Document:

Exhibit 10.7
    

    
      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      PLATO LEARNING, INC. 
2006
      STOCK INCENTIVE PLAN
    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    

    

    

    

    
      PLATO LEARNING, INC. 2006 STOCK INCENTIVE PLAN
    

    

    

    
      TABLE OF CONTENTS
    

    

    

    
    	
          Article 1.
        	
          Establishment, Objectives and Duration
        	
          1
        
	
          Article 2.
        	
          Definitions
        	
          1
        
	
          Article 3.
        	
          Administration
        	
          7
        
	
          Article 4.
        	
          Shares Subject to the Plan and Maximum Awards
        	
          8
        
	
          Article 5.
        	
          Eligibility and Participation
        	
          9
        
	
          Article 6.
        	
          Options
        	
          9
        
	
          Article 7.
        	
          Stock Appreciation Rights
        	
          13
        
	
          Article 8.
        	
          Restricted Stock and Restricted Stock Units
        	
          13
        
	
          Article 9.
        	
          Performance Shares
        	
          14
        
	
          Article 10.
        	
          Other Stock Awards
        	
          15
        
	
          Article 11.
        	
          Performance Measures
        	
          15
        
	
          Article 12.
        	
          Beneficiary Designation
        	
          16
        
	
          Article 13.
        	
          Deferrals and Code Section 409A
        	
          17
        
	
          Article 14.
        	
          Rights of Participants
        	
          17
        
	
          Article 15.
        	
          Amendment, Modification and Termination
        	
          17
        
	
          Article 16.
        	
          Nontransferability of Awards.
        	
          19
        
	
          Article 17.
        	
          Withholding
        	
          20
        
	
          Article 18.
        	
          Indemnification
        	
          20
        
	
          Article 19.
        	
          Successors
        	
          20
        
	
          Article 20.
        	
          Breach of Restrictive Covenants
        	
          20
        
	
          Article 21.
        	
          Legal Construction
        	
          21
        

    

    

    

    
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      PLATO LEARNING, INC. 2006 STOCK INCENTIVE PLAN
    

    

    

    
      Article 1.                        Establishment, Objectives and
      Duration
    

    
      1.1       Establishment of the Plan.  PLATO
      Learning, Inc., a Delaware corporation, hereby establishes this PLATO
      Learning, Inc. 2006 Stock Incentive Plan (the "Plan") as set forth
      herein.  Capitalized terms used but not otherwise defined herein will
      have the meanings given to them in Article 2.  The Plan permits the
      grant of Nonstatutory Stock Options, Incentive Stock Options, Stock
      Appreciation Rights, Restricted Stock, Restricted Stock Units,
      Performance Shares, and other Stock Awards.  
    

    
      The Board of Directors of the Company approved the Plan on December 8,
      2005.  The Plan shall become effective upon its ratification by an
      affirmative vote at the annual meeting of stockholders of the Company to
      be held on March 2, 2006, and will remain in effect as provided in
      Section 1.3 hereof.
    

    
      1.2       Purpose of the Plan.  The
      purpose of the Plan is to promote the success and enhance the value of
      the Company by linking the personal interests of Participants to those
      of Company shareholders, and by providing Participants with an incentive
      for outstanding performance.  The Plan is further intended to provide
      flexibility to the Company in its ability to motivate, attract and
      retain the services of Participants upon whose judgment, interest, and
      special effort the successful conduct of its business is largely
      dependent.
    

    
      1.3       Duration of the Plan.  The
      Plan will commence on the Effective Date, as described in Article 2, and
      will remain in effect, subject to the right of the Committee to amend or
      terminate the Plan at any time pursuant to Article 15, until all Shares
      subject to it pursuant to Article 4 have been issued or transferred
      according to the Plan's provisions.  In no event may an Award be granted
      under the Plan on or after the tenth annual anniversary of the Effective
      Date.
    

    
      Article 2.                        Definitions
    

    
      Whenever used in the Plan, the following terms have the meanings set
      forth below, and when the meaning is intended, the initial letter of the
      word is capitalized:
    

    
      "Affiliates" means (a) for purposes of Incentive Stock
      Options, any corporation that is a Parent or Subsidiary of the Company,
      and (b) for all other purposes hereunder, an entity that is (directly or
      indirectly) controlled by, or controls, the Company.
    

    
      "Award" means, individually or collectively, a grant
      under this Plan to a Participant of Nonstatutory Stock Options,
      Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
      Restricted Stock Units, Performance Shares or other Stock Awards.
    

    
      "Award Agreement" means an agreement entered into by
      the Company and a Participant setting forth the terms and provisions
      applicable to an Award or Awards granted to the Participant or the terms
      and provisions applicable to an election to defer compensation under
      Section 8.2.
    

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

    

    

    
      
        

        

      

      
        
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      "Cause" shall have the meaning set forth in any
      employment, consulting, or other written agreement between the
      Participant and the Company or an Affiliate.  If there is no employment,
      consulting, or other written agreement between the Participant and the
      Company or an Affiliate, or if such agreement does not define "Cause,"
      then "Cause" shall have the meaning specified by the Committee in
      connection with the grant of any Award; provided, that if the Committee
      does not so specify, "Cause" shall mean the Participant's:
    

    
      (a)       willful neglect of or continued failure to substantially
      perform his or her duties with or obligations for the Company or an
      Affiliate in any material respect (other than any such failure resulting
      from his or her incapacity due to physical or mental illness);
    

    
      (b)       commission of a willful or grossly negligent act or the
      willful or grossly negligent omission to act that causes or is
      reasonably likely to cause material harm to the Company or an Affiliate;
      or
    

    
      (c)       commission or conviction of, or plea of nolo
      contendere to, any felony or any crime materially injurious to the
      Company or an Affiliate.
    

    
      An act or omission is "willful" for this purpose if it was knowingly
      done, or knowingly omitted, by the Participant in bad faith and without
      reasonable belief that the act or omission was in the best interest of
      the Company or an Affiliate.  Determination of Cause shall be made by
      the Committee in its sole discretion, and may be applied retroactively
      if, after the Participant terminates Service, it is discovered that
      Cause occurred during Participant’s Service.
    

    
      "Change in Control" means the occurrence of any one or
      more of the following:
    

    
      (a)       Any person or persons acting as a group acquires (or has
      acquired during the 12-month period ending on the date of the most
      recent acquisition by such person or persons) ownership of stock of the
      Company representing fifty percent (50%) or more of the voting power of
      the Company’s then outstanding stock; provided, however, that a Change
      in Control shall not be deemed to occur by virtue of any of the
      following acquisitions:  (i) by the Company or any Affiliate, (ii) by
      any employee benefit plan (or related trust) sponsored or maintained by
      the Company or any Affiliate, or (iii) by any underwriter temporarily
      holding securities pursuant to an offering of such securities;
    

    
      (b)       Any person or persons acting as a group acquires ownership of
      stock that, together with stock held by such person or group,
      constitutes more than fifty percent (50%) of the total fair market value
      or voting power of the Company’s then outstanding stock.  The
      acquisition of Company stock by the Company in exchange for property,
      which reduces the number of outstanding shares of Company stock and
      increases the percentage ownership by any person or group to more than
      50% of the total fair market value or voting power of the Company’s then
      outstanding stock will be treated as a Change in Control;
    

    
      (c)       A majority of the members of the Board is replaced during any
      12-month period by directors whose appointment or election is not
      endorsed by a majority of the members of the Board before the date of
      the appointment or election;
    

    

    

    
      
        

        

      

      
        
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      (d)       Any person or persons acting as a group acquires (or has
      acquired during the 12-month period ending on the date of the most
      recent acquisition by such person or persons) assets from the Company
      that have a total gross fair market value of at least forty percent
      (40%) of the total gross fair market value of all the assets of the
      Company immediately prior to such acquisition.  For purposes of this
      section, gross fair market value means the value of the assets of the
      Company, or the value of the assets being disposed of, without regard to
      any liabilities associated with such assets.  The event described in
      this paragraph (d) shall not be deemed to be a Change in Control if the
      assets are transferred to (i) any owner of Company stock in exchange for
      or with respect to the Company's stock, (ii) an entity in which the
      Company owns, directly or indirectly, at least fifty percent (50%) of
      the entity's total value or total voting power, (iii) any person that
      owns, directly or indirectly, at least fifty percent (50%) of the total
      value or voting power of all outstanding Company stock, or (iv) an
      entity in which a person described in (d)(iii) above owns at least fifty
      percent (50%) of the total value or voting power.  For purposes of this
      section, and except as otherwise provided, a person's status is
      determined immediately after the transfer of the assets; or
    

    
      (e)       Upon the happening of any other event(s) designated in the
      Code, or regulations or guidance thereunder, as a Change in Control for
      purposes of Section 409A of the Code.
    

    
      Notwithstanding the foregoing, a Change in Control of the Company shall
      not be deemed to occur solely because any person or group owning more
      than fifty percent (50%) of the total value or voting power of all
      outstanding Company stock acquires additional Company stock.  In no
      event will a Change in Control be deemed to have occurred, with respect
      to the Participant, if an employee benefit plan maintained by the
      Company or an Affiliate or the Participant is part of a purchasing group
      that consummates the transaction that would otherwise result in a Change
      in Control.  The employee benefit plan or the Participant will be deemed
      “part of a purchasing group” for purposes of the preceding sentence if
      the plan or the Participant is an equity participant in the purchasing
      company or group, except where participation is passive ownership of
      less than two percent (2%) of the stock of the purchasing company.
    

    
      "Code" means the Internal Revenue Code of 1986, as
      amended from time to time, and the regulations promulgated thereunder.
    

