Document:

EXHIBIT
      4.1

    

    CHINA
      SHOE HOLDINGS, INC.

    

    2008
      EQUITY INCENTIVE PLAN

    

    
      	
              1.

            	
              Purposes
                of the Plan.
                The purposes of this Plan are: to attract and retain the best available
                personnel for positions of substantial responsibility, to provide
                additional incentive to Employees, Directors and Consultants, and
                to
                promote the success of the Company's business. The Plan permits the
                grant
                of Incentive Stock Options, Non-statutory Stock Options, Restricted
                Stock,
                Restricted Stock Units, Stock Appreciation Rights, Performance Units
                and
                Performance Shares. The
                Administrator may only award or grant those Awards that either comply
                with
                the applicable requirements of Code Section 409A, or do not result
                in the
                deferral of compensation within the meaning of Code Section
                409A.

            

    

    

    
      	2.	
              Definitions.
                As used herein, the following definitions will
                apply:

            

    

    

    “Administrator”
means
      the Board or any of its Committees as will be administering the Plan, in
      accordance with Section 4.

    

    “Applicable
      Laws”
means
      the requirements relating to the administration of equity-based awards under
      U.S. state corporate laws, U.S. federal and state securities laws, the Code,
      any
      stock exchange or quotation system on which the Common Stock is listed or quoted
      and the applicable laws of any foreign country or jurisdiction where Awards
      are,
      or will be, granted under the Plan.

    

    “Award”
means,
      individually or collectively, a grant under the Plan of Options, SARs,
      Restricted Stock, Restricted Stock Units, Performance Units or Performance
      Shares.

    

    “Award
      Agreement”
means
      the written or electronic agreement setting forth the terms and provisions
      applicable to each Award granted under the Plan. The Award Agreement is subject
      to the terms and conditions of the Plan.

    

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

    

    “Change
      in Control”
means
      the occurrence of any of the following events:

    

    (i) Any
      “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
      becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act),
      directly or indirectly, of securities of the Company representing fifty percent
      (50%) or more of the total voting power represented by the Company's then
      outstanding voting securities; provided however, that for purposes of this
      subsection (i) any acquisition of securities directly from the Company shall
      not
      constitute a Change in Control; or

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii) The
      consummation of the sale or disposition by the Company of all or substantially
      all of the Company's assets;

    

    (iii) A
      change
      in the composition of the Board occurring within a two-year period, as a result
      of which fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” means directors who either (A) are Directors as of the
      effective date of the Plan, or (B) are elected, or nominated for election,
      to
      the Board with the affirmative votes of at least a majority of the Incumbent
      Directors at the time of such election or nomination (but will not include
      an
      individual whose election or nomination is in connection with an actual or
      threatened proxy contest relating to the election of directors to the Company);
      or

    

    (iv) The
      consummation of a merger or consolidation of the Company with any other
      corporation, other than a merger or consolidation which would result in the
      voting securities of the Company outstanding immediately prior thereto
      continuing to represent (either by remaining outstanding or by being converted
      into voting securities of the surviving entity or its parent) at least fifty
      percent (50%) of the total voting power represented by the voting securities
      of
      the Company or such surviving entity or its parent outstanding immediately
      after
      such merger or consolidation.

    

    “Code”
means
      the Internal Revenue Code of 1986, as amended. Any reference to a section of
      the
      Code herein will be a reference to any successor or amended section of the
      Code.

    

    “Committee”
means
      a
      committee of Directors or of other individuals satisfying Applicable Laws
      appointed by the Board in accordance with Section 4 hereof.

    

    “Common
      Stock”
means
      the common stock of the Company.

    

    “Company”
means
      China Shoe Holdings, Inc., a Nevada corporation, or any successor
      thereto.

    

    “Consultant”
means
      any person, including an advisor, engaged by the Company or a Parent or
      Subsidiary to render services to such entity.

    

    “Director”
means
      a
      member of the Board.

    

    “Disability”
means
      total and permanent disability as defined in Section 22(e)(3) of the Code,
      provided that in the case of Awards other than ISOs, the Administrator in its
      discretion may determine whether a permanent and total disability exists in
      accordance with uniform and non-discriminatory standards adopted by the
      Administrator from time to time.

    

    
      
        
        

      

      
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    “Employee”
means
      any person, including Officers and Directors, employed by the Company or any
      Parent or Subsidiary of the Company. Neither service as a Director nor payment
      of a director's fee by the Company will be sufficient to constitute "employment"
      by the Company.

