination of Service as shall have been determined by the Board and set forth
in the related Award Agreement.

    

    5.2  The Board may provide
for any other terms and conditions for a Nonqualified Stock Option not
inconsistent with this Article V or Articles III or VI, as determined in its
sole discretion and set forth in the Award Agreement for such Nonqualified Stock
Option.

    

    ARTICLE
VI — INCIDENTS OF STOCK OPTIONS

    

    6.1  Each Stock Option shall
be granted subject to such terms and conditions, if any, not inconsistent with
this Plan, as shall be determined by the Board and set forth in the related
Award Agreement, including any provisions as to continued employment as
consideration for the grant or exercise of such Stock Option and any provisions
which may be advisable to comply with applicable laws, regulations or rulings of
any governmental authority.  Notwithstanding any other provision of
the Plan, no Stock Option can be exercised after the expiration date provided in
the applicable Award Agreement and no Stock Option may provide that, upon
exercise of the Stock Option, a new Stock Option automatically will be
granted.

    

    6.2  Except as hereinafter
described, a Stock Option shall not be transferable by the Participant other
than by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the Participant only by the Participant or
the Participant's guardian or legal representative.  In the event of
the death of a Participant, any unexercised Stock Options may be exercised to
the extent otherwise provided herein or in such Participant's Award Agreement by
the executor or personal representative of such Participant's estate or by any
person who acquired the right to exercise such Stock Options by bequest under
the Participant's will or by inheritance. The Board, in its sole discretion, may
at any time permit a Participant to transfer a Nonqualified Stock Option for no
consideration to or for the benefit of one or more members of the Participant's
Immediate Family (including, without limitation, to a trust for the benefit of
the Participant and/or one or more members of such Participant's Immediate
Family or a corporation, partnership or limited liability company established
and controlled by the Participant and/or one or more members of such
Participant's Immediate Family), subject to such limits as the Board may
establish. The transferee of such Nonqualified Stock Option shall remain subject
to all terms and conditions applicable to such Nonqualified Stock Option prior
to such transfer. The foregoing right to transfer the Nonqualified Stock Option,
if granted by the Board shall apply to the right to consent to amendments to the
Award Agreement.

     

    
      
         

      

      
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    6.3  Shares of Common Stock
purchased upon exercise of a Stock Option shall be paid for in such amounts, at
such times and upon such terms as shall be determined by the Board, subject to
limitations set forth in the Stock Option Award Agreement. The Board may, in its
sole discretion, permit the exercise of a Stock Option by payment in cash or by
tendering shares of Common Stock (either by actual delivery of such shares or by
attestation), or any combination thereof, as determined by the Board. In the
sole discretion of the Board, payment in shares of Common Stock also may be made
with shares received upon the exercise or partial exercise of the Stock Option,
whether or not involving a series of exercises or partial exercises and whether
or not share certificates for such shares surrendered have been delivered to the
Participant. The Board also may, in its sole discretion, permit the payment of
the exercise price of a Stock Option by the voluntary surrender of all or a
portion of the Stock Option. Shares of Common Stock previously held by the
Participant and surrendered in payment of the Option Price of a Stock Option
shall be valued for such purpose at the Fair Market Value thereof on the date
the Stock Option is exercised.

    

    6.4  The holder of a Stock
Option shall have no rights as a shareholder with respect to any shares covered
by the Stock Option (including, without limitation, any voting rights, the right
to inspect or receive the Company’s balance sheets or financial statements or
any rights to receive dividends or non-cash distributions with respect to such
shares) until such time as the holder has exercised the Stock Option and then
only with respect to the number of shares which are the subject of the
exercise.  No adjustment shall be made for dividends or other rights
for which the record date is prior to the date such stock certificate is
issued.

