Document:

Exhibit
      10.1

     

    AMENDED
      RBC 2005 LONG-TERM EQUITY INCENTIVE PLAN

     

    Amended
      and Restated as of August 29, 2007 (“Effective Date”)

     

    1.    Purpose.

     

    This
      plan
      shall be known as the RBC 2005 Long-Term Equity Incentive Plan (the “Plan”). The
      purpose of the Plan shall be to promote the long-term growth and profitability
      of RBC Bearings Incorporated (the “Company”)
      and
      its Subsidiaries by (i) providing certain directors, officers and employees
      of, and certain other individuals who perform services for, or to whom an offer
      of employment has been extended by, the Company and its Subsidiaries with
      incentives to maximize stockholder value and otherwise contribute to the success
      of the Company and (ii) enabling the Company to attract, retain and reward
      the best available persons for positions of responsibility. Grants
      (“Grants”)
      of
      incentive or non-qualified stock options, stock appreciation rights
      (“SARs”),
      either alone or in tandem with options, restricted stock, performance awards
      or
      any combination of the foregoing may be made under the Plan. This Plan
      supercedes any prior plans, and any Grant hereunder supercedes any prior written
      agreement pursuant to which such Grant is made.

     

    2.    Definitions.

     

    (a)  “Award
      Agreement”
means
      any written agreement between the Company and any person pursuant to which
      the
      Company makes any Grant under the Plan.

     

    (b)  “Board
      of Directors”
and
      “Board”
mean
      the board of directors of the Company.

     

    (c)  “Cause”
means,
      unless otherwise defined in any Award Agreement, the occurrence of one or more
      of the following events:

     

    (i)  conviction
      of a felony or any crime or offense lesser than a felony involving the property
      of the Company or a Subsidiary or commission of an act involving fraud or
      dishonesty; or, in the case of any of the foregoing, a plea of nolo
      contendere
      with
      respect thereto;

     

    (ii)  conduct
      that has caused demonstrable and serious injury to the Company or a Subsidiary,
      reputational, monetary or otherwise; 

     

    (iii)  willful
      refusal to perform or substantial disregard of duties properly assigned, as
      determined by the Company; 

     

    (iv)  willful
      misrepresentation or material non-disclosure to the Board;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (v)  engaging
      willfully in misconduct in connection with the performance of any of one’s
      duties, including, without limitation, the misappropriation of funds or securing
      or attempting to secure personally any profit in connection with any transaction
      entered into on behalf of the Company or its Subsidiaries or
      affiliates;

     

    (vi)  willful
      breach of duty of loyalty to the Company or, if applicable, a Subsidiary or
      any
      other active disloyalty to the Company or, if applicable, any Subsidiary,
      including, without limitation, willfully aiding a competitor or, without
      duplication of clause (vii), improperly disclosing confidential information;
      

     

    (vii)  willful
      breach of any confidentiality or non-disclosure agreement with the Company
      or
      any Subsidiary; or

     

    (viii)  material
      violation of any code or standard of behavior generally applicable to employees
      (or executive employees, in the case of an executive of the Company or any
      Subsidiary) of the Company or any Subsidiary.

     

    (d)   “Change
      in Control”
means,
      unless otherwise defined in any Award Agreement, 

     

    (i)  if
      any
      "person" or "group" as those terms are used in Sections 13(d) and 14(d) of
      the
      Exchange Act or any successors thereto, is or becomes the "beneficial owner"
      (as
      defined in Rule 13d-3 under the Exchange Act or any successor thereto), directly
      or indirectly, of securities of the Company representing 50% or more of the
      combined voting power of the Company's then outstanding securities, provided,
      that
      the acquisition of additional securities by any person or group that owns 50%
      or
      more of the voting power prior to such acquisition of additional securities
      shall not be a Change of Control; or

     

    (ii)  during
      any twelve-month period, individuals who at the beginning of such period
      constitute the Board and any new directors whose election by the Board or
      nomination for election by the Company's stockholders was approved by at least
      a
      majority of the directors then still in office who either were directors at
      the
      beginning of the period or whose election was previously so approved, cease
      for
      any reason to constitute a majority thereof; or

     

    (iii)  the
      stockholders of the Company approve a merger or consolidation of the Company
      with any other corporation, other than a merger or consolidation (A) which
      would
      result in all or a portion of the voting securities of the Company outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) more than 50% of the combined voting power of the voting securities
      of
      the Company or such surviving entity outstanding immediately after such merger
      or consolidation or (B) by which the corporate existence of the Company is
      not
      affected and following which the Company's chief executive officer and directors
      retain their positions with the Company (and constitute at least a majority
      of
      the Board); or 

     

    (iv)  the
      stockholders of the Company approve an agreement for the sale or disposition
      by
      the Company of all or substantially all the Company's assets.

    
      
         

      

      
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    (e)  “Code”
means
      the Internal Revenue Code of 1986, as amended.

     

    (f)  “Committee”
means
      the Compensation Committee of the Board, which shall consist solely of two
      or
      more outside directors.

     

    (g)  “Common
      Stock”
means
      the common stock, par value $0.01 per share, of the Company, and any other
      shares into which such stock may be changed by reason of a recapitalization,
      reorganization, merger, consolidation or any other change in the corporate
      structure or capital stock of the Company.

     

    (h)  “Disability”
means
      a
      disability that would entitle an eligible participant to payment of monthly
      disability payments under any Company disability plan or as otherwise determined
      by the Committee; provided that in any instance where a grant to a participant
      is treated as “deferred compensation” within the meaning of Section 409A of the
      Code, “Disability” shall be interpreted consistently with the meaning of Section
      409A of the Code and guidance issued thereunder. 