    

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

    

    “Fair
      Market Value”
means,
      as of any date, the value of Common Stock determined as follows:

    

    (i) If
      the
      Common Stock is listed on any established stock exchange or a national market
      system, including without limitation the Nasdaq National Market or the Nasdaq
      SmallCap Market of the Nasdaq Stock Market and the last trade or closing ask
      price on the Over the Counter Bulletin Board (whichever is lower), its Fair
      Market Value will be the closing sales price for such stock (or the closing
      bid,
      if no sales were reported) as quoted on such exchange or system on the day
      of
      determination, as reported in The Wall Street Journal or such other source
      as
      the Administrator deems reliable;

    

    (ii) If
      the
      Common Stock is regularly quoted by a recognized securities dealer but selling
      prices are not reported, the Fair Market Value of a Share will be the mean
      between the high bid and low asked prices for the Common Stock on the day of
      determination, as reported in The Wall Street Journal or such other source
      as
      the Administrator deems reliable; or

    

    (iii) In
      the
      absence of an established market for the Common Stock, the Fair Market Value
      will be determined in good faith by the Administrator.

    

    “Fiscal
      Year”
means
      the fiscal year of the Company.

    

    “Grant
      Date”
means,
      for all purposes, the date on which the Administrator makes the determination
      granting such Award, or such other later date as is determined by the
      Administrator. Notice of the determination will be provided to each Participant
      within a reasonable time after the date of such grant.

    

    “ISO”
means
      an Option that by its terms qualifies and is otherwise intended to qualify
      as an
      incentive stock option within the meaning of Section 422 of the Code and the
      regulations promulgated thereunder.

    

    “NSO”
means
      an Option that by its terms does not qualify or is not intended to qualify
      as an
      ISO.

    

    
      
        
        

      

      
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    “Officer”
means
      a
      person who is an officer of the Company within the meaning of Section 16 of
      the
      Exchange Act and the rules and regulations promulgated thereunder.

    

    “Option”
means
      a
      stock option granted pursuant to the Plan.

    

    “Optioned
      Stock”
means
      the Common Stock subject to an Award.

    

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

    

    “Participant”
means
      the holder of an outstanding Award.

    

    “Performance
      Share”
means
      an Award denominated in Shares which may be earned in whole or in part upon
      attainment of performance goals or other vesting criteria as the Administrator
      may determine pursuant to Section 10.

    

    “Performance
      Unit”
means
      an Award which may be earned in whole or in part upon attainment of performance
      goals or other vesting criteria as the Administrator may determine and which
      may
      be settled for cash, Shares or other securities or a combination of the
      foregoing pursuant to Section 10.

    

    “Period
      of Restriction”
means
      the period during which the transfer of Shares of Restricted Stock are subject
      to restrictions and therefore, the Shares are subject to a substantial risk
      of
      forfeiture. Such restrictions may be based on the passage of time, the
      achievement of target levels of performance, or the occurrence of other events
      as determined by the Administrator.

    

    “Plan”
means
      this 2008 Equity Incentive Plan.

    

    “Restricted
      Stock”
means
      Shares issued pursuant to a Restricted Stock award under Section 7.

    

    “Restricted
      Stock Unit”
means
      a
      bookkeeping entry representing an amount equal to the Fair Market Value of
      one
      Share, granted pursuant to Section 8. Each Restricted Stock Unit represents
      an
      unfunded and unsecured obligation of the Company.

    

    “Rule
      16b-3”
means
      Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect
      when
      discretion is being exercised with respect to the Plan.

    

    “Section
      16(b)”
means
      Section 16(b) of the Exchange Act.

    

    “Service
      Provider”
means
      an Employee, Director or Consultant.

    

    “Share”
means
      a
      share of the Common Stock, as adjusted in accordance with Section
      13.

    

    
      
        
        

      

      
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    “Stock
      Appreciation Right”
or
      “SAR” means an Award, granted alone or in connection with an Option, that
      pursuant to Section 9 is designated as a Stock Appreciation Right.

    

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

    

    “Ten
      Percent Owner”
means
      any Service Provider who is, on the grant date of an ISO, the owner of Shares
      (determined with application of ownership attribution rules of Code Section
      424(d)) possessing more than 10% of the total combined voting power of all
      classes of stock of the Company or any of its Subsidiaries.

    

    
      	3.	
              Stock
                Subject to the Plan.

            

    

    

    
      	 	
              (a)

            	
              Stock
                Subject to the Plan.
                Subject to the provisions of Section 13, the maximum aggregate number
                of
                Shares that may be issued under the Plan under the Plan is twenty
                million
                (20,000,000) Shares. The Shares may be authorized, but unissued,
                or
                reacquired Common Stock.