    

    6.5  The Board may permit the
voluntary surrender of all or a portion of any Stock Option granted under the
Plan to be conditioned upon the granting to the Participant of a new Stock
Option for the same or a different number of shares of Common Stock as the Stock
Option surrendered, or may require such voluntary surrender as a condition
precedent to a grant of a new Stock Option to such Participant. Subject to the
provisions of the Plan, such new Stock Option shall be exercisable at such
Option Price, during such Option Period and on such other terms and conditions
as are specified by the Board at the time the new Stock Option is granted. Upon
surrender, the Stock Options surrendered shall be canceled and the shares of
Common Stock previously subject to them shall be available for the grant of
other Stock Options.

    

    6.6  The Board may at any
time offer to purchase a Participant's outstanding Stock Option for a payment
equal to the value of such Stock Option payable in cash, shares of Common Stock
or Restricted Stock or other property upon surrender of the Participant's Stock
Option, based on such terms and conditions as the Board shall establish and
communicate to the Participant at the time that such offer is made.

    

    6.7  The
Board shall have the discretion, exercisable either at the time the Award is
granted or at the time the Participant discontinues employment, to establish as
a provision applicable to the exercise of one or more Stock Options that, during
a limited period of exercisability following a Termination of Service, the Stock
Option may be exercised not only with respect to the number of shares of Common
Stock for which it is exercisable at the time of the Termination of Service but
also with respect to one or more subsequent installments for which the Stock
Option would have become exercisable had the Termination of Service not
occurred.

    

    ARTICLE
VII — RESTRICTED STOCK

    

    7.1  The Board, in its sole
discretion, may from time to time on or after the Effective Date award shares of
Restricted Stock to Eligible Persons as a reward for past service and an
incentive for the performance of future services that will contribute materially
to the successful operation of the Company an its Affiliates, subject to the
terms and conditions set forth in this Article VII.

     

    
      
         

      

      
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    7.2  The Board shall
determine the terms and conditions of any Award of Restricted Stock, which shall
be set forth in the related Award Agreement, including without
limitation:

    

    (a) the purchase price, if any, to be
paid for such Restricted Stock, which may be zero, subject to such minimum
consideration as may be required by applicable law;

    

    (b) the duration of the Restriction
Period or Restriction Periods with respect to such Restricted Stock and whether
any events may accelerate or delay the end of such Restriction
Period(s);

    

    (c) the circumstances upon which the
restrictions or limitations shall lapse, and whether such restrictions or
limitations shall lapse as to all shares of Restricted Stock at the end of the
Restriction Period or as to a portion of the shares of Restricted Stock in
installments during the Restriction Period by means of one or more vesting
schedules;

    

    (d) whether such Restricted Stock is
subject to repurchase by the Company or to a right of first refusal at a
predetermined price or if the Restricted Stock may be forfeited entirely under
certain conditions;

    

    (e) whether any performance goals may
apply to a Restriction Period to shorten or lengthen such period;
and

    

    (f) whether dividends and other
distributions with respect to such Restricted Stock are to be paid currently to
the Participant or withheld by the Company for the account of the
Participant.

    

    7.3  Awards of Restricted
Stock must be accepted within a period of thirty (30) days after the Grant Date
(or such shorter or longer period as the Board may specify at such time) by
executing an Award Agreement with respect to such Restricted Stock and tendering
the purchase price, if any. A prospective recipient of an Award of Restricted
Stock shall not have any rights with respect to such Award, unless such
recipient has executed an Award Agreement with respect to such Restricted Stock,
has delivered a fully executed copy thereof to the Board and has otherwise
complied with the applicable terms and conditions of such Award.

    

    7.4  In the sole discretion
of the Board and as set forth in the Award Agreement for an Award of Restricted
Stock, all shares of Restricted Stock held by a Participant and still subject to
restrictions shall be forfeited by the Participant upon the Participant's
Termination of Service and shall be reacquired, canceled and retired by the
Company. Notwithstanding the foregoing, unless otherwise provided in an Award
Agreement with respect to an Award of Restricted Stock, in the event of the
death, Disability or Retirement of a Participant during the Restriction Period,
or in other cases of special circumstances (including hardship or other special
circumstances of a Participant whose employment is involuntarily terminated),
the Board may elect to waive in whole or in part any remaining restrictions with
respect to all or any part of such Participant's Restricted Stock, if it finds
that a waiver would be appropriate.