     

    (i)  “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    (j)  “Fair
      Market Value”
of
      a
      share of Common Stock of the Company means, as of the date in question, the
      officially-quoted closing selling price of the stock (or if no selling price
      is
      quoted, the bid price) on the principal securities exchange or market on which
      the Common Stock is then listed for trading (including, for this purpose, the
      New York Stock Exchange or the Nasdaq National Market) (the “Market”)
      for
      the applicable trading day or, if the Common Stock is not then listed or quoted
      in the Market, the Fair Market Value shall be the fair value of the Common
      Stock
      determined in good faith by the Board using any reasonable method; provided,
      however, that when shares received upon exercise of an option are immediately
      sold in the open market, the net sale price received may be used to determine
      the Fair Market Value of any shares used to pay the exercise price
      or applicable
      withholding taxes and to compute the withholding taxes.

     

    (k)  “Incentive
      Stock Option”
means
      an option conforming to the requirements of Section 422 of the Code and/or
      any
      successor thereto.

     

    (l)  “Initial
      Public Offering”
means
      an underwritten initial public offering and sale of any shares of Common Stock
      pursuant to an effective registration statement under the Securities
      Act.

     

    (m)  “Non-Employee
      Director”
has
      the
      meaning given to such term in Rule 16b-3 under the Exchange Act and/or any
      successor thereto.

     

    (n)  “Non-qualified
      Stock Option”
means
      any stock option other than an Incentive Stock Option.

     

    (o)  “Other
      Securities”
mean
      securities of the Company other than Common Stock, which may include, without
      limitation, debentures, unbundled stock units or components thereof, preferred
      stock, warrants and securities convertible into or exchangeable for Common
      Stock
      or other property.

     

    
      
         

      

      
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    (p)  “Retirement”
means
      retirement as defined under any Company pension plan or retirement program
      or
      termination of one’s employment on retirement with the approval of the
      Committee; provided that in any instance where a grant to a participant is
      treated as “deferred compensation” within the meaning of Section 409A of the
      Code, “Retirement” shall be interpreted consistently with the meaning of Section
      409A(a)(2)(A)(i) of the Code and guidance issued thereunder.

     

    (q)  “Subsidiary”
means
      a
      corporation or other entity of which outstanding shares or ownership interests
      representing 50% or more of the combined voting power of such corporation or
      other entity entitled to elect the management thereof, or such lesser percentage
      as may be approved by the Committee, are owned directly or indirectly by the
      Company. 

     

    3.    Administration.

     

    The
      Plan
      shall be administered by the Committee; provided that the Board may, in its
      discretion, at any time and from time to time, resolve to administer the Plan,
      in which case the term “Committee” shall be deemed to mean the Board for all
      purposes herein. Subject to the provisions of the Plan, the Committee shall
      be
      authorized to (i) select persons to participate in the Plan,
      (ii) determine the form and substance of Grants made under the Plan to each
      participant, and the conditions and restrictions, if any, subject to which
      such
      Grants will be made, (iii) certify that the conditions and restrictions
      applicable to any Grant have been met, (iv) modify the terms of Grants made
      under the Plan in accordance with the provisions of Sections 16 and 17 hereof,
      (v) interpret the Plan and Grants made thereunder, (vi) make any adjustments
      necessary or desirable in connection with Grants made under the Plan to eligible
      participants located outside the United States and (vii) adopt, amend, or
      rescind such rules and regulations, and make such other determinations, for
      carrying out the Plan as it may deem appropriate. Decisions of the Committee
      on
      all matters relating to the Plan shall be in the Committee’s sole discretion and
      shall be conclusive and binding on all parties. The validity, construction,
      and
      effect of the Plan and any rules and regulations relating to the Plan shall
      be
      determined in accordance with applicable federal and state laws and rules and
      regulations promulgated pursuant thereto. No member of the Committee and no
      officer of the Company shall be liable for any action taken or omitted to be
      taken by such member, by any other member of the Committee or by any officer
      of
      the Company in connection with the performance of duties under the Plan, except
      for such person’s own willful misconduct or as expressly provided by
      statute.

     

    The
      expenses of the Plan shall be borne by the Company. The Company shall not be
      required to establish any special or separate fund or make any other segregation
      of assets to assume the obligations pursuant to any Grant made under the Plan,
      and rights to any payment in connection with such Grants shall be no greater
      than the rights of the Company’s general creditors.

     

    4.    Shares
      Available for the Plan.

     

    Subject
      to adjustments as provided in Section 15, an aggregate of 1,639,170
      shares of Common Stock, which represents the number of shares equal to
      approximately eight 
      percent ( 8%) of
      the
      number of shares of Common Stock outstanding as of the Effective Date (the
      "Shares"), may
      be
      issued pursuant to the Plan. Such Shares may be in whole or in part authorized
      and unissued or held by the Company as treasury shares. If any Grant under
      the
      Plan expires or terminates unexercised, becomes unexercisable or is forfeited
      as
      to any Shares, or is tendered or withheld as to any Shares in payment of the
      exercise price of the Grant or taxes payable with respect to the Grant or the
      vesting or exercise thereof, then such unpurchased, forfeited, tendered or
      withheld Shares may thereafter be available for further Grants under the Plan
      as
      the Committee shall determine. 

    
      
         

      

      
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    Without
      limiting the generality of the foregoing provisions of this Section 4 or the
      generality of the provisions of Sections 3, 6 or 17 or any other section of
      this
      Plan, the Committee may, at any time or from time to time, and on such terms
      and
      conditions (that are consistent with and not in contravention of the other
      provisions of this Plan) as the Committee may, in its sole discretion,
      determine, enter into agreements (or take other actions with respect to the
      Grants) for new Grants containing terms (including exercise prices) more (or
      less) favorable than the outstanding Grants.