    
      "Committee" shall mean the Compensation Committee of
      the Board of Directors, the composition of which shall at all times
      satisfy the provisions of Code Section 162(m) and shall consist of at
      least two directors who are "independent directors" within the meaning
      of the NASDAQ marketplace rules, and "nonemployee directors" within the
      meaning of Exchange Act Rule 16b-3.
    

    
      "Company" means PLATO Learning, Inc., a Delaware
      corporation, and any successor thereto as provided in Article 19.
    

    
      "Consultant" means any person, including an advisor,
      engaged by the Company or an Affiliate to render services to such entity
      and who is not a Director or an Employee.
    

    

    

    
      
        

        

      

      
        
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      "Director" means any individual who is a member of the
      Board of Directors.
    

    
      "Disability" shall have the meaning prescribed by the
      Committee in any applicable Award Agreement or, in the absence of any
      such definition, shall mean:
    

    
      (a)                A physical or mental condition that would qualify a
      Participant for a disability benefit under the long-term disability plan
      of the Company applicable to him or her;
    

    
      (b)                If the Participant is not covered by such a long-term
      disability plan, disability as defined for purposes of eligibility for a
      disability award under the Social Security Act;  
    

    
      (c)                When used in connection with the exercise of an
      Incentive Stock Option following termination of employment, disability
      within the meaning of Code Section 22(e)(3); or
    

    
      (d)                Such other condition as may be determined by the
      Committee to constitute "disability" under Code Section 409A.
    

    
      "Effective Date" means March 2, 2006 subject to the
      Plan's adoption by the Board and approval of the Plan by the Company's
      shareholders.
    

    
      "Employee" means any person employed by the Company or
      an Affiliate in a common law employee-employer relationship.  A
      Participant shall not cease to be an Employee for purposes of this Plan
      in the case of (i) any leave of absence approved by the Company or (ii)
      transfers between locations of the Company or among the Company, its
      Parent, any Subsidiary, or any successor.  For purposes of Incentive
      Stock Options, no such leave may exceed ninety (90) days, unless
      reemployment upon expiration of such leave is guaranteed by statute or
      contract.  If reemployment upon expiration of a leave of absence
      approved by the Company is not so guaranteed, on the one hundred and
      eighty-first (181st) day of such leave any Incentive Stock Option held
      by the Participant shall cease to be treated as an Incentive Stock
      Option and shall be treated for tax purposes as a Nonstatutory Stock
      Option.  Neither service as a Director nor payment of a director's fee
      by the Company shall be sufficient to constitute "employment" by the
      Company.
    

    
      "Exchange Act" means the Securities Exchange Act of
      1934, as amended from time to time, or any successor act thereto.
    

    
      "Exercise Price" means the price at which a Share may
      be purchased by a Participant pursuant to an Option.
    

    
      "Fair Market Value" of a Share on any given date shall
      be determined by the Committee as follows:
    

    
      (a)                If the Share is listed for trading on the National
      Association of Securities Dealers, Inc. (NASDAQ) National Market System
      or one or more national securities exchanges, the last reported sales
      price on the NASDAQ or such principal exchange on the date in question,
      or if such Share shall not have been traded on such principal exchange
      on such date, the last reported sales price on the NASDAQ or such
      principal exchange on the first day prior thereto on which such Share
      was so traded;
    

    

    

    
      
        

        

      

      
        
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      (b)                If the Share is not listed for trading, by any means
      determined fair and reasonable by the Committee, which determination
      shall be final and binding on all parties; or
    

    
      "Incentive Stock Option" or "ISO"
      means an option to purchase Shares granted under Article 6 that is
      designated as an Incentive Stock Option and that is intended to meet the
      requirements of Code Section 422.
    

    
      "Nonstatutory Stock Option" or "NQSO"
      means an option to purchase Shares granted under Article 6 that is not
      intended to meet the requirements of Code Section 422.
    

    
      "Option" means an Incentive Stock Option or a
      Nonstatutory Stock Option, as described in Article 6.
    

    
      "Parent" means a "parent corporation," whether now or
      hereafter existing, as defined in Code Section 424(e).
    

    
      "Participant" means an Employee, Consultant or Director
      whom the Committee has selected to participate in the Plan pursuant to
      Section 5.2 and who has an Award outstanding under the Plan.
    

    
      "Performance-Based Exception" means the
      performance-based exception from the tax deductibility limitations of
      Code Section 162(m) and any regulations promulgated thereunder.
    

    
      "Performance Period" means the time period during which
      performance objectives must be met in order for a Participant to earn
      Performance Shares granted under Article 9.
    

    
      "Performance Share" means an Award denominated in
      Shares which may be earned in whole or in part based on the attainment
      of certain performance objectives specified in the Award Agreement, as
      described in Article 9.  
    

    
      "Personal Leave" means a leave of absence as described
      in Section 5.3.
    

    
      "Plan" means the PLATO Learning, Inc. 2006 Stock
      Incentive Plan, as set forth in this document, and as amended from time
      to time.
    

    
      "Prior Plans" means the following equity incentive
      plans maintained by the Company:  (i) TRO Learning, Inc. 1997 Stock
      Incentive Plan; (ii) TRO Learning, Inc. 1997 Non-Employee Directors
      Stock Option Plan; (iii) PLATO Learning, Inc. 2000 Stock Incentive Plan;
      (iv) PLATO Learning, Inc. 2000 Nonemployee Directors Stock Option Plan;
      and (v) PLATO Learning, Inc. 2002 Stock Plan, as amended and including
      its sub-plan, the PLATO Learning United Kingdom Share Option Plan.
    

    
      "Restriction Period" means the period during
      which the transfer of Shares of Restricted Stock is limited in some way
      (based on the passage of time, the achievement of performance
      objectives, or the occurrence of other events as determined by the
      Committee, in its sole discretion) or the Restricted Stock is not vested.
    

    

    

    
      
        

        

      

      
        
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      "Restricted Stock" means a contingent grant of Shares
      awarded to a Participant pursuant to Article 8.  The Shares awarded to
      the Participant will vest over the Restricted Period and according to
      the time-based or performance-based criteria, specified in the Award
      Agreement.
    

    
      "Restricted Stock Unit" or "RSU" means
      a notional account established pursuant to an Award granted to a
      Participant, as described in Article 8, that is (a) valued solely by
      reference to Shares, (b) subject to restrictions specified in the Award
      Agreement, and (c) payable only in Shares.  The RSUs awarded to the
      Participant will vest according to the time-based or performance-based
      criteria specified in the Award Agreement.
    

    
      “Retirement” means Normal Retirement or Early
      Retirement.  For purposes of this Plan, “Normal Retirement” means
      retirement from active employment with the Company and any Affiliate of
      the Company on or after age 65; or termination of employment on or after
      (a) reaching the age established by the Company as the normal retirement
      age in any employment agreement between the Participant and the Company
      or an Affiliate, or, in the absence of such an agreement (b) reaching
      age sixty-two with ten years of service with the Company or an
      Affiliate, provided the retirement is approved by the Chief Executive
      Officer of the Company, unless the Participant is an officer subject to
      Section 16 of the Exchange Act, in which case the retirement must be
      approved by the Committee.  For purposes of this Plan, “Early
      Retirement” means retirement, with consent of the Committee at the time
      of retirement, from active employment with the Company and any Affiliate
      of the Company, when a minimum of 70 is determined by totaling the age
      of the employee and the number of years of service as an active employee
      with the Company and any Affiliate.
    

    
      "Service" means the provision of services to the
      Company or its Affiliates in the capacity of (i) an Employee, (ii) a
      Director, or (iii) a Consultant.  For purposes of this Plan, the
      transfer of an Employee from the Company to an Affiliate, from an
      Affiliate to the Company or from an Affiliate to another Affiliate shall
      not be a termination of Service.  However, if the Affiliate for which an
      Employee, Director or Consultant is providing services ceases to be an
      Affiliate of the Company due to a sale, transfer or other reason, and
      the Employee, Director or Consultant ceases to perform services for the
      Company or any Affiliate, the Employee, Director or Consultant shall
      incur a termination of Service.  In the case of an Award that is subject
      to Code Section 409A, whether a termination of Service has occurred is
      determined under Section 13.2.
    

    
      "Shares" means the shares of common stock, $0.01 par
      value, of the Company, or any successor or predecessor equity interest
      in the Company.
    

    
      "Stock Appreciation Right" or "SAR"
      means an Award of the contingent right to receive Shares or cash, as
      specified in the Award Agreement, in the future, based on the value, or
      the appreciation in the value, of Shares, pursuant to the terms of
      Article 7.  
    

    
      "Subsidiary" means a "subsidiary corporation," whether
      now or hereafter existing, as defined in Code Section 424(f).
    

    

    

    
      
        

        

      

      
        
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      "Vested" means, with respect to an Award, that such
      Award has become fully or partly exercisable; provided, however, that
      notwithstanding its status as a Vested Award, an Award shall cease to be
      exercisable pursuant to (and while exercisable shall be subject to) such
      terms as are set forth herein and in the relevant Award
      Agreement.  Similarly, terms such as "Vest," "Vesting," and "Unvested"
      shall be interpreted accordingly.  
    

    
      Article 3.                         Administration
    

    
      3.1       The Committee.  The
      Plan will be administered by the Committee, or by any other committee
      appointed by the Board whose composition satisfies the "nonemployee
      director" requirements of Rule 16b-3 under the Exchange Act and the
      regulations of Rule 16b-3 under the Exchange Act, the "independent
      director" requirements of the NASDAQ marketplace rules, and the "outside
      director" provisions of Code Section 162(m), or any successor
      regulations or provisions.
    