    

    7.5  Except as otherwise
provided in this Article VII, no shares of Restricted Stock received by a
Participant shall be sold, exchanged, transferred, pledged, hypothecated or
otherwise disposed of during the Restriction Period.

     

    
      
         

      

      
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    7.6  Upon an Award of
Restricted Stock to a Participant, a certificate or certificates representing
the shares of such Restricted Stock will be issued to and registered in the name
of the Participant. Unless otherwise determined by the Board, such certificate
or certificates will be held in custody by the Company until (i) the Restriction
Period expires and the restrictions or limitations lapse, in which case one or
more certificates representing such shares of Restricted Stock that do not bear
a restrictive legend (other than any legend as required under applicable federal
or state securities laws) shall be delivered to the Participant, or (ii) a prior
forfeiture by the Participant of the shares of Restricted Stock subject to such
Restriction Period, in which case the Company shall cause such certificate or
certificates to be canceled and the shares represented thereby to be retired,
all as set forth in the Participant's Award Agreement.  It shall be a
condition of an Award of Restricted Stock that the Participant deliver to the
Company a stock power endorsed in blank relating to the shares of Restricted
Stock to be held in custody by the Company.

    

    7.7  Except as provided in
this Article VII or in the related Award Agreement, a Participant receiving an
Award of shares of Restricted Stock Award shall have, with respect to such
shares, all rights of a shareholder of the Company, including the right to vote
the shares and the right to receive any distributions, unless and until such
shares are otherwise forfeited by such Participant; provided, however, the Board
may require that any cash dividends with respect to such shares of Restricted
Stock be automatically reinvested in additional shares of Restricted Stock
subject to the same restrictions as the underlying Award, or may require that
cash dividends and other distributions on Restricted Stock be withheld by the
Company or its Affiliates for the account of the Participant. The Board shall
determine whether interest shall be paid on amounts withheld, the rate of any
such interest, and the other terms applicable to such withheld
amounts.

    

    ARTICLE
VIII — STOCK AWARDS

    

    8.1  The Board, in its sole
discretion, may from time to time on or after the Effective Date grant Stock
Awards to Eligible Persons in payment of compensation that has been earned or as
compensation to be earned, including without limitation compensation awarded or
earned concurrently with or prior to the grant of the Stock Award, subject to
the terms and conditions set forth in this Article VIII.

    

    8.2  For the purposes of this
Plan, in determining the value of a Stock Award, all shares of Common Stock
subject to such Stock Award shall be set in the Award Agreement and may be less
than one hundred percent (100%) of the Fair Market Value of the Common Stock at
the Grant Date.

    

    8.3  Unless otherwise
determined by the Board and set forth in the related Award Agreement, shares of
Common Stock subject to a Stock Award will be issued, and one or more
certificates representing such shares will be delivered, to the Participant as
soon as practicable following the Grant Date of such Stock Award. Upon the
issuance of such shares and the delivery of one or more certificates
representing such shares to the Participant, such Participant shall be and
become a shareholder of the Company fully entitled to receive dividends, to vote
and to exercise all other rights of a shareholder of the Company.
Notwithstanding any other provision of this Plan, unless the Board expressly
provides otherwise with respect to a Stock Award, as set forth in the related
Award Agreement, no Stock Award shall be deemed to be an outstanding Award for
purposes of the Plan.

    

    ARTICLE
IX — PERFORMANCE SHARES

    

    9.1  The Board, in its sole
discretion, may from time to time on or after the Effective Date award
Performance Shares to Eligible Persons as an incentive for the performance of
future services that will contribute materially to the successful operation of
the Company and its Affiliates, subject to the terms and conditions set forth in
this Article IX.