     

    5.    Participation.

     

    Participation
      in the Plan shall be limited to those directors (including Non-Employee
      Directors), officers (including non-employee officers) and employees of, and
      other individuals performing services for, or to whom an offer of employment
      has
      been extended by, the Company and its Subsidiaries selected by the Committee
      (including participants located outside the United States). Nothing in the
      Plan
      or in any Grant thereunder shall confer any right on a participant to continue
      in the employ as a director or officer of, or in any other capacity or in the
      performance of services for, the Company or shall interfere in any way with
      the
      right of the Company to terminate the employment or performance of services
      or
      to reduce the compensation or responsibilities of a participant at any time.
      By
      accepting any Grant under the Plan, each participant and each person claiming
      under or through him or her shall be conclusively deemed to have indicated
      his
      or her acceptance and ratification of, and consent to, any action taken under
      the Plan by the Company, the Board or the Committee.

     

    Incentive
      Stock Options or Non-qualified Stock Options, SARs alone or in tandem with
      options, restricted stock awards, performance awards or any combination thereof
      may be granted to such persons and for such number of Shares as the Committee
      shall determine (such individuals to whom Grants are made being sometimes herein
      called “optionees” or “grantees,” as the case may be). Determinations made by
      the Committee under the Plan need not be uniform and may be made selectively
      among eligible individuals under the Plan, whether or not such individuals
      are
      similarly situated. A Grant of any type made hereunder in any one year to an
      eligible participant shall neither guarantee nor preclude a further Grant of
      that or any other type to such participant in that year or subsequent
      years.

     

    6.    Incentive
      and Non-qualified Options and SARs.

     

    The
      Committee may from time to time grant to eligible participants Incentive Stock
      Options, Non-qualified Stock Options, or any combination thereof; provided
      that
      the Committee may grant Incentive Stock Options only to eligible employees
      of
      the Company or its subsidiaries (as defined for this purpose in Section 424(f)
      of the Code or any successor thereto). In any one calendar year, the Committee
      shall not grant to any one participant options or SARs to purchase or receive
      the economic equivalent of a number of shares of Common Stock in excess of
      10%
      of the total number of Shares authorized under the Plan pursuant to Section
      4;
provided,
      however, that the Committee shall be permitted to grant to Dr. Michael J.
      Hartnett up to 60% of the total number of Shares authorized under the plan
      at
      any time. The options granted shall take such form as the Committee shall
      determine, subject to the following terms and conditions.

    
      
         

      

      
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    It
      is the
      Company’s intent that Non-qualified Stock Options granted under the Plan not be
      classified as Incentive Stock Options, that Incentive Stock Options be
      consistent with and contain or be deemed to contain all provisions required
      under Section 422 of the Code or any successor thereto, that neither any
      Non-qualified Stock Option nor any Incentive Stock Option be treated as a
      payment of deferred compensation for the purposes of Section 409A of the Code
      and any successor thereto, and that any ambiguities in construction be
      interpreted in order to effectuate such intent. If an Incentive Stock Option
      granted under the Plan does not qualify as such for any reason, then to the
      extent of such non-qualification, the stock option represented thereby shall
      be
      regarded as a Non-qualified Stock Option duly granted under the Plan, provided
      that such stock option otherwise meets the Plan’s requirements for Non-qualified
      Stock Options.

     

    (a)  Price.
      The
      price per Share deliverable upon the exercise of each option (“exercise price”)
      shall not be less than 100% of the Fair Market Value of a share of Common Stock
      as of the date of Grant of the option, and in the case of the Grant of any
      Incentive Stock Option to an employee who, at the time of the Grant, owns more
      than 10% of the total combined voting power of all classes of stock of the
      Company or any of its Subsidiaries, the exercise price may not be less than
      110%
      of the Fair Market Value of a share of Common Stock as of the date of Grant
      of
      the option, in each case unless otherwise permitted by Section 422 of the Code
      or any successor thereto.

     

    (b)  Payment.
      Options
      may be exercised, in whole or in part, upon payment of the exercise price of
      the
      Shares to be acquired. Unless otherwise determined by the Committee, payment
      shall be made (i) in cash (including check, bank draft, money order or wire
      transfer of immediately available funds), (ii) by delivery of outstanding shares
      of Common Stock with a Fair Market Value on the date of exercise equal to the
      aggregate exercise price payable with respect to the options' exercise, (iii)
      by
      simultaneous sale through a broker reasonably acceptable to the Committee of
      Shares acquired on exercise, as permitted under Regulation T of the Federal
      Reserve Board, (iv) by authorizing the Company to withhold from issuance a
      number of Shares issuable upon exercise of the options which, when multiplied
      by
      the Fair Market Value of a share of Common Stock on the date of exercise, is
      equal to the aggregate exercise price payable with respect to the options so
      exercised or (v) by any combination of the foregoing. 

     

    In
      the
      event a grantee elects to pay the exercise price payable with respect to an
      option pursuant to clause (ii) above, (A) only a whole number of share(s) of
      Common Stock (and not fractional shares of Common Stock) may be tendered in
      payment, (B) such grantee must present evidence acceptable to the Company that
      he or she has owned any such shares of Common Stock tendered in payment of
      the
      exercise price (and that such tendered shares of Common Stock have not been
      subject to any substantial risk of forfeiture) for at least six months prior
      to
      the date of exercise, and (C) Common Stock must be delivered to the Company.
      Delivery for this purpose may, at the election of the grantee, be made either
      by
      (A) physical delivery of the certificate(s) for all such shares of Common Stock
      tendered in payment of the price, accompanied by duly executed instruments
      of
      transfer in a form acceptable to the Company, or (B) direction to the grantee’s
      broker to transfer, by book entry, of such shares of Common Stock from a
      brokerage account of the grantee to a brokerage account specified by the
      Company. When payment of the exercise price is made by delivery of Common Stock,
      the difference, if any, between the aggregate exercise price payable with
      respect to the option being exercised and the Fair Market Value of the shares
      of
      Common Stock tendered in payment (plus any applicable taxes) shall be paid
      in
      cash. No grantee may tender shares of Common Stock having a Fair Market Value
      exceeding the aggregate exercise price payable with respect to the option being
      exercised (plus any applicable taxes). 