    
      3.2       Authority of the Committee.  Except
      as limited by law and subject to the provisions of this Plan, the
      Committee will have full power to:  select Employees, Directors and
      Consultants to participate in the Plan; determine the sizes and types of
      Awards; determine the terms and conditions of Awards in a manner
      consistent with the Plan; construe and interpret the Plan and any
      agreement or instrument entered into under the Plan; establish, amend or
      waive rules and regulations for the Plan's administration; and (subject
      to the provisions of Article 16) amend the terms and conditions of any
      outstanding Award to the extent they are within the discretion of the
      Committee as provided in the Plan.  Further, the Committee will make all
      other determinations that may be necessary or advisable to administer
      the Plan.  As permitted by law and consistent with Section 3.1, the
      Committee may delegate some or all of its authority under the Plan,
      including to an officer of the Company to designate the Employees (other
      than such officer himself or herself) to receive Options and to
      determine the number of Shares subject to the Options such Employees
      will receive.
    

    
      The duties of the Committee or its delegatee shall also include, but
      shall not be limited to, making disbursements and settlements of Awards,
      creating trusts, and determining whether to defer or accelerate the
      vesting of, or the lapsing of restrictions or risk of forfeiture with
      respect to, Options, Restricted Stock and Restricted Stock Units, and
      Stock Appreciation Rights.  Subject only to compliance with the express
      provisions of the Plan, the Committee or its delegatee may act in its
      sole and absolute discretion in performing the duties specifically set
      forth in the preceding sentence and other duties under the Plan.  
    

    
      3.3       Decisions Binding.  All
      determinations and decisions made by the Committee pursuant to the
      provisions of the Plan will be final, conclusive and binding on all
      persons, including, without limitation, the Company, its Board of
      Directors, its shareholders, all Affiliates, Employees, Participants and
      their estates and beneficiaries.
    

    
      3.4       Change in Control.  In
      the event of a Change in Control, the Committee shall have the
      discretion to accelerate the vesting of Awards, eliminate any
      restrictions applicable to Awards, deem the performance measures to be
      satisfied, or take such other action as it deems appropriate, in its
      sole discretion.   With respect to any Award that is subject to the
      provisions of Code Section 409A, the Committee’s discretion hereunder
      shall be limited to the extent that its exercise would not cause such
      Award to fail to comply with the requirements of Code Section 409A.
    

    

    

    
      
        

        

      

      
        
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      Article 4.                        Shares Subject to the Plan and
      Maximum Awards
    

    
      4.1       Number of Shares Available for Awards.  
    

    
      (a)       Subject to adjustment as provided below and in Sections 4.2
      and 4.3, the maximum number of Shares that may be issued or transferred
      to Participants under the Plan will be 1,794,904 Shares, which
      represents the number of Shares available for the grant of future awards
      under the Company's Prior Plans as of the Effective Date.  No additional
      awards will be made under any Prior Plan on or after the Effective
      Date.  Shares to be issued pursuant to Awards may be authorized, but
      unissued, or reacquired Common Stock.  Notwithstanding anything to the
      contrary contained herein: (i) all Shares covered by a SAR or Option
      shall be considered issued or transferred pursuant to the Plan to the
      extent it is exercised and without regard to whether Shares are actually
      issued to the Participant upon such exercise; and (ii) the aggregate
      plan limit above shall not be increased by Shares tendered in payment of
      an Option Exercise Price, Shares withheld by the company to satisfy a
      tax withholding obligation, or Shares repurchased by the Company with
      Exercise Price proceeds from the Participant.
    

    
      (b)       The total number of Shares that may be issued or transferred
      in connection with the Awards of Restricted Stock, Restricted Stock
      Units, Performance Shares or other full value Stock Awards shall not
      exceed 750,000.  The maximum number of Shares that may be issued or
      transferred to Participants as Incentive Stock Options is 100,000.  The
      maximum number of Shares and Share equivalent units that may be granted
      during any calendar year to any one Participant under all types of
      Awards available under the Plan is 250,000 (on an aggregate
      basis); provided, however, that (i) the foregoing limit will
      apply whether the Awards are paid in Shares or in cash; and (ii) the
      Participant in connection with his or her first year of Service may be
      granted an additional Award covering not more than an additional 200,000
      Shares, which shall not count against the limits set forth initially
      in this sentence.  All limits described in this Section 4.1(b) are
      subject to adjustment as provided in Section 4.3.
    

    
      4.2       Lapsed Awards.  Any
      Shares subject to an Award under the Plan or the Prior Plan that, on or
      after the Effective Date, are forfeited, canceled, settled or otherwise
      terminated without a distribution of Shares to a Participant will revert
      to the Plan and thereafter be deemed to be available again for Award.
    

    
      4.3       Adjustments in Authorized Shares.
      If the Shares, as currently constituted, are changed into or exchanged
      for a different number or kind of shares of stock or other securities of
      the Company or of another corporation (whether because of a merger,
      consolidation, recapitalization, reclassification, split, reverse split,
      combination of shares, or otherwise, but not including a Public Offering
      or other capital infusion from any source) or if the number of Shares is
      increased through the payment of a stock dividend, then the Committee
      shall substitute for or add to each Share that may become subject to an
      Award the number and kind of shares of stock or other securities into
      which each outstanding Share was changed, for which each such Share was
      exchanged, or to which each such Share is entitled, as the case may be.
    

    

    

    
      
        

        

      

      
        
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      Article 5.                        Eligibility and Participation
    

    
      5.1       Eligibility.  An
      Employee shall be deemed eligible for participation upon such Employee's
      first day of employment.  Additionally, non-Employee Directors and
      Consultants and/or their representatives who are chosen from time to
      time at the sole discretion of the Company to receive one or more Awards
      are also eligible to participate in the Plan.
    

    
      5.2       Actual Participation.  Subject
      to the provisions of the Plan, the Committee will, from time to time,
      select those Employees, non-Employee Directors and Consultants to whom
      Awards will be granted, and will determine the nature and amount of each
      Award.
    

    
      5.3       Personal Leave Status.  
    

    
      (a)       Notwithstanding anything in the Plan to the contrary, the
      Committee, in its sole discretion, reserves the right to designate a
      Participant's leave of absence as "Personal Leave."  No Awards shall be
      granted to a Participant during Personal Leave.  A Participant's
      Unvested Awards shall remain Unvested during such Personal Leave and the
      time spent on such Personal Leave shall not count towards the Vesting of
      such Awards.  A Participant's Vested Awards that may be exercised
      pursuant to Section 6.6 hereof shall remain exercisable upon
      commencement of Personal Leave until the earlier of (i) a period of one
      year from the date of commencement of such Personal Leave; or (ii) the
      remaining exercise period of such Awards after which time the Option is
      forfeited unless the Participant has returned from Personal
      Leave.  Notwithstanding the foregoing, if a Participant returns to the
      Company from a Personal Leave of less than one year and the
      Participant's Awards have not expired, the Awards shall remain
      exercisable and additional vesting will resume for the remaining
      exercise period as provided at the time of grant and subject to the
      conditions contained herein.
    

    
      (b)       The Committee, in its sole discretion, may waive or alter the
      provisions of this Section 5.3 with respect to any Participant.  The
      waiver or alteration of such provisions with respect to any Participant
      shall have no effect on any other Participant.
    

    
      Article 6.                        Options
    

    
      6.1       Grant of Options.  Subject
      to the terms and provisions of the Plan, Options may be granted to
      Employees, non-Employee Directors and Consultants in the number, and
      upon the terms, and at any time and from time to time, as determined by
      the Committee.
    

    
      6.2       Award Agreement.  Each
      Option grant will be evidenced by an Award Agreement that specifies the
      Exercise Price, the duration of the Option, the number of Shares to
      which the Option pertains, the manner, time and rate of exercise or
      Vesting of the Option, and such other provisions as the Committee
      determines.  The Award Agreement will also specify whether the Option is
      intended to be an ISO or an NQSO.
    

    

    

    
      
        

        

      

      
        
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      6.3       Exercise Price.  The
      Exercise Price for each Share subject to an Option will be determined by
      the Committee; provided, however, that the exercise price of any Option
      shall in all cases be equal to or greater than the Fair Market Value of
      a Share on the date the Option is granted.  
    

    
      6.4       Duration of Options.  Each
      Option will expire at the time determined by the Committee at the time
      of grant, but no later than the tenth anniversary of the date of its
      grant.
    

    
      6.5       Dividend Equivalents.  The
      Committee may, but will not be required to, provide under an agreement
      for payments in connection with Options that are equivalent to dividends
      declared and paid on the Shares underlying the Options prior to the date
      of exercise.  Such dividend equivalent agreement shall be separate and
      apart from the Award Agreement and shall provide that, to the extent the
      related Option Award is intended to avoid the application of Code
      Section 409A, the right to the dividend equivalent payment shall not be
      contingent, directly or indirectly, upon the exercise of the related
      Option.
    

    
      6.6       Exercise of Options.  Options
      will be exercisable at such times and be subject to such restrictions
      and conditions as the Committee in each instance approves, which need
      not be the same for each Award or for each Participant.  
    

    
      6.7       Payment.  The holder
      of an Option may exercise the Option only by delivering a written
      notice, or if permitted by the Committee, in its discretion and in
      accordance with procedures adopted by it, by delivering an electronic
      notice of exercise to the Company setting forth the number of Shares as
      to which the Option is to be exercised, together with full payment of
      the Exercise Price for the Shares and any withholding tax relating to
      the exercise of the Option.
    

    
      The Exercise Price and any related withholding taxes (as provided in
      Article 17) will be payable to the Company in full either:  (a) in cash,
      or its equivalent, in United States dollars; (b) if permitted in the
      governing Award Agreement, by tendering Shares owned by the Participant
      duly endorsed for transfer to the Company, or Shares issuable to the
      Participant upon exercise of the Option; or (c) any combination of (a)
      and (b); or (d) by any other means the Committee determines to be
      consistent with the Plan's purposes and applicable law.  The Committee,
      in its discretion, may require that no Shares may be tendered until such
      Shares have been owned by the Participant for at least six months (or
      such other period determined by the Committee).
    