     

    
      
         

      

      
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    9.2  The Board shall
determine the terms and conditions of any Award of Performance Shares, which
shall be set forth in the related Award Agreement, including without
limitation:

    

    (a) the purchase price, if any, to be
paid for such Performance Shares, which may be zero, subject to such minimum
consideration as may be required by applicable law;

    

    (b) the performance period (the
"Performance Period") and/or performance objectives (the "Performance
Objectives") applicable to such Awards;

    

    (c) the number of Performance Shares
that shall be paid to the Participant if the applicable Performance Objectives
are exceeded or met in whole or in part; and

    

    (d) the form of settlement of a
Performance Share.

    

    9.3  At any date, each
Performance Share shall have a value equal to the Fair Market Value of a share
of Common Stock.

    

    9.4  Performance Periods may
overlap, and Participants may participate simultaneously with respect to
Performance Shares for which different Performance Periods are
prescribed.

    

    9.5  Performance Objectives
may vary from Participant to Participant and between Awards and shall be based
upon such performance criteria or combination of factors as the Board may deem
appropriate, including, but not limited to, minimum earnings per share or return
on equity. If during the course of a Performance Period there shall occur
significant events which the Board expects to have a substantial effect on the
applicable Performance Objectives during such period, the Board may revise such
Performance Objectives.

    

    9.6  In the sole discretion
of the Board and as set forth in the Award Agreement for an Award of Performance
Shares, all Performance Shares held by a Participant and not earned shall be
forfeited by the Participant upon the Participant's Termination of Service.
Notwithstanding the foregoing, unless otherwise provided in an Award Agreement
with respect to an Award of Performance Shares, in the event of the death,
Disability or Retirement of a Participant during the applicable Performance
Period, or in other cases of special circumstances (including hardship or other
special circumstances of a Participant whose employment is involuntarily
terminated), the Board may determine to make a payment in settlement of such
Performance Shares at the end of the Performance Period, based upon the extent
to which the Performance Objectives were satisfied at the end of such period and
pro rated for the portion of the Performance Period during which the Participant
was employed by the Company or an Affiliate; provided, however, that the Board
may provide for an earlier payment in settlement of such Performance Shares in
such amount and under such terms and conditions as the Board deems appropriate
or desirable.

    

    9.7  The settlement of a
Performance Share shall be made in cash, whole shares of Common Stock or a
combination thereof and shall be made as soon as practicable after the end of
the applicable Performance Period.  Notwithstanding the foregoing, the
Board in its sole discretion may allow a Participant to defer payment in
settlement of Performance Shares on terms and conditions approved by the Board
and set forth in the related Award Agreement entered into in advance of the time
of receipt or constructive receipt of payment by the Participant.

     

    
      
         

      

      
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    9.8  Performance Shares shall
not be transferable by the Participant. The Board shall have the authority to
place additional restrictions on the Performance Shares including, but not
limited to, restrictions on transfer of any shares of Common Stock that are
delivered to a Participant in settlement of any Performance Shares.

    

    ARTICLE
X — CHANGES OF CONTROL OR OTHER FUNDAMENTAL CHANGES

    

    10.1  Upon the occurrence of
a Change of Control and unless otherwise provided in the Award Agreement with
respect to a particular Award:

    

    (a) all outstanding Stock Options shall
become immediately exercisable in full, subject to any appropriate adjustments
in the number of shares subject to the Stock Option and the Option Price, and
shall remain exercisable for the remaining Option Period, regardless of any
provision in the related Award Agreement limiting the exercisability of such
Stock Option or any portion thereof for any length of time;

    

    (b) all outstanding Performance Shares
with respect to which the applicable Performance Period has not been completed
shall be paid out as soon as practicable as follows:

    

    (i) all Performance Objectives
applicable to the Award of Performance Shares shall be deemed to have been
satisfied to the extent necessary to earn one hundred percent (100%) of the
Performance Shares covered by the Award;

    

    (ii) the applicable Performance Period
shall be deemed to have been completed upon occurrence of the Change of
Control;

    

    (iii) the payment to the Participant
in settlement of the Performance Shares shall be the amount determined by the
Board, in its sole discretion, or in the manner stated in the Award Agreement,
as multiplied by a fraction, the numerator of which is the number of full
calendar months of the applicable Performance Period that have elapsed prior to
occurrence of the Change of Control, and the denominator of which is the total
number of months in the original Performance Period; and

    

    (iv) upon the making of any such
payment, the Award Agreement as to which it relates shall be deemed terminated
and of no further force and effect.