    
      
         

      

      
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    In
      the
      event a grantee elects to pay the exercise price payable with respect to an
      option pursuant to clause (iv) above, only a whole number of Shares (and not
      fractional Shares) may be withheld in payment. When payment of the exercise
      price is made by withholding of Shares, the difference, if any, between the
      aggregate exercise price payable with respect to the option being exercised
      and
      the Fair Market Value of the Shares withheld in payment (plus any applicable
      taxes) shall be paid in cash. No grantee may authorize the withholding of Shares
      having a Fair Market Value exceeding the aggregate exercise price payable with
      respect to the option being exercised (plus any applicable taxes). Any withheld
      Shares shall no longer be issuable under such option.

     

    (c)  Terms
      of Options; Vesting.
      The
      term during which each option may be exercised shall be determined by the
      Committee, but if required by the Code and except as otherwise provided herein,
      no option shall be exercisable in whole or in part more than ten years from
      the
      date it is granted, and no Incentive Stock Option granted to an employee who
      at
      the time of the Grant owns more than 10% of the total combined voting power
      of
      all classes of stock of the Company or any of its Subsidiaries shall be
      exercisable more than five years from the date it is granted. All rights to
      purchase Shares pursuant to an option shall, unless sooner terminated, expire
      at
      the date designated by the Committee. The Committee shall determine the date
      on
      which each option shall become exercisable and may provide that an option shall
      become exercisable in installments. The Shares constituting each installment
      may
      be purchased in whole or in part at any time after such installment becomes
      exercisable, subject to such minimum exercise requirements as may be designated
      by the Committee. Prior to the exercise of an option and delivery of the Shares
      represented thereby, the optionee shall have no rights as a stockholder with
      respect to any Shares covered by such outstanding option (including any dividend
      or voting rights).

     

    (d)  Limitations
      on Grants.
      If
      required by the Code, the aggregate Fair Market Value (determined as of the
      Grant date) of Shares for which an Incentive Stock Option is exercisable for
      the
      first time during any calendar year under all equity incentive plans of the
      Company and its Subsidiaries (as defined in Section 422 of the Code or any
      successor thereto) may not exceed $100,000.

     

    (e)  Termination;
      Forfeiture.

     

    (i)  Death
      or Disability.
      Unless
      otherwise provided in any Award Agreement, if a participant ceases to be a
      director, officer or employee of, or to perform other services for, the Company
      and any Subsidiary due to death or Disability, (A) all of the participant’s
      options and SARs that were exercisable on the date of death or Disability shall
      remain exercisable for, and shall otherwise terminate at the end of, a period
      of
      one year after the date of death or Disability, but in no event after the
      expiration date of the options and SARs and (B) all of the participant’s
      options and SARs that were not exercisable on the date of death or Disability
      shall be forfeited immediately upon such death or Disability; provided, however,
      that the Committee may determine to additionally vest such options and SARs,
      in
      whole or in part, in its discretion. Notwithstanding the foregoing, if the
      Disability giving rise to the termination of employment is not within the
      meaning of Section 22(e)(3) of the Code or any successor thereto, Incentive
      Stock Options not exercised by such participant within one year after the date
      of termination of employment will cease to qualify as Incentive Stock Options
      and will be treated as Non-qualified Stock Options under the Plan if required
      to
      be so treated under the Code.

     

    
      
         

      

      
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    (ii)  Retirement.
      Unless
      otherwise provided in any Award Agreement, if a participant ceases to be a
      director, officer or employee of, or to perform other services for, the Company
      and any Subsidiary upon the occurrence of his or her Retirement, (A) all of
      the participant’s options and SARs that were exercisable on the date of
      Retirement shall remain exercisable for, and shall otherwise terminate at the
      end of, a period of 90 days after the date of Retirement, but in no event after
      the expiration date of the options or SARs; provided that the participant does
      not engage in Competition during such 90-day period unless he or she receives
      written consent to do so from the Board or the Committee, and (B) all of
      the participant’s options and SARs that were not exercisable on the date of
      Retirement shall be forfeited immediately upon such Retirement; provided,
      however, that such options and SARs, may become fully vested and exercisable
      in
      the discretion of the Committee. Notwithstanding the foregoing, Incentive Stock
      Options not exercised by such participant within 90 days after Retirement will
      cease to qualify as Incentive Stock Options and will be treated as Non-qualified
      Stock Options under the Plan if required to be so treated under the
      Code.

     

    (iii)  Discharge
      for Cause.
      Unless
      determined by the Committee, if a participant ceases to be a director, officer
      or employee of, or to perform other services for, the Company or a Subsidiary
      due to Cause, or if a participant does not become a director, officer or
      employee of, or does not begin performing other services for, the Company or
      a
      Subsidiary for any reason, all of the participant’s options and SARs shall
      expire and be forfeited immediately upon such cessation or non-commencement,
      whether or not then exercisable.

     

    (iv)  Other
      Termination.
      If a
      participant ceases to be a director, officer or employee of, or to otherwise
      perform services for, the Company or a Subsidiary for any reason other than
      death, Disability, Retirement or Cause, (A) all of the participant’s
      options and SARs that were exercisable on the date of such cessation shall
      remain exercisable for, and shall otherwise terminate at the end of, a period
      of
      30 days after the date of such cessation, but in no event after the expiration
      date of the options or SARs; provided that the participant does not engage
      in
      Competition during such 30-day period unless he or she receives written consent
      to do so from the Board or the Committee, and (B) all of the participant’s
      options and SARs that were not exercisable on the date of such cessation shall
      be forfeited immediately upon such cessation.

     

    (v)  Change
      of Control. If
      there
      is a Change in Control of the Company or similar event, the Committee may,
      in
      its discretion, provide for the vesting of a participant’s options and SARs on
      such terms and conditions as it deems appropriate in such participant’s Award
      Agreement.