    
      6.8       Special Provisions for ISOs.  Notwithstanding
      any other provision of this Article 6, the following special provisions
      shall apply to any Award of Incentive Stock Options:
    

    
      (a)       The Committee may award Incentive Stock Options only to
      Employees.
    

    
      (b)       An Option will not constitute an Incentive Stock Option under
      this Plan to the extent it would cause the aggregate Fair Market Value
      of Shares with respect to which Incentive Stock Options are exercisable
      by the Participant for the first time during a calendar year (under all
      plans of the Company and its Affiliates) to exceed $100,000.  Such Fair
      Market Value shall be determined as of the date on which each such
      Incentive Stock Option is granted.
    

    

    

    
      
        

        

      

      
        
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      (c)       If the Employee to whom the Incentive Stock Option is granted
      owns stock possessing more than ten (10%) percent of the total combined
      voting power of all classes of the Company or any Affiliate, then:  (i)
      the Exercise Price for each Share subject to an Option will be at least
      one hundred ten percent (110%) of the Fair Market Value of the Share on
      the Effective Date of the Award; and (ii) the Option will expire upon
      the earlier of (A) the time specified by the Committee in the Award
      Agreement, or (B) the fifth anniversary of the date of grant.
    

    
      (d)       No Option that is intended to be an Incentive Stock Option may
      be granted under the Plan until the Company's shareholders approve the
      Plan.  If such shareholder approval is not obtained within 12 months
      after the Board's adoption of the Plan, then no Options may be granted
      under the Plan that are intended to be Incentive Stock Options.  No
      Option that is intended to be an Incentive Stock Option may be granted
      under the Plan after the tenth anniversary of the date the Company
      adopted the Plan or the Company's shareholders approved the Plan,
      whichever is earlier.
    

    
      (e)       An Incentive Stock Option must be exercised, if at all, by the
      earliest of (i) the time specified in the Award Agreement, (ii) three
      months after the Participant's termination of Service for a reason other
      than death or Disability, or (iii) twelve months after the Participant's
      termination of Service for death or Disability.
    

    
      (f)       An Option that is intended but fails to be an ISO shall be
      treated as an NQSO for purposes of the Plan.
    

    
          6.9     Termination of Service.  Unless
      the applicable Award Agreement provides otherwise and subject to Section
      6.8(e):
    

    
      (a)                If a Participant’s Service with the Company and any
      Affiliate terminates by reason of death, any Option may thereafter be
      exercised, to the extent then exercisable, by the legal representative
      of the estate or by the legatee of the Participant under the will of the
      Participant, but may not be exercised after twelve months from the date
      of such death or the expiration of the stated term of the Option,
      whichever period is shorter. In the event of termination of Service by
      reason of death, if, pursuant to its terms, any Incentive Stock Option
      is exercised after the expiration of the exercise periods that apply for
      purposes of Code Section 422, the Option will thereafter be treated as a
      Nonstatutory Stock Option. Options that are not exercisable at the time
      of Participant’s death shall expire at the close of business on the date
      of death.
    

    
      (b)                If a Participant’s Service with the Company and any
      Affiliate terminates by reason of Disability, any Option held by such
      Participant may thereafter be exercised, to the extent it was
      exercisable at the time of termination due to Disability, but may not be
      exercised after twelve months from the date of such termination of
      Service or the expiration of the stated term of the Option, whichever
      period is the shorter. In the event of termination of Service by reason
      of Disability, if, pursuant to its terms, any Incentive Stock Option is
      exercised after the expiration of the exercise periods that apply for
      purposes of Code Section 422, the Option will thereafter be treated as a
      Nonstatutory Stock Option. Options that are not exercisable at the time
      of such termination of Service shall expire at the close of business on
      the date of such termination.
    

    

    

    
      
        

        

      

      
        
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      (c)                If a Participant’s Service with the Company and any
      Affiliate terminates by reason of Retirement, any Option held by such
      Participant may thereafter be exercised, to the extent it was
      exercisable at the time of termination due to Retirement, but may not be
      exercised after thirty-six months from the date of such termination of
      Service or the expiration of the stated term of the Option, whichever
      period is the shorter. In the event of termination of Service by reason
      of Retirement, if, pursuant to its terms, any Incentive Stock Option is
      exercised after the expiration of the exercise periods that apply for
      purposes of Code Section 422, the Option will thereafter be treated as a
      Nonstatutory Stock Option.  Options that are not exercisable at the time
      of such termination of Service by reason of Retirement shall expire at
      the close of business on the date of such termination.
    

    
      (d)                If a Participant’s Service terminates for any reason
      other than Death, Disability or Retirement, any Option held by such
      Participant may thereafter be exercised to the extent it was exercisable
      at the time of such termination, but may not be exercised after 90 days
      after such termination, or the expiration of the stated term of the
      Option, whichever period is the shorter. In the event of termination of
      Service by reason other than Death, Disability or Retirement and if
      pursuant to its terms any Incentive Stock Option is exercised after the
      expiration of the exercise periods that apply for purposes of Code
      Section 422, the Option will thereafter be treated as a Nonstatutory
      Stock Option. Options that are not exercisable at the time of such
      termination of Service shall expire at the close of business on the date
      of such termination.  In the event a Participant’s Service with the
      Company is terminated for Cause, all unexercised Options granted to such
      Participant shall immediately terminate.
    

    
      Each Option Award Agreement will set forth the extent to which the
      Participant has the right to exercise the Option after his or her
      termination of Service.  These terms will be determined by the Committee
      in its sole discretion, need not be uniform among all Options, and may
      reflect, among other things, distinctions based on the reasons for
      termination of Service.  However, notwithstanding any other provision
      herein to the contrary, no additional Options will Vest after a
      Participant's Service ceases or has terminated for any reason, whether
      such cessation or termination is lawful or unlawful.
    

    
      6.10      Maximum Value Options.  The
      Committee may establish, in an Option Award Agreement, a maximum
      potential appreciation that may be delivered with respect to the
      Participant’s Options.  In the event a Participant exercises his or her
      Options when the Fair Market Value of the Shares exceeds the maximum
      potential appreciation threshold set forth in the Award Agreement, the
      number of Shares delivered to the Participant upon exercise will be
      reduced as necessary to effect the maximum value restriction.  
    

    

    

    
      
        

        

      

      
        
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      Article 7.             Stock Appreciation Rights
    

    
      7.1       Grant of SARs.  Subject
      to the terms and conditions of the Plan, SARs may be granted to
      Participants at any time and from time to time, as determined by the
      Committee.  Within the limits of Article 4, the Committee will have sole
      discretion to determine the number of SARs granted to each Participant
      and, consistent with the provisions of the Plan, to determine the terms
      and conditions pertaining to SARs.
    

    
      The grant price for any SAR shall be determined by the Committee, but
      shall in all cases be equal to or greater than the Fair Market Value of
      a Share on the date the SAR is granted.  .
    

    
      7.2       Exercise of SARs.  SARs
      may be exercised upon whatever terms and conditions the Committee, in
      its sole discretion, imposes.
    

    
      7.3       Award Agreement.  Each
      SAR grant will be evidenced by an Award Agreement that specifies the
      grant price, whether settlement of the SAR will be made in cash or in
      Shares, the term of the SAR and such other provisions as the Committee
      determines.
    

    
      7.4       Term of SAR.  The
      term of a SAR will be determined by the Committee, in its sole
      discretion, but may not exceed ten years.
    

    
      7.5       Payment of SAR Amount.  Upon
      exercise of a SAR with respect to a Share, a Participant will be
      entitled to receive an amount equal to the excess, if any, of the Fair
      Market Value of a Share on the date of exercise of the SAR over the
      grant price specified in the Award Agreement.  At the discretion of the
      Committee, the payment that may become due upon SAR exercise may be made
      in cash, in Shares or in any combination of the two.
    

    
      7.6       Termination of Service.  Each
      SAR Award Agreement will set forth the extent to which the Participant
      has the right to exercise the SAR after his or her termination of
      Service.  These terms will be determined by the Committee, in its sole
      discretion, need not be uniform among all SARs issued under the Plan,
      and may reflect, among other things, distinctions based on the reasons
      for termination of Service.
    

    
      Article 8.             Restricted Stock and Restricted Stock Units
    

    
      8.1       Grant of Restricted Stock or Restricted Stock Units.  Subject
      to the terms and provisions of the Plan, the Committee may, at any time
      and from time to time, grant Restricted Stock or Restricted Stock Units
      to Participants in such amounts as it determines.
    

    
      8.2       Award Agreement.  Each
      grant of Restricted Stock or Restricted Stock Units will be evidenced by
      an Award Agreement that specifies the Restriction Periods, the number of
      Shares or Share equivalent units granted, and such other provisions as
      the Committee determines.
    

    
      8.3       Other Restrictions.  Subject
      to Article 12, the Committee may impose such other conditions or
      restrictions on any Restricted Stock or Restricted Stock Units as it
      deems advisable, including, without limitation, restrictions based upon
      the achievement of specific performance objectives (Company-wide,
      business unit, individual, or any combination of them), time-based
      restrictions on vesting, and restrictions under applicable federal or
      state securities laws.  The Committee may provide that restrictions
      established under this Section 8.4 as to any given Award will lapse all
      at once or in installments.
    

    

    

    
      
        

        

      

      
        
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      The Company will retain the certificates representing Shares of
      Restricted Stock in its possession until all conditions and restrictions
      applicable to the Shares have been satisfied.
    