    

    (c) all outstanding shares of
Restricted Stock with respect to which the restrictions have not lapsed shall be
deemed vested, and all such restrictions shall be deemed lapsed and the
Restriction Period ended.

    

    10.2  Anything contained
herein to the contrary notwithstanding, upon the dissolution or liquidation of
the Company, each Award granted under the Plan and then outstanding shall
terminate; provided, however, that following the adoption of a plan of
dissolution or liquidation, and in any event prior to the effective date of such
dissolution or liquidation, each such outstanding Award granted hereunder shall
be exercisable in full and all restrictions shall lapse, to the extent set forth
in Section 10.1(a), (b) and (c) above.

     

    
      
         

      

      
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    10.3  After the merger of one
or more corporations into the Company or any Affiliate, any merger of the
Company into another corporation, any consolidation of the Company or any
Affiliate of the Company and one or more corporations, or any other corporate
reorganization of any form involving the Company as a party thereto and
involving any exchange, conversion, adjustment or other modification of the
outstanding shares of the Common Stock, each Participant shall, at no additional
cost, be entitled, upon any exercise of such Participant's Stock Option, to
receive, in lieu of the number of shares as to which such Stock Option shall
then be so exercised, the number and class of shares of stock or other
securities or such other property to which such Participant would have been
entitled to pursuant to the terms of the agreement of merger or consolidation or
reorganization, if at the time of such merger or consolidation or
reorganization, such Participant had been a holder of record of a number of
shares of Common Stock equal to the number of shares as to which such Stock
Option shall then be so exercised. Comparable rights shall accrue to each
Participant in the event of successive mergers, consolidations or
reorganizations of the character described above. The Board may, in its sole
discretion, provide for similar adjustments upon the occurrence of such events
with regard to other outstanding Awards under this Plan. The foregoing
adjustments and the manner of application of the foregoing provisions shall be
determined by the Board in its sole discretion. Any such adjustment may provide
for the elimination of any fractional shares which might otherwise become
subject to an Award. All adjustments made as the result of the foregoing in
respect of each Incentive Stock Option shall be made so that such Incentive
Stock Option shall continue to be an Incentive Stock Option, as defined in
Section 422 of the Code.

    

    ARTICLE
XI — AMENDMENT AND TERMINATION

    

    11.1  Subject to the
provisions of Section 11.2, the Board of Directors at any time and from time to
time may amend or terminate the Plan as may be necessary or desirable to
implement or discontinue the Plan or any provision hereof.  To the
extent required by the Act or the Code, however, no amendment, without approval
by the Company's shareholders, shall:

    

    (a) materially alter the group of
persons eligible to participate in the Plan;

    

    (b) except as provided in Section 3.4,
change the maximum aggregate number of shares of Common Stock that are available
for Awards under the Plan;

    

    (c) alter the class of individuals
eligible to receive an Incentive Stock Option or increase the limit on Incentive
Stock Options set forth in Section 4.1(d) or the value of shares of Common Stock
for which an Eligible Employee may be granted an Incentive Stock
Option.

    

    11.2  No amendment to or
discontinuance of the Plan or any provision hereof by the Board of Directors or
the shareholders of the Company shall, without the written consent of the
Participant, adversely affect (in the sole discretion of the Board) any Award
theretofore granted to such Participant under this Plan; provided, however, that
the Board retains the right and power to:

    

    (a) annul any Award if the Participant
is terminated for cause as determined by the Board; and

    

    (b) convert any outstanding Incentive
Stock Option to a Nonqualified Stock Option.

    

    11.3  If a Change of Control
has occurred, no amendment or termination shall impair the rights of any person
with respect to an outstanding Award as provided in Article X.