     

    
      
         

      

      
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    7.    Stock
      Appreciation Rights.

     

    Provided
      that the Company’s stock is traded on an established securities market, the
      Committee shall have the authority to grant SARs under this Plan, subject to
      such terms and conditions specified in this paragraph 7 and any additional
      terms
      and conditions as the Committee may specify. 

     

    No
      SAR
      may be issued unless (a) the exercise price of the SAR may never be less than
      the Fair Market Value of the underlying Shares on the date of grant and (b)
      the
      SAR does not include any feature for the deferral of compensation income other
      than the deferral of recognition of income until the exercise of the
      SAR.

     

    No
      SAR
      may be exercised unless the Fair Market Value of a share of Common Stock of
      the
      Company on the date of exercise exceeds the exercise price of the SAR. Prior
      to
      the exercise of the SAR and delivery of the Shares represented thereby, the
      participant shall have no rights as a stockholder with respect to Shares covered
      by such outstanding SAR (including any dividend or voting rights).

     

    Upon
      the
      exercise of an SAR, the participant shall be entitled to a distribution in
      an
      amount equal to the difference between the Fair Market Value of a share of
      Common Stock on the date of exercise and the exercise price of the SAR,
      multiplied by the number of Shares as to which the SAR is exercised. Such
      distribution shall be made in Shares having a Fair Market Value equal to such
      amount.

     

    All
      SARs
      will be exercised automatically on the last day prior to the expiration date
      of
      the SAR so long as the Fair Market Value of a share of Common Stock on that
      date
      exceeds the exercise price of the SAR or any related option, as applicable.
      

     

    The
      provisions of Subsections 6(c) shall apply to all SARs except to the extent
      that
      the Award Agreement pursuant to which such Grant is made expressly provides
      otherwise.

     

    It
      is the
      Company’s intent that no SAR shall be treated as a payment of deferred
      compensation for purposes of Section 409A of the Code and that any ambiguities
      in construction be interpreted in order to effectuate such intent.

     

    8.    Restricted
      Stock.

     

    The
      Committee may at any time and from time to time grant Shares of restricted
      stock
      under the Plan to such participants and in such amounts as it determines. Each
      Grant of restricted stock shall specify the applicable restrictions on such
      Shares, the duration of such restrictions, and the time or times at which such
      restrictions shall lapse with respect to all or a specified number of Shares
      that are part of the Grant. 

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    The
      participant will be required to pay the Company the aggregate par value of
      any
      Shares of restricted stock (or such larger amount as the Board may determine
      to
      constitute capital under Section 154 of the Delaware General Corporation Law,
      as
      amended, or any successor thereto) within 15 days
      of
      the date of Grant, unless such Shares of restricted stock are treasury shares.
      Unless otherwise determined by the Committee, certificates representing Shares
      of restricted stock granted under the Plan will be held in escrow by the Company
      on the participant’s behalf during any period of restriction thereon and will
      bear an appropriate legend specifying the applicable restrictions thereon,
      and
      the participant will be required to execute a blank stock power therefor. Except
      as otherwise provided by the Committee, during such period of restriction the
      participant shall have all of the rights of a holder of Common Stock, including
      but not limited to the rights to receive dividends and to vote, and any stock
      or
      other securities received as a distribution with respect to such participant’s
      restricted stock shall be subject to the same restrictions as then in effect
      for
      the restricted stock.

     

    Unless
      otherwise provided in any Award Agreement, at such time as a participant ceases
      to be a director, officer or employee of, or to otherwise perform services
      for,
      the Company and its Subsidiaries due to death, Disability or Retirement during
      any period of restriction, all Shares of restricted stock granted to such
      participant on which the restrictions have not lapsed shall be immediately
      forfeited to the Company. If there is a Change in Control of the Company or
      similar event, the Committee may, in its discretion, provide for the lapsing
      of
      restrictions on a participant’s Shares of restricted stock on such terms and
      conditions as it deems appropriate in such participant’s Award Agreement. At
      such time as a participant ceases to be, or in the event a participant does
      not
      become, a director, officer or employee of, or otherwise perform services for,
      the Company or its Subsidiaries for any other reason, all Shares of restricted
      stock granted to such participant on which the restrictions have not lapsed
      shall be immediately forfeited to the Company. The provisions of Subsections
      6(c) and (e) shall apply to Restricted Stock except to the extent that the
      Award
      Agreement in relation thereto expressly provides otherwise.

     

    It
      is the
      Company’s intent that Restricted Stock shall not be treated as a payment of
      deferred compensation for purposes of Section 409A of the Code and that any
      ambiguities in construction be interpreted in order to effectuate such
      intent.

     

    9.    Performance
      Awards.

     

    Performance
      awards may be granted to participants at any time and from time to time as
      determined by the Committee. The Committee shall have complete discretion in
      determining the size and composition of performance awards granted to a
      participant. The period over which performance is to be measured (a “performance
      cycle”) shall commence on the date specified by the Committee and shall end on
      the last day of a fiscal year specified by the Committee. A performance award
      shall be paid no later than the fifteenth day of the third month following
      the
      completion of a performance cycle (or following the elapsed portion of the
      performance cycle, in the circumstances described in the last paragraph of
      this
      Section 9). Performance awards may include (i) specific dollar-value target
      awards (ii) performance units, the value of each such unit being determined
      by the Committee at the time of issuance, and/or (iii) performance Shares,
      the value of each such Share being equal to the Fair Market Value of a share
      of
      Common Stock. In any one calendar year, the Committee shall not grant to any
      one
      participant performance awards in excess of 10% of the total number of Shares
      authorized under the Plan pursuant to Section 4; provided,
      however, that the Committee shall be permitted to grant to Dr. Michael J.
      Hartnett up to 60% of the total number of Shares authorized under the plan
      at
      any time.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    The
      value
      of each performance award may be fixed or it may be permitted to fluctuate
      based
      on a performance factor (e.g., return on equity) selected by the Committee.
      It
      is the Company’s intent that no performance award be treated as the payment of
      deferred compensation for purposes of Section 409A of the Code and that any
      ambiguities in construction be interpreted in order to effectuate such
      intent.