    
      8.4       Payment of Awards.  Except
      as otherwise provided in this Article 8, Shares covered by each
      Restricted Stock grant will become freely transferable by the
      Participant after the last day of the applicable Restriction Period, and
      Share equivalent units covered by a Restricted Stock Unit Award will be
      paid out in Shares to the Participant as soon as administratively
      practicable following the last day of the applicable Restriction Period,
      or on the date provided in the Award Agreement, but in no event later
      than 2-1/2 months following the end of the calendar year or the
      Company’s tax year containing the last day of the Restriction Period.
    

    
      8.5       Voting Rights.  During
      the Restriction Period, Participants holding Shares of Restricted Stock
      may exercise full voting rights with respect to those Shares.
    

    
      8.6       Dividends and Other Distributions.  During
      the Restriction Period, Participants awarded Shares of Restricted Stock
      hereunder will be credited with regular cash dividends paid on those
      Shares.  Dividends on vested Shares shall be paid at the same time as
      dividends are paid to other Company shareholders.  Dividends on unvested
      Shares shall be subject to the same vesting conditions and risk of
      forfeiture as the underlying Shares, and shall be paid to the
      Participant no later than 2-1/2 months following the end of the calendar
      year or the Company’s tax year in which the underlying Shares vest.
    

    
      An Award Agreement may provide that, during the Restriction Period,
      Participants awarded Restricted Stock Units shall be credited with
      dividend equivalents deemed reinvested in additional RSUs which are
      subject to the same vesting conditions as the underlying RSUs.  Such
      dividend equivalents shall be subject to the same vesting conditions and
      risk of forfeiture as the underlying Restricted Stock Units, and will be
      paid to the Participant as and when the underlying Restricted Stock
      Units are paid.
    

    
      8.7       Termination of Service.  Each
      Award Agreement will set forth the extent to which vesting will be
      accelerated in connection with a termination of Service.  These terms
      will be determined by the Committee in its sole discretion, need not be
      uniform among all Awards of Restricted Stock, and may reflect, among
      other things, distinctions based on the reasons for termination of
      Service.
    

    
      Article 9.                        Performance Shares
    

    
      9.1       Grant of Performance Shares.  Subject
      to the terms of the Plan, Performance Shares may be granted to
      Participants in such amounts and upon such terms, and at any time and
      from time to time, as the Committee determines.  The Award of
      Performance Shares may be based on the Participant's attainment of
      performance objectives, or the vesting of an Award of Performance Shares
      may be based on the Participant's attainment of performance objectives,
      each as described in this Article 9.
    

    
      9.2       Value of Performance Shares.  Each
      Performance Share will have an initial value equal to the Fair Market
      Value of a Share on the date of grant.  The Committee will set
      performance objectives in its discretion which, depending on the extent
      to which they are met, will determine the number or value (or both) of
      Performance Shares that will be paid out to the Participant.  For
      purposes of this Article 9, the time period during which the performance
      objectives must be met will be called a "Performance Period" and will be
      set by the Committee in its discretion.
    

    

    

    
      
        

        

      

      
        
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      9.3       Earning of Performance Shares.  Subject
      to the terms of this Plan, after the applicable Performance Period has
      ended and the Performance Shares have vested, the holder of Performance
      Shares will be entitled to receive payout on the number and value of
      Performance Shares earned by the Participant over the Performance
      Period, to be determined as a function of the extent to which the
      corresponding performance objectives have been achieved.
    

    
      9.4       Award Agreement.  Each
      grant of Performance Shares will be evidenced by an Award Agreement
      specifying the material terms and conditions of the Award (including the
      form of payment of earned Performance Shares), and such other provisions
      as the Committee determines.
    

    
      9.5       Form and Timing of Payment of Performance Shares.  Earned
      and vested Performance Shares will be paid out no later than two and
      one-half (2-1/2) months following the end of the calendar year or the
      Company’s tax year in which the Performance Shares are earned and
      vested.  The Committee will pay earned and vested Performance Shares in
      the form of cash, in Shares, or in a combination of cash and Shares, as
      specified in the Award Agreement.  Performance Shares may be paid
      subject to any restrictions deemed appropriate by the Committee.
    

    
      9.6       Termination of Service.  Each
      Award Agreement will set forth the extent to which vesting will be
      accelerated in connection with a termination of Service.  These terms
      will be determined by the Committee, in its sole discretion, need not be
      uniform among all Awards of Performance Shares, and may reflect, among
      other things, distinctions based on the reasons for termination of
      Service.
    

    
      Article 10.                       Other Stock Awards
    

    
      Subject to the terms of the Plan, other Stock Awards may be granted to
      Participants in such amounts and upon such terms, and at any time and
      from time to time, as the Committee determines.  
    

    
      Article 11.                       Performance Measures
    

    
      Unless and until the Committee proposes and the Company's shareholders
      approve a change in the general performance measures set forth in this
      Article 11, the performance measure(s) to be used for purposes of Awards
      designed to qualify for the Performance-Based Exception will be chosen
      from among the following alternatives (or in any combination of such
      alternatives):
    

    
      (a)       net earnings;
    

    
      (b)      operating earnings or income;
    

    
      (c)       earnings growth;
    

    

    

    
      
        

        

      

      
        
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      (d)       net income (absolute or competitive growth rates comparative);
    

    
      (e)       net income applicable to Shares;
    

    
      (f)       cash flow, including operating cash flow, free cash flow,
      discounted cash flow return on investment, and cash flow in excess of
      cost of capital;
    

    
      (g)      earnings per Share;
    

    
      (h)       return on shareholders' equity (absolute or peer-group
      comparative);
    

    
      (i)       stock price (absolute or peer-group comparative);
    

    
      (j)       absolute and/or relative return on common shareholders' equity;
    

    
      (k)       absolute and/or relative return on capital;
    

    
      (l)       absolute and/or relative return on assets;
    

    
      (m)      economic value added (income in excess of cost of capital);
    

    
      (n)       customer satisfaction;
    

    
      (o)       expense reduction;
    

    
      (p)       ratio of operating expenses to operating revenues;
    

    
      (q)      gross revenue or revenue by pre-defined business segment
      (absolute or competitive growth rates comparative);
    

    
      (r)       revenue backlog; and
    

    
      (s)       margins realized on delivered services.
    

    
      The Committee will have the discretion to adjust targets set for
      preestablished performance objectives; however, Awards designed to
      qualify for the Performance-Based Exception may not be adjusted upward,
      except to the extent permitted under Code Section 162(m), to reflect
      accounting changes or other events.
    

    
      If Code Section 162(m) or other applicable tax or securities laws change
      to allow the Committee discretion to change the types of performance
      measures without obtaining shareholder approval, the Committee will have
      sole discretion to make such changes without obtaining shareholder
      approval.  In addition, if the Committee determines it is advisable to
      grant Awards that will not qualify for the Performance-Based Exception,
      the Committee may grant Awards that do not so qualify.
    

    
      Article 12.           Beneficiary Designation
    

    
      Each Participant may, from time to time, name any beneficiary or
      beneficiaries (who may be named contingently or successively) to whom
      any benefit under the Plan is to be paid in case the Participant should
      die before receiving any or all of his or her Plan benefits.  Each
      beneficiary designation will revoke all prior designations by the same
      Participant, must be in a form prescribed by the Committee, and must be
      made during the Participant's lifetime.  If the Participant's designated
      beneficiary predeceases the Participant or no beneficiary has been
      designated, benefits remaining unpaid at the Participant's death will be
      paid to the Participant's estate or other entity described in the
      Participant's Award Agreement.
    

    

    

    
      
        

        

      

      
        
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      Article 13.       Deferrals and Code Section 409A  
    

    
                13.1      Deferrals.  The
      Committee may permit or require a Participant to defer receipt of cash
      or Shares that would otherwise be due to him or her under the Plan upon
      the vesting or settlement of any Award other than an Option in
      accordance with any plan adopted for that purpose by the Company or such
      rules and procedures as the Committee may establish.  Any such plan,
      rules or procedures shall comply with the requirements of Code Section
      409A, including those with respect to the time when a deferral election
      may be made, the period of the deferral and the events that would result
      in the payment of the deferred amount.
    

    
                13.2      Termination of Service.  Nothwithstanding
      anything to the contrary in this Plan, if any Award hereunder is subject
      to Code Section 409A, in the case of any amount payable under such Award
      upon a termination of Service, a termination of Service will be deemed
      to have occurred at such time as the Participant has experienced a
      “separation from service” as such term is defined for purposes of Code
      Section 409A.
    

    
                13.3      Timing of Payment to a Specified Employee.  If
      any amount shall be payable with respect to any Award hereunder as a
      result of a Participant’s “separation from service” at such time as the
      Participant is a “specified employee” and such amount is subject to the
      provisions of Code Section 409A, then notwithstanding any other
      provision of this Plan, no payment shall be made, except as permitted
      under Code Section 409A, prior to the first day of the seventh (7th)
      calendar month beginning after the Participant’s separation from service
      (or the date of his or her earlier death). The Company may adopt a
      specified employee policy that will apply to identify the specified
      employees for all deferred compensation plans subject to Code Section
      409A; otherwise, specified employees will be identified using the
      default standards contained in the regulations under Code Section 409A.
    

    
      Article 14.        Rights of Participants
    

    
                14.1       Employment and Service.  Nothing
      in the Plan will confer upon any Participant any right to continue in
      the employ or Service of the Company or any Affiliate, or interfere with
      or limit in any way the right of the Company or any Affiliate to
      terminate any Participant's employment or Service at any time.
    

    
                14.2       Participation.  No
      Employee, Consultant or Director will have the right to receive an Award
      under this Plan, or, having received any Award, to receive a future
      Award.
    