     

    
      
         

      

      
        Page 16
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    ARTICLE
XII — MISCELLANEOUS PROVISIONS

    

    12.1  Nothing in the Plan or
any Award granted hereunder shall confer upon any Participant any right to
continue in the employ of the Company or its Affiliates or to serve as a
Director or shall interfere in any way with the right of the Company or its
Affiliates or the shareholders of the Company, as applicable, to terminate the
employment of a Participant or to release or remove a Director at any
time.  Unless specifically provided otherwise, no Award granted under
the Plan shall be deemed salary or compensation for the purpose of computing
benefits under any employee benefit plan or other arrangement of the Company or
its Affiliates for the benefit of their respective employees unless the Company
shall determine otherwise.  No Participant shall have any claim to an
Award until it is actually granted under the Plan and an Award Agreement has
been executed and delivered to the Company.  To the extent that any
person acquires a right to receive payments from the Company under the Plan,
such right shall, except as otherwise provided by the Board, be no greater than
the right of an unsecured general creditor of the Company. All payments to be
made hereunder shall be paid from the general funds of the Company, and no
special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts, except as provided in Article VII
with respect to Restricted Stock and except as otherwise provided by the
Board.

    

    12.2  The Plan and the grant
of Awards shall be subject to all applicable federal and state laws, rules, and
regulations and to such approvals by any government or regulatory agency as may
be required. Any provision herein relating to compliance with Rule 16b-3 under
the Act shall not be applicable with respect to participation in the Plan by
Participants who are not subject to Section 16 of the Act.

    

    12.3  The terms of the Plan
shall be binding upon the Company, its successors and assigns.

    

    12.4  Neither a Stock Option
nor any other type of equity-based compensation provided for hereunder shall be
transferable except as provided for in Section 6.2. In addition to the transfer
restrictions otherwise contained herein, additional transfer restrictions shall
apply to the extent required by federal or state securities laws.  If
any Participant makes such a transfer in violation hereof, any obligation
hereunder of the Company to such Participant shall terminate
immediately.

    

    12.5  This Plan and all
actions taken hereunder shall be governed by the laws of the State of Alaska
(except its choice-of-law provisions).

    

    12.6  Each Participant
exercising an Award hereunder agrees to give the Board prompt written notice of
any election made by such Participant under Section 83(b) of the Code, or any
similar provision thereof.

    

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

    

    12.8  The grant of an Award
pursuant to this Plan shall not affect in any way the right or power of the
Company or any of its Affiliates to make adjustments, reclassification,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or to dissolve, liquidate or sell, or to transfer all or part of
its business or assets.

    

    12.9  The Plan is not subject
to the provisions of ERISA or qualified under Section 401(a) of the
Code.

     

    
      
         

      

      
        Page 17
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    12.10  If a Participant is
required to pay to the Company an amount with respect to income and employment
tax withholding obligations in connection with (i) the exercise of a
Nonqualified Stock Option, (ii) certain dispositions of Common Stock acquired
upon the exercise of an Incentive Stock Option, or (iii) the receipt of Common
Stock pursuant to any other Award, then the issuance of Common Stock to such
Participant shall not be made (or the transfer of shares by such Participant
shall not be required to be effected, as applicable) unless such withholding tax
or other withholding liabilities shall have been satisfied in a manner
acceptable to the Company.  To the extent provided by the terms of an
Award Agreement, the Participant may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of Common Stock
under an Award by any of the following means (in addition to the Company's right
to withhold from any compensation paid to the Participant by the Company) or by
a combination of such means: (i) tendering a cash payment; (ii) authorizing the
Company to withhold shares of Common Stock from the shares of Common Stock
otherwise issuable to the Participant as a result of the exercise or acquisition
of Common Stock under the Award, provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to
be withheld by law; or (iii) delivering to the Company owned and unencumbered
shares of Common Stock.

    

    
      
        
          
            
              
                	
                        Adopted
      by the Board of Directors this 23rd day of March, 2009.

                      
	 
      
	
                        /s/ Kenneth S. Forster

                      
	
                        Kenneth
      S. Forster

                      
	
                        Secretary

                      

              

            

          

        

      

    

    

    
      
         

      

      
        Page 18
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