     

    The
      Committee shall establish performance goals and objectives for each performance
      cycle on the basis of such criteria and objectives as the Committee may select
      from time to time, including, without limitation, the performance of the
      participant, the Company, one or more of its Subsidiaries or divisions or any
      combination of the foregoing. During any performance cycle, the Committee shall
      have the authority to adjust the performance goals and objectives for such
      cycle
      for such reasons as it deems equitable.

     

    The
      Committee shall determine the portion of each performance award that is earned
      by a participant on the basis of the Company’s performance over the performance
      cycle in relation to the performance goals for such cycle. The earned portion
      of
      a performance award may be paid out in Shares, cash, Other Securities, or any
      combination thereof, as the Committee may determine.

     

    A
      participant must be a director, officer or employee of, or otherwise perform
      services for, the Company or its Subsidiaries at the end of the performance
      cycle in order to be entitled to payment of a performance award issued in
      respect of such cycle; provided, however, that except as otherwise determined
      by
      the Committee, if a participant ceases to be a director, officer or employee
      of,
      or to otherwise perform services for, the Company and its Subsidiaries upon
      his
      or her death, Retirement, or Disability prior to the end of the performance
      cycle, the Committee may provide in a Grant that the participant may earn a
      proportionate portion of the performance award based upon the elapsed portion
      of
      the performance cycle and the Company’s performance over that portion of such
      cycle.

     

    10.   Withholding
      Taxes.

     

    (a)  Participant
      Election.
      Unless
      otherwise determined by the Committee, a participant may elect to deliver shares
      of Common Stock (or have the Company withhold shares acquired upon exercise
      of
      an option or SAR or deliverable upon grant or vesting of restricted stock,
      as
      the case may be) to satisfy, in whole or in part, the amount the Company is
      required to withhold for taxes in connection with the exercise of an option
      or
      SAR or the delivery of restricted stock upon grant or vesting, as the case
      may
      be. Such election must be made on or before the date the amount of tax to be
      withheld is determined. Once made, the election shall be irrevocable. The fair
      market value of the shares to be withheld or delivered will be the Fair Market
      Value as of the date the amount of tax to be withheld is determined. In the
      event a participant elects to deliver or have the Company withhold shares of
      Common Stock pursuant to this Section 10(a), such delivery or withholding must
      be made subject to the conditions and pursuant to the procedures set forth
      in
      Section 6(b) with respect to the delivery or withholding of Common Stock in
      payment of the exercise price of options.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (b)  Company
      Requirement.
      The
      Company may require, as a condition to any Grant or exercise under the Plan
      or
      to the delivery of certificates for Shares issued hereunder, that the grantee
      make provision for the payment to the Company, either pursuant to Section 10(a)
      or this Section 10(b), of federal, state or local taxes of any kind required
      by
      law to be withheld with respect to any Grant or delivery of Shares. The Company,
      to the extent permitted or required by law, shall have the right to deduct
      from
      any payment of any kind (including salary or bonus) otherwise due to a grantee,
      an amount equal to any federal, state or local taxes of any kind required by
      law
      to be withheld with respect to any grant or delivery of Shares under the
      Plan.

     

    11.   Written
      Agreement.

     

    Each
      employee to whom a Grant is made under the Plan shall enter into an Award
      Agreement with the Company that shall contain such provisions consistent with
      the provisions of the Plan, as may be approved by the Committee.

     

    12.   Transferability.

     

    Unless
      the Committee determines otherwise, no option, SAR, performance award or
      restricted stock granted under the Plan shall be transferable by a participant
      other than by will or the laws of descent and distribution; provided that,
      in
      the case of Shares of restricted stock granted under the Plan, such Shares
      of
      restricted stock shall be freely transferable following the time at which such
      restrictions shall have lapsed with respect to such Shares. Unless the Committee
      determines otherwise, an option, SAR or performance award may be exercised
      only
      by the optionee or grantee thereof; by his or her executor or administrator,
      the
      executor or administrator of the estate of any of the foregoing, or any person
      to whom the option, SAR or performance award is transferred by will or the
      laws
      of descent and distribution; or by his or her guardian or legal representative;
      or the guardian or legal representative of any of the foregoing; provided that
      Incentive Stock Options may be exercised by any guardian or legal representative
      only if permitted by the Code and any regulations thereunder. All provisions
      of
      this Plan and any Award Agreement referred to in Section 11 shall in any event
      continue to apply to any option, SAR, performance award or restricted stock
      granted under the Plan and transferred as permitted by this Section 12, and
      any
      transferee of any such option, SAR, performance award or restricted stock shall
      be bound by all provisions of this Plan and any agreement referred to in Section
      11 as and to the same extent as the applicable original grantee.

     

    13.    Listing,
      Registration and Qualification.

     

    If
      the
      Committee determines that the listing, registration or qualification upon any
      securities exchange or under any law of Shares subject to any option, SAR,
      performance award or restricted stock Grant is necessary or desirable as a
      condition of, or in connection with, the granting of same or the issue or
      purchase of Shares thereunder, no such option or SAR may be exercised in whole
      or in part, no such performance award may be paid out, and no Shares may be
      issued, unless such listing, registration or qualification is effected free
      of
      any conditions not acceptable to the Committee.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    14.    Transfer
      of Employee.

     

    The
      transfer of an employee from the Company to a Subsidiary, from a Subsidiary
      to
      the Company, or from one Subsidiary to another shall not be considered a
      termination of employment; nor shall it be considered a termination of
      employment if an employee is placed on military or sick leave or such other
      leave of absence which is considered by the Committee as continuing intact
      the
      employment relationship.