    
      Article 15         Amendment, Modification and Termination
    

    
                15.1       Amendment, Modification and Termination.  The
      Committee may at any time and from time to time, alter, amend, modify or
      terminate the Plan in whole or in part.  The Committee will not,
      however, increase the number of Shares that may be issued or transferred
      to Participants under the Plan, as described in the first sentence of
      Section 4.1 (and subject to adjustment as provided in Sections 4.2 and
      4.3).
    

    
      Subject to the terms and conditions of the Plan, the Committee may
      modify, extend or renew outstanding Awards under the Plan, or accept the
      surrender of outstanding Awards (to the extent not already exercised)
      and grant new Awards in substitution of them (to the extent not already
      exercised).  The Committee will not, however, modify any outstanding
      Option so as to specify a lower Exercise Price, without the approval of
      the Company's shareholders.  Notwithstanding the foregoing, no
      modification of an Award will materially alter or impair any rights or
      obligations under any Award already granted under the Plan, without the
      prior written consent of the Participant.
    

    

    

    
      
        

        

      

      
        
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      15.2 Adjustment of Awards Upon the Occurrence of Certain Events.
    

    
      (a)       Equity Restructurings.
      If the outstanding Shares are increased, decreased, changed into or
      exchanged for a different number or kind of shares or securities of the
      Company through a non-reciprocal transaction between the Company and its
      stockholders that causes the per Share fair value underlying an Award to
      change, such as stock dividend, stock split, spin-off, rights offering,
      recapitalization through a large, non-recurring cash dividend, or other
      similar transaction, a proportionate adjustment shall be made to the
      number or kind of shares or securities allocated to Awards that have
      been granted prior to any such change. Any such adjustment in an
      outstanding Stock Option (or Stock Appreciation Right) shall be made
      without change in the aggregate purchase price applicable to the
      unexercised portion of such Stock Option (or Stock Appreciation Right)
      but with a corresponding adjustment in the Exercise Price for each Share
      or other unit of any security covered by such Stock Option (or Stock
      Appreciation Right).
    

    
      (b)       Reciprocal Transactions.
      The Committee may, but shall not be obligated to, make an appropriate
      and proportionate adjustment to an Award or to the Exercise Price of any
      outstanding Award, and/or grant an additional Award to the holder of any
      outstanding Award, to compensate for the diminution in the intrinsic
      value of the Shares resulting from any reciprocal transaction.
    

    
      (c)       Certain Unusual or
      Nonrecurring Events. In recognition of unusual or nonrecurring
      events affecting the Company or its financial statements, or in
      recognition of changes in applicable laws, regulations, or accounting
      principles, and, whenever the Committee determines that adjustments are
      appropriate in order to prevent dilution or enlargement of the benefits
      or potential benefits intended to be made available under the Plan, the
      Committee may, using reasonable care, make adjustments in the terms and
      conditions of, and the criteria included in, Awards. In case of an Award
      designed to qualify for the Performance-Based Exception (as defined in
      Code Section 162(m)), the Committee will take care not to make an
      adjustment that would disqualify the Award.
    

    
      (d)       Fractional Shares and
      Notice. Fractional Shares resulting from any adjustment in Awards
      pursuant to this Section 15.2 may be settled in cash or otherwise as the
      Committee determines. The Company will give notice of any adjustment to
      each Participant who holds an Award that has been adjusted and the
      adjustment (whether or not such notice is given) will be effective and
      binding for all Plan purposes.
    

    

    

    
      
        

        

      

      
        
          - 18 -
        

        
          

        

      

      
        

        

      

    

    

    

    
      15.3      Awards Previously Granted.  No
      termination, amendment or modification of the Plan will adversely affect
      in any material way any Award already granted, without the written
      consent of the Participant who holds the Award.
    

    
      15.4      Compliance with Code Section 162(m).  Awards
      will comply with the requirements of Code Section 162(m), if the
      Committee determines that such compliance is desired with respect to an
      Award available for grant under the Plan.  In addition, if changes are
      made to Code Section 162(m) to permit greater flexibility as to any
      Award available under the Plan, the Committee may, subject to this
      Article 15, make any adjustments it deems appropriate.
    

    
      Article 16.                        Nontransferability of Awards.  
    

    
      Except as otherwise provided in a Participant's Award Agreement, no
      Option, SAR, Performance Share, Restricted Stock, or Restricted Stock
      Unit granted under the Plan may be sold, transferred, pledged, assigned,
      or otherwise alienated or hypothecated, other than by will or by the
      laws of descent and distribution, or pursuant to a domestic relations
      order (as defined in Code Section 414(p)).  All rights with respect to
      Performance Shares, Restricted Stock, Restricted Stock Units and other
      Stock Awards will be available during the Participant's lifetime only to
      the Participant or his or her guardian or legal representative.  Except
      as otherwise provided in a Participant's Award Agreement or in paragraph
      (a) below, all Options and SARs will be exercisable during the
      Participant's lifetime only by the Participant or his or her guardian or
      legal representative.  The Participant's beneficiary may exercise the
      Participant's rights to the extent they are exercisable under the Plan
      following the Participant's death.  The Committee may, in its
      discretion, require a Participant's guardian, legal representative or
      beneficiary to supply it with the evidence the Committee deems necessary
      to establish the authority of the guardian, legal representative or
      beneficiary to act on behalf of the Participant.
    

    
      (a)       Notwithstanding the foregoing, with respect to any
      Nonstatutory Stock Options, each Participant shall be permitted at all
      times to transfer any or all of the Options, or, in the event the
      Options have not yet been issued to the Participant, the Company shall
      be permitted to issue any or all of the Options, to certain trusts
      designated by the Participant as long as such transfer or issuance is
      made as a gift (i.e., a transfer for no consideration, with
      donative intent), whether during lifetime or to take effect upon (or as
      a consequence of) his or her death, to his or her spouse or
      children.  Gifts in trust shall be deemed gifts to every beneficiary and
      contingent beneficiary, and so shall not be permitted under this
      paragraph (a) if the beneficiaries or contingent beneficiaries shall
      include anyone other than such spouse or children.  Transfers to a
      spouse or child for consideration, regardless of the amount, shall not
      be permitted under this Section.
    

    
      (b)       Any Options issued or transferred under this Article 16 shall
      be subject to all terms and conditions contained in the Plan and the
      applicable Award Agreement.  If the Committee makes an Option
      transferable, such Option shall contain such additional terms and
      conditions, as the Committee deems appropriate.
    

    

    

    
      
        

        

      

      
        
          - 19 -
        

        
          

        

      

      
        

        

      

    

    

    

    
      Article 17.         Withholding
    

    
      17.1      Tax Withholding.  The
      Company will have the power and the right to deduct or withhold, or
      require a Participant to remit to the Company, the minimum amount
      necessary to satisfy federal, state, and local taxes, domestic or
      foreign, required by law or regulation to be withheld with respect to
      any taxable event arising under this Plan.
    

    
      17.2      Share Withholding.  With
      respect to withholding required upon the exercise of Options or SARs,
      upon the lapse of restrictions on Restricted Stock, or upon any other
      taxable event arising as a result of Awards granted hereunder, the
      Company may satisfy the minimum withholding requirement for supplemental
      wages, in whole or in part, by withholding Shares having a Fair Market
      Value (determined on the date the Participant recognizes taxable income
      on the Award) equal to the minimum withholding tax required to be
      collected on the transaction.  The Participant may elect, subject to the
      approval of the Committee, to deliver the necessary funds to satisfy the
      withholding obligation to the Company, in which case there will be no
      reduction in the Shares otherwise distributable to the Participant.
    

    
      Article 18.         Indemnification
    

    
      Each person who is or has been a member of the Committee or the Board,
      and any officer or Employee to whom the Committee has delegated
      authority under Section 3.1 or 3.2 of the Plan, will be indemnified and
      held harmless by the Company from and against any loss, cost, liability,
      or expense that may be imposed upon or reasonably incurred by him or her
      in connection with or as a result of any claim, action, suit or
      proceeding to which he or she may be a party or in which he or she may
      be involved by reason of any action taken, or failure to act, under the
      Plan.  Each such person will also be indemnified and held harmless by
      the Company from and against any and all amounts paid by him or her in a
      settlement approved by the Company, or paid by him or her in
      satisfaction of any judgment, of or in a claim, action, suit or
      proceeding against him or her and described in the previous sentence, so
      long as he or she gives the Company an opportunity, at its own expense,
      to handle and defend the claim, action, suit or proceeding before he or
      she undertakes to handle and defend it.  The foregoing right of
      indemnification will not be exclusive of any other rights of
      indemnification to which a person who is or has been a member of the
      Committee or the Board may be entitled under the Company's Articles of
      Incorporation or By-Laws, as a matter of law, or otherwise, or any power
      that the Company may have to indemnify him or her or hold him or her
      harmless.
    

    
      Article 19.         Successors
    

    
      All obligations of the Company under the Plan or any Award Agreement
      will be binding on any successor to the Company, whether the existence
      of the successor results from a direct or indirect purchase of all or
      substantially all of the business or assets of the Company or both, or a
      merger, consolidation, or otherwise.
    

    
      Article 20.         Breach of Restrictive Covenants
    

    
      An Award Agreement may provide that, notwithstanding any other provision
      of this Plan to the contrary, if the Participant breaches any
      competition, nonsolicitation or nondisclosure provisions contained in
      the Award Agreement, whether during or after termination of Service, the
      Participant will forfeit:
    

    

    

    
      
        

        

      

      
        
          - 20 -
        

        
          

        

      

      
        

        

      

    

    

    

    
      (a)       any and all Awards granted or transferred to him or her under
      the Plan, including Awards that have become Vested; and
    

    
      (b)       the profit the Participant has realized on the exercise of any
      Awards, which is the difference between the Exercise Price of the Awards
      and the applicable Fair Market Value of the Shares (the Participant may
      be required to repay such difference to the Company).
    