     

    15.    Adjustments.

     

    In
      the
      event of a reorganization, recapitalization, spin-off or other extraordinary
      distribution, stock split, stock dividend, combination of shares, merger,
      consolidation, distribution of assets, spin-off or other extraordinary
      distribution, or any other change in the corporate structure or shares of the
      Company, the Committee shall make such adjustment as it deems appropriate in
      the
      number and kind of Shares or other property available for issuance under the
      Plan (including, without limitation, the total number of Shares available for
      issuance under the Plan pursuant to Section 4), in the number and kind of
      options, SARs, Shares or other property covered by Grants previously made under
      the Plan, and in the exercise price of outstanding options and SARs. Any such
      adjustment shall be final, conclusive and binding for all purposes of the Plan.
      In the event of any merger, consolidation or other reorganization in which
      the
      Company is not the surviving or continuing corporation or in which a Change
      in
      Control is to occur, all of the Company’s obligations regarding options, SARs,
      performance awards, and restricted stock that were granted hereunder and that
      are outstanding on the date of such event shall, on such terms as may be
      approved by the Committee prior to such event, be (a) assumed by the surviving
      or continuing corporation; or (b) canceled in exchange for cash, securities
      of
      the acquiror or other property; provided that, in the case of clause (b), (i)
      such merger, consolidation, other reorganization or Change in Control
      constitutes a “change in ownership or control” of the Company or a “change in
      the ownership of a substantial portion” of the Company’s assets within the
      meaning of Section 409A(a)(2)(A)(v) of the Code and the guidance issued
      thereunder or (ii) the payment of cash, securities or other property is not
      treated as a payment of "deferred compensation" under Section 409A of the
      Code.

     

    Without
      limitation of the foregoing, in connection with any transaction described in
      of
      the last sentence of the preceding paragraph, the Committee may, in its
      discretion, (i) cancel any or all outstanding options under the Plan in
      consideration for payment to the holders thereof of an amount equal to the
      portion of the consideration that would have been payable to such holders
      pursuant to such transaction if their options had been fully exercised
      immediately prior to such transaction, less the aggregate exercise price that
      would have been payable therefor, or (ii) if the amount that would have been
      payable to the option holders pursuant to such transaction if their options
      had
      been fully exercised immediately prior thereto would be equal to or less than
      the aggregate exercise price that would have been payable therefor, cancel
      any
      or all such options for no consideration or payment of any kind. Payment of
      any
      amount payable pursuant to the preceding sentence may be made in cash or, in
      the
      event that the consideration to be received in such transaction includes
      securities or other property, in cash, securities of the acquiror or other
      property in the Committee’s discretion.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    16.    Amendment
      and Termination of the Plan.

     

    Except
      as
      otherwise provided in an Award Agreement, the Board of Directors, without
      approval of the stockholders, may amend or terminate the Plan, except that
      no
      amendment shall become effective without prior approval of the stockholders
      of
      the Company if stockholder approval would be required by applicable law or
      regulations, including if required for continued compliance with the
      performance-based compensation exception of Section 162(m) of the Code or
      any successor thereto, under the provisions of Section 409A of the Code or
      any
      successor thereto, under the provisions of Section 422 of the Code or any
      successor thereto, or by any listing requirement of the principal stock exchange
      on which the Common Stock is then listed.

     

    17.    Amendment
      or Substitution of Grants under the Plan.

     

    The
      terms
      of any outstanding Grant under the Plan may be amended from time to time by
      the
      Committee in its discretion in any manner that it deems appropriate including,
      but not limited to, acceleration of the date of exercise of any Grant and/or
      payments thereunder or of the date of lapse of restrictions on Shares (but,
      in
      the case of a Grant that is or would be treated as “deferred compensation” for
      purposes of Section 409A of the Code, only to the extent permitted by guidance
      issued under Section 409A of the Code); provided that, except as otherwise
      provided in Section 16 or in an Award Agreement, no such amendment shall
      adversely affect in a material manner any right of a participant under the
      Grant
      without his or her written consent, and further provided that the Committee
      shall not reduce the exercise price of any options or SARs awarded under the
      Plan. The Committee may, in its discretion, permit holders of Grants under
      the
      Plan to surrender outstanding Grants in order to exercise or realize rights
      under other Grants, or in exchange for new Grants, or require holders of Grants
      to surrender outstanding Grants as a condition precedent to the receipt of
      new
      Grants under the Plan, but only if such surrender, exercise, realization,
      exchange or Grant (a) is not treated as a payment of, and does not cause a
      Grant
      to be treated as, deferred compensation for the purposes of Section 409A of
      the
      Code or (b) is permitted under guidance issued pursuant to Section 409A of
      the
      Code. Notwithstanding anything contained in this Section 17 to the contrary,
      no
      surrender, exercise, realization, exchange or Grant in substitution for,
assumption
      of, or as an alternative to or replacement of, an existing Grant pursuant to
      this Section 17 shall be effected in order to reduce or change the exercise
      price of any outstanding options or SARs awarded under the Plan or otherwise
      implement a re-pricing of any outstanding options or SARs awarded under the
      Plan.

     

    18.    Commencement
      Date; Termination Date.

     

    The
      date
      of commencement of the Plan shall be August 9, 2005, subject to approval by
      the
      shareholders of the Company. If required by the Code, the Plan will also be
      subject to reapproval by the shareholders of the Company prior to August 9,
      2010.

     

    Unless
      previously terminated upon the adoption of a resolution of the Board terminating
      the Plan, the Plan shall terminate at the close of business on August 8, 2015.
      Subject to the provisions of an Award Agreement, which may be more restrictive,
      no termination of the Plan shall materially and adversely affect any of the
      rights or obligations of any person, without his or her written consent, under
      any Grant of options or other incentives theretofore granted under the
      Plan.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    19.    Severability.