    
      Article 21.           Legal Construction
    

    
      21.1      Number.  Except where
      otherwise indicated by the context, any plural term used in this Plan
      includes the singular and a singular term includes the plural.
    

    
      21.2      Severability.  If any
      provision of the Plan is held illegal or invalid for any reason, the
      illegality or invalidity will not affect the remaining parts of the
      Plan, and the Plan will be construed and enforced as if the illegal or
      invalid provision had not been included.
    

    
      21.3      Requirements of Law.  The
      granting of Awards and the issuance of Share or cash payouts under the
      Plan will be subject to all applicable laws, rules, and regulations, and
      to any approvals by governmental agencies or national securities
      exchanges as may be required.
    

    
      21.4      Securities Law Compliance.  As
      to any individual who is, on the relevant date, an officer, director or
      ten percent beneficial owner of any class of the Company's equity
      securities that is registered pursuant to Section 12 of the Exchange
      Act, all as defined under Section 16 of the Exchange Act, transactions
      under this Plan are intended to comply with all applicable conditions of
      Rule 16b-3 under the Exchange Act, or any successor rule.  To the extent
      any provision of the Plan or action by the Committee fails to so comply,
      it will be deemed null and void, to the extent permitted by law and
      deemed advisable by the Committee.
    

    
      If at any time the Committee determines that exercising an Option or SAR
      or issuing Shares pursuant to an Award would violate applicable
      securities laws, the Option or SAR will not be exercisable, and the
      Company will not be required to issue Shares.  The Company may require a
      Participant to make written representations it deems necessary or
      desirable to comply with applicable securities laws.  No person who
      acquires Shares under the Plan may sell the Shares, unless he or she
      makes the offer and sale pursuant to an effective registration statement
      under the Exchange Act, which is current and includes the Shares to be
      sold, or an exemption from the registration requirements of the Exchange
      Act.
    

    
      21.5      Awards to Foreign Nationals and Employees Outside the
      United States.  To the extent the Committee deems it necessary,
      appropriate or desirable to comply with foreign law or practice and to
      further the purposes of this Plan, the Committee may, without amending
      the Plan, (i) establish rules applicable to Awards granted to
      Participants who are foreign nationals or are employed outside the
      United States, or both, including rules that differ from those set forth
      in this Plan, and (ii) grant Awards to such Participants in accordance
      with those rules.
    

    
      21.6      Unfunded Status of the Plan.  The
      Plan is intended to constitute an "unfunded" plan for incentive and
      deferred compensation.  With respect to any payments or deliveries of
      Shares not yet made to a Participant by the Company, the Participant's
      rights are no greater than those of a general creditor of the
      Company.  The Committee may authorize the establishment of trusts or
      other arrangements to meet the obligations created under the Plan, so
      long as the arrangement does not cause the Plan to lose its legal status
      as an unfunded plan.
    

    

    

    
      
        

        

      

      
        
          - 21 -
        

        
          

        

      

      
        

        

      

    

    

    

    
      21.7      Governing Law.  To the
      extent not preempted by federal law, the Plan and all agreements
      hereunder will be construed in accordance with and governed by the laws
      of the State of Minnesota.
    

    
      21.8      Electronic Delivery and Evidence of Award.  The
      Company may deliver by email or other electronic means (including
      posting on a web site maintained by the Company or by a third party) all
      documents relating to the Plan or any Award hereunder (including,
      without limitation, any Award Agreement and prospectus required by the
      SEC) and all other documents that the Company is required to deliver to
      its securities holders (including, without limitation, annual reports
      and proxy statements).  In addition, evidence of an Award may be in
      electronic form, may be limited to notation on the books and records of
      the Company and, with the approval of the Board, need not be signed by a
      representative of the Company or a Participant. Any Shares that become
      deliverable to the Participant pursuant to the Plan may be issued in
      certificate form in the name of the Participant or in book entry form in
      the name of the Participant.   
    

    
      21.9      No Limitation on Rights of the Company.  The
      grant of the Award does not and will not in any way affect the right or
      power of the Company to make adjustments, reclassifications or changes
      in its capital or business structure, or to merge, consolidate,
      dissolve, liquidate, sell or transfer all or any part of its business or
      assets.
    

    
      21.10     Participant to Have No Rights as a Shareholder.  Before
      the date as of which he or she is recorded on the books of the Company
      as the holder of any Shares underlying an Award, a Participant will have
      no rights as a shareholder with respect to those Shares.
    

    

    

    
      - 22 -Exhibit 10.1

                            ASSET PURCHASE AGREEMENT

THIS AGREEMENT dated the 25th day of June 2008.

BETWEEN:

                  COAL HARBOUR CONSULTING INC.
                  999 WEST HASTINGS STREET, SUITE 510
                  VANCOUVER BC V6C 2W2

                  (the "VENDOR")
                                                               OF THE FIRST PART
AND:
                  SILVER BAY RESOURCES INC.
                  502 NORTH DIVISION STREET
                  CARSON CITY, NV 89703

                  (the "PURCHASER")
                                                              OF THE SECOND PART

WHEREAS:

A. The Vendor is the registered and beneficial  owner of various  mineral claims
(hereinafter  the "CLAIMS"),  collectively  called Silver Bay Property Claims of
the Vendor are more  particularly  described in Schedule "A" attached hereto and
forming part of this Agreement;

B. The Vendor has agreed to sell and the Purchaser has agreed to purchase all of
the Claims of the Vendor in accordance with the terms of this Agreement.

NOW THEREFORE THIS AGREEMENT  WITNESSES that in  consideration  of the terms and
covenants  herein and other good and  valuable  consideration,  the  receipt and
sufficiency  of which each  party  acknowledges,  the  parties  hereto  agree as
follows:

1. PURCHASE AND SALE OF ASSETS

1.1 SALE OF ASSETS.  Subject to the terms and conditions of this Agreement,  the
Vendor hereby sells to the  Purchaser,  and the Purchaser  hereby  purchases the
Vendor's Claims.

1.2 PURCHASE  PRICE.  The purchase  price payable by the Purchaser to the Vendor
for the Vendor's  Claims is USD $20,000 (the "PURCHASE  PRICE").  If applicable,
subject to a carried 3% Net Smelter Royalty as described in Schedule "B".

1.3 PAYMENT OF THE PURCHASE PRICE.  The Purchase Price will be paid  immediately
on delivery of property report, by check or wire order.

2. COVENANTS OF THE PARTIES

2.1 COVENANTS.  The parties  undertake to keep the  information  with respect to
this  Agreement,  the terms  herein,  and any related,  underlying or subsequent
agreements (the  "INFORMATION")  confidential  and not to directly or indirectly
disclose  the  Information  at any  time to any  person  or  persons  or use the
Information for any purpose whatsoever.
<PAGE>

3. REPRESENTATIONS OF THE VENDOR

3.1  REPRESENTATIONS.  The Vendor  represents  and warrants to the  Purchaser as
follows,  with the intent that the Purchaser will rely on the representations in
entering  into  this  Agreement,   and  in  concluding  the  purchase  and  sale
contemplated by this Agreement:

     (a)  CAPACITY TO SELL. The Vendor is Coal Harbour  Consulting Inc.,  having
          the power and capacity to own and dispose of the Claims,  and to enter
          into this Agreement and carry out its terms to the full extent;

     (b)  AUTHORITY TO SELL. The execution and delivery of this  Agreement,  and
          the completion of the  transaction  contemplated by this Agreement has
          been duly and validly authorized by all necessary  corporate action on
          the part of the Vendor, and this Agreement  constitutes a legal, valid
          and binding obligation of the Vendor enforceable against the Vendor in
          accordance  with its terms except as may be limited by laws of general
          application affecting the rights of creditors;

     (c)  LITIGATION.  There is no litigation or  administrative or governmental
          proceeding  or inquiry  pending  or, to the  knowledge  of the Vendor,
          threatened against or relating to the Claims, nor does the Vendor know
          of or have  reasonable  grounds  that  there is any basis for any such
          action, proceeding or inquiry;

     (d)  GOOD  STANDING.  Prior to  closing  this  Agreement,  the  Vendor  has
          maintained, as required, the Claims in good standing.

4. REPRESENTATIONS OF THE PURCHASER

4.1  REPRESENTATIONS.  The  Purchaser  represents  and warrants to the Vendor as
follows,  with the intent that the Vendor will rely on these representations and
warranties in entering into this  Agreement,  and in concluding the purchase and
sale contemplated by this Agreement:

     (a)  STATUS OF PURCHASER. The Purchaser is a corporation duly incorporated,
          validly  existing and in good  standing and has the power and capacity
          to enter into this Agreement and carry out its terms; and

     (B)  AUTHORITY TO PURCHASE.  The execution  and delivery of this  Agreement
          and the completion of the  transaction  contemplated by this Agreement
          has been duly and validly authorized by all necessary corporate action
          on the part of the Purchaser,  and this Agreement constitutes a legal,
          valid and binding obligation of the Purchaser  enforceable against the
          Purchaser  in  accordance  with its terms except as limited by laws of
          general application affecting the rights of creditors.

5. TRANSFER OF ASSETS

5.1 TRANSFER OF PROPERTY. The Purchaser must provide written instructions to the
Vendor if the Purchaser wishes to transfer the claims into the Purchaser's name.
The instructions should include the claims,  tenures, and property name, as well
as the full name and mineral license of the Purchaser.