     

    Whenever
      possible, each provision of the Plan shall be interpreted in such manner as
      to
      be effective and valid under applicable law, but if any provision of the Plan
      is
      held to be prohibited by or invalid under applicable law, such provision shall
      be ineffective only to the extent of such prohibition or invalidity, without
      invalidating the remainder of the Plan.

     

    20.    Governing
      Law.

     

    The
      Plan
      shall be governed by the corporate laws of the State of Delaware, without giving
      effect to any choice of law provisions that might otherwise refer construction
      or interpretation of the Plan to the substantive law of another
      jurisdiction.

     

    21.    Compliance
      Amendments.

     

    Except
      as
      otherwise provided in an Award Agreement, notwithstanding any of the foregoing
      provisions of the Plan, and in addition to the powers of amendment set forth
      in
      Sections 16 and 17 hereof, the provisions hereof and the provisions of any
      award
      made hereunder may be amended unilaterally by the Company from time to time
      to
      the extent necessary (and only to the extent necessary) to prevent the
      implementation, application or existence (as the case may be) of any such
      provision from (i) requiring the inclusion of any compensation deferred pursuant
      to the provisions of the Plan (or an award thereunder) in a participant's gross
      income pursuant to Section 409A of the Code, and the regulations issued
      thereunder from time to time and/or (ii) inadvertently causing any award
      hereunder to be treated as providing for the deferral of compensation pursuant
      to such Code section and regulations.

     

    
      
         

      

      
        15PROMISSORY
          NOTE-DDII

        

        

        
          	
                  $
                    100,000 (One Hundred Thousand Dollars)

                	
                  Dated:
                    July , 2007

                
	
                  Principal
                    Amount 

                	
                  State
                    of Nevada

                

        

        

        Funding
          Date- On or before July [ ], 2007

        Due
          Date of Note January [ ], 2008

        

        FOR
          VALUE RECEIVED,  One
          Hundred Thousand Dollars ($100,000), the undersigned, Indigo-Energy, Inc.,
          a
          Nevada Corporation, located at 701 N. Green Valley Parkway, Suite 200,
          Henderson, NV 89074 (Borrowers) hereby promises to pay to the order of
          MLPF&S CUST FBO Dean Davis c/o Merrill Lynch, Attn: Melinda Drummond 390 E.
          Henry St., Spartanburg, SC 29304-9849 (Maker) the sum of $100,000 (One
          Hundred
          Thousand Dollars). Said sum shall be paid in the manner
          following: 

        

        The
          note shall carry an interest premium of twenty percent (20%) per annum
          pro-rata
          for the number of days from Funding Date to Due Date. The Borrower may
          prepay
          this note at any time without penalty by delivery of the appropriate principal
          and pro-rata interest to Maker. If Borrower elects to pre-pay this note,
          he will
          allow Maker 10 days notice to exercise the Payment Option as define
          below.

        

        At
          the Due Date, or earlier, Maker will choose one of the following 2 Payment
          Options:

        

        Option
          1- Borrower will repay the Principal Amount plus Interest within 10 days
          of the
          Due Date, or

        

        Option
          2 Maker may elect to accept an issuance of the same number of shares as
          the
          Principal plus Interest total due dollar for share of the Borrower’s common
          stock such stock to be restricted by Rule 144. For example, if the total
          principal and interest is $60,000, the Maker may elect to take 60,000 shares
          of
          stock in lieu of cash payment.

        

        Additionally,
          the Maker shall receive twice the number of shares of Borrower’s common stock as
          the dollar Principal amount of the Promissory Note within thirty (30) days
          of
          funding, such stock to be restricted by Rule 144 (example- if the note
          is
          $50,000, the number of shares to be issued is 100,000).

        

        This
          Note shall at the option of the Maker be immediately due and payable upon
          the
          occurrence of any of the following:

        	1-  	
                Breach
                  of any condition of any of the security
                  interest.

              

        	2-  	
                Upon
                  the insolvency, dissolution, or liquidation of the
                  Borrowers.

              

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        Wire
          Instructions for receipt of funds by Borrower are:

         

        Bank
          of America

        Branch
          NV1-155-01-01

        Banker:
          Charity Lopez

        2638
          W. Horizon Ridge Parkway

        Henderson,
          NV 89052

        702-654-6316

        702-654-6342
          fax

        Indigo-Energy,
          Inc.

        Account
          # 005012537333

        Wire
          Routing ABA # 026009593

        

        In
          the event this note shall be in default, and placed with an attorney for
          collection, then the Borrower agrees to pay all reasonable attorney fees
          and
          costs of collection. Payments not made within 10 days of due date shall
          be
          subject to a late charge of 10% of said payment. All payments hereunder
          shall be
          made to the Maker.

        

        The
          Borrowers agree to be fully bound hereunder until this note shall be fully
          paid
          and waive demand, presentment and protest and all notices thereto and further
          agrees to remain bound, notwithstanding any extension, renewal, modification,
          waiver, or other indulgence by the Maker or upon the discharge or release
          of the
          Borrowers, or upon the exchange, substitution, or release of any collateral
          granted as security for this Note. No modification or indulgence by Maker
          shall
          be binding unless in writing, and any indulgence for one occasion shall
          not be
          an indulgence for any other or future occasion. This Note shall take effect
          as a
          sealed instrument and shall be construed, governed, and enforced in accordance
          with the laws of the State of Nevada. 

        

        Signed
          the date recorded below:

         

        
          
            	 	 	 	 	 
	
                    David
                      Larson, CEO 

                  	 	
                    Date

                  	 	 
	
                    Indigo-Energy,
                      Inc.

                  	 	 	 	 
	 	 	 	 	 
	
                    Accepted
                      by Maker:

                  	 	 	 	 
	 	 	 	 	 
	 	 	 	 	
                    13-3180817

                  
	
                    MLPF&S
                      CUST FBO Dean Davis

                  	 	
                    Date

                  	 	
                    EIN
                      #

                  

          

           

          

          PromNoteDDII

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