5.2. VENDOR'S  MAINTENANCE OF PROPERTY.  The Purchaser may request the Vendor to
maintain the claims on the  Purchaser's  behalf,  or if the  Purchaser  does not
provide  written  instruction  to transfer  the claims,  then the Vendor will by
default  assume  maintenance  of the claims for the  Purchaser.  The Vendor will
charge an annual maintenance fee per claim to satisfy the annual fees due to the
Mineral Titles Office.  If the Purchaser does not pay the Vendor fees before the
due dates they will  forfeit  any and all rights to their  mineral  claims.  The
Vendor will provide a best effort to adequately  notify the  Purchaser  before a
claim is due.

                                       2
<PAGE>
6. SURVIVAL OF REPRESENTATIONS AND COVENANTS

6.1 VENDOR'S REPRESENTATIONS AND COVENANTS.  All representations,  covenants and
agreements  made by the Vendor in this Agreement or under this  Agreement  will,
unless otherwise expressly stated,  survive closing and any investigation at any
time made by or on behalf  of the  Purchaser  will  continue  in full  force and
effect for the benefit of the Purchaser.

6.2 PURCHASER'S  REPRESENTATIONS AND COVENANTS.  All representations,  covenants
and  agreements  made by the Purchaser in this Agreement or under this Agreement
will, unless otherwise  expressly stated,  survive closing and any investigation
at any time made by or on behalf of the Vendor and will  continue  in full force
and effect for the benefit of the Vendor.

7. GENERAL

7.1 GOVERNING LAW. This Agreement and each of the documents  contemplated  by or
delivered  under or in connection  with this Agreement are governed  exclusively
by, and are to be enforced,  construed and interpreted exclusively in accordance
with the laws of British  Columbia  which will be deemed to be the proper law of
the Agreement.

7.2 PROFESSIONAL  FEES. Each of the parties will bear the fees and disbursements
of  their  respective   lawyers,   advisers  and  consultants  engaged  by  them
respectively in connection with the transactions  contemplated by this Agreement
prior to the closing.

7.3 ENUREMENT. This Agreement enures to the benefit of and binds the parties and
their respective successors and permitted assigns.

7.4 NOTICE.  All notices  required or permitted to be given under this Agreement
will be in writing  and  personally  delivered  to the  address of the  intended
recipient  set out on the first page of this  Agreement or at such other address
as may  from  time to time  be  notified  by any of the  parties  in the  manner
provided in this Agreement.

7.5  FURTHER  ASSURANCES.  The  parties  will  execute  and  deliver all further
documents and take all further  action  reasonably  necessary or  appropriate to
give effect to the  provisions  and intent of this Agreement and to complete the
transactions contemplated by this Agreement.

7.6  REMEDIES  CUMULATIVE.  The rights and  remedies  under this  Agreement  are
cumulative and are in addition to and not in  substitution  for any other rights
and  remedies  available  at law or in  equity or  otherwise.  Any party to this
Agreement  may  terminate  this  Agreement if any other party is in breach of or
defaults  under any material  term or condition of this  Agreement or has made a
material misrepresentation in this Agreement. No single or partial exercise by a
party of any right or remedy precludes or otherwise  affects the exercise of any
other right or remedy to which that party may be entitled.

7.7 ENTIRE  AGREEMENT.  This Agreement  constitutes the entire agreement between
the parties and there are no representations,  express or implied,  statutory or
otherwise  and no  collateral  agreements  other  than as  expressly  set out or
referred to in this Agreement.

7.8 HEADINGS.  The division of this Agreement into sections and the insertion of
headings are for  convenience  only and do not form part of this  Agreement  and
will not be used to  interpret,  define or limit the scope,  extent or intent of
this Agreement.

7.9  SEVERABILITY.  Each  provision  of  this  Agreement  is  severable.  If any
provision of this Agreement is or becomes illegal, invalid or unenforceable, the
illegality, invalidity or unenforceability of that provision will not affect the
legality,  validity  or  enforceability  of the  remaining  provisions  of  this
Agreement.

7.10  SCHEDULES.  The  Schedules  attached  hereto form an integral part of this
Agreement.

                                       3
<PAGE>
7.11 TIME OF THE ESSENCE. Time will be of the essence of this Agreement.

7.12 COUNTERPARTS. This Agreement and all documents contemplated by or delivered
in connection  with this Agreement may be executed and delivered by facsimile or
original and in any number of counterparts,  and each executed  counterpart will
be considered to be an original.  All executed  counterparts taken together will
constitute one agreement.

IN WITNESS  WHEREOF the parties have duly executed this  Agreement by their duly
authorized officers effective the day, month and year written above.

VENDOR: COAL HARBOUR CONSULTING INC.

PURCHASER: SILVER BAY RESOURCES INC.

Per: /s/ Donald R. Gardner
--------------------------------------
DONALD R. GARDNER
Director & Officer

                                       4
<PAGE>
                                  SCHEDULE "A"
             THIS IS SCHEDULE "A" to the Asset Purchase Agreement.

ASSET DETAILS:

MINERAL CLAIM(S): 551979

CLAIMS COLLECTIVELY CALLED:  Silver Bay Property

EXECUTIVE SUMMARY:

1.   The Silver Bay Property is located on Jervis Inlet,  about 100 km northwest
     of Vancouver,  BC. Access is by helicopter or float plane from Vancouver or
     Sechelt, or by boat from Egmont or Pender Harbour on the Sechelt Peninsula.
     The Silver Bay Property  comprises one MTO mineral claim containing 12 cell
     claim units totaling 248.686 hectares.

2.   The Jervis Inlet area is underlain by a variety of Jurassic to Tertiary age
     granitic  intrusives  of the Coast  Plutonic  Complex.  The granitic  rocks
     intrude and  metamorphose  late Jurassic to Lower  Cretaceous  argillaceous
     sediments and andesitic to felsic volcanics of the Gambier Group.

3.   The Gambier Group hosts the 60 million tonne Britannia volcanogenic copper,
     zinc,  lead,  silver,  gold  deposit  on  Howe  Sound  about  80 km to  the
     southeast.  The Silver Bay Property is underlain by metamorphosed sediments
     and  volcanics  of the  Gambier  Group with zinc,  lead,  silver and copper
     mineralization in a geological setting similar to the Britannia Mine.

     On  the   Silver  Bay   Property,   prospectors   explored   two  areas  of
     mineralization  by  open-cuts  and a short adit in the early  1900's.  More
     recent  exploration  includes  geological  mapping,  rock sampling and soil
     geochemistry by Newmont  Exploration Ltd. and James Laird in 1983 and 1984.
     No other work has been recorded.

4.   A two-phase proposed work program includes  construction of a control grid,
     geological mapping and rock sampling,  additional silt geochemical sampling
     and trenching.  Based on a compilation  of these  results,  a diamond drill
     program will be designed to explore and define the potential resources.

                                       5
<PAGE>
                                  SCHEDULE "B"
              THIS IS SCHEDULE "B" to the Asset Purchase Agreement.

                             3% NET SMELTER RETURNS

a.   In this Agreement,  "3% Net Smelter  Returns" means 3% of the net amount of
     money received y the Purchaser for its own account from the sale of one, or
     ore  concentrates or other mineral products from the Claims to a smelter or
     other mineral  products buyer after  deduction of smelter  and/or  refining
     charges,  ore treatment charges,  penalties and any and all charges made by
     the purchaser of ore, concentrates, or other mineral products, less any and
     all  transportation  costs  which may be incurred  in  connection  with the
     transporation  of ore or  concentrates,  less all umpire  charges which the
     purchaser may be required to pay.

b.   Payment of Net Smelter Returns by the Purchaser to the Vendor shall be made
     semi-annully  within 60 days after the end fo each  fiscal half year of the
     Purcahser  and  shall  be  accompanied  by  unaudited  financial  statement
     pertaining  to the  operations  carried out by the Purchaser on the Claims.
     Within 90 days after the end of each fiscal year of the  Purchaser in which
     Net Smelter Returns are payable to the Vendor,  the records relating to the
     calculation  of Net Smelter  Returns for such year shall be audited and any
     resulting  adjustments in the payment of Net Smelter Returns payable to the
     Vnedor shall be made forthwith. A copy of the said audit shall be delivered
     to the vendor within 30 days of the end of such 90 day period.

c.   Each annual adit shall be final and not  subject to  adjustment  unless the
     Vendor delivers to the Purchaser  written  exceptions in reasonable  detail
     within six months after the Vendor  receives the report.  The Vendor or its
     reporesentative  duly  authorized  in writing at its expense shall have the
     right to audit  the books  and  records  of the  Purchaser  related  to Net
     Smelter  Returns to determine the accuracy of the report but shall not have
     access to any other books and records of the Purchaser.  The audit shall be
     conducted by a chartered  or  certified  public  accountant  of  recognized
     standing.  The  Purchaser  shall have the right to condition  access to its
     books and records on execution  of a written  agreement by the auditor that
     all information  will be held in confidence and used solely for purposes of
     audit and resolution of any disputes  related to the report.  A copy of the
     Vendor's  report shall be delivered to the Purchaser upon  completion,  and
     any  discrepancy  between the amount actually paid by the Purchaser and the
     amount which should have been paid  according to the Vendor's  report shall
     be paid  forthwith  ,one  party to the  other.  In the event  that the said
     discrepancy  is to the detriment o fthe Vendor and exceeds 5% of the amount
     actually  paid by the  Purcahser , then the  Purchser  shall pay the entire
     cost of the audit.

d.   Any dispute arising out of or related to any report,  payment,  calculation
     or audit  shall be  resolved  solely  by  arbitration  as  provided  in the
     Agreement.  No error in  accounting or in  interpretation  of the Agreement
     shall be the basis for a claim of breach of fiduciary duty, or the like, or
     give rise to a claim for exempary or punitive damages or for termination or
     rescission of the  Agreement or the estate and rights  acquired and held by
     the Purchaser under the terms of the Agreement.

                                       6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]