            

    

    

    
      	 	
              (b)

            	
              Lapsed
                Awards.
                If an Award expires or becomes unexercisable without having been
                exercised
                in full or, with respect to Restricted Stock, Restricted Stock Units,
                Performance Shares or Performance Units, is forfeited in whole or
                in part
                to the Company, the unpurchased Shares (or for Awards other than
                Options
                and SARs, the forfeited or unissued Shares) which were subject to
                the
                Award will become available for future grant or sale under the Plan
                (unless the Plan has terminated). With respect to SARs, only Shares
                actually issued pursuant to an SAR will cease to be available under
                the
                Plan; all remaining Shares subject to the SARs will remain available
                for
                future grant or sale under the Plan (unless the Plan has terminated).
                Shares that have actually been issued under the Plan under any Award
                will
                not be returned to the Plan and will not become available for future
                distribution under the Plan; provided, however, that if Shares issued
                pursuant to Awards of Restricted Stock, Restricted Stock Units,
                Performance Shares or Performance Units are forfeited to the Company,
                such
                Shares will become available for future grant under the Plan. Shares
                withheld by the Company to pay the exercise price of an Award or
                used to
                satisfy tax withholding obligations with respect to an Award will
                become
                available for future grant or sale under the Plan. To the extent
                an Award
                under the Plan is paid out in cash rather than Shares, such cash
                payment
                will not result in reducing the number of Shares available for issuance
                under the Plan. 

            

    

    

    
      	 	
              (c)

            	
              Limitations

            

    

    (i) Subject
      to the provisions of Section 13, not more than an aggregate of 20,000,000
      Shares
      shall be available for issuance pursuant to grants of Restricted Stock under
      the
      Plan.

    

    
      
        
        

      

      
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    (ii) Subject
      to the provisions of Section 13, not more than 8,000,000 Shares (or for Awards
      denominated in cash, the Fair Market Value of 8,000,000 Shares on the Grant
      Date), may be made subject to Awards under the Plan to any individual
      Participant in the aggregate in any one fiscal year of the Company, such
      limitation to be applied in a manner consistent with the requirements of, and
      only to the extent required for compliance with, the exclusion from the
      limitation on deductibility of compensation under Code Section
      162(m).

    

    (iii) Subject
      to the provisions of Section 13, to the extent consistent with Section 424
      of
      the Code, not more than an aggregate of 20,000,000 Shares may be issued under
      ISOs.

    

    
      	 	
              (d)

            	
              Share
                Reserve.
                The Company, during the term of this Plan, will at all times reserve
                and
                keep available such number of Shares as will be sufficient to satisfy
                the
                requirements of the Plan.

            

    

    

    
      	4.	
              Administration
                of the Plan.

            

    

    

    
      	 	
              (a)

            	
              Procedure.
                The Plan shall be administered by the Board or a committee or committees
                (including subcommittees) appointed by, and consisting of two or
                more
                members of, the Board. If
                and so long as the Common Stock is registered under Section 12(b)
                or 12(g)
                of the Exchange Act, the Board shall consider in selecting the Plan
                Administrator and the membership of any committee acting as Plan
                Administrator the provisions regarding (a) “outside directors” as
                contemplated by Section 162(m) of the Code; (b) “nonemployee directors” as
                contemplated by Rule 16b-3 under the Exchange Act; and (c) “independent
                directors” as contemplated by the listing requirements for any stock
                exchange on which Shares are listed. The
                Board may delegate the responsibility for administering the Plan
                with
                respect to designated classes of eligible Participants to different
                committees consisting of two or more members of the Board, subject
                to such
                limitations as the Board or the Plan Administrator deems appropriate.
                Committee members shall serve for such term as the Board may determine,
                subject to removal by the Board at any time. To the extent consistent
                with
                Applicable Laws, the Board may authorize one or more senior executive
                officers of the Company to grant Awards to designated classes of
                eligible
                employees within the limits prescribed by the
                Board.

            

    

     

    
      	 	
              (b)

            	
              Powers
                of the Administrator.
                Subject to the provisions of the Plan, and in the case of a Committee,
                subject to the specific duties delegated by the Board to such Committee,
                the Administrator will have the authority, in its
                discretion:

            

    

    

    (i) to
      determine the Fair Market Value;

    

    
      
        
        

      

      
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    (ii) to
      select
      the Service Providers to whom Awards may be granted hereunder;

    

    
      
        (iii)
          to
          determine the number of Shares to be covered by each Award granted hereunder;
          

      

    

    

      
(iv) to
      approve forms of agreement for use under the Plan;

    

    (v) to
      determine the terms and conditions, not inconsistent with the terms of the
      Plan,
      of any Award granted hereunder. Such terms and conditions include, but are
      not
      limited to, the exercise price, the time or times when Awards may be exercised
      (which may be based on performance criteria), any vesting acceleration or waiver
      of forfeiture restrictions, and any restriction or limitation regarding any
      Award or the Shares relating thereto, based in each case on such factors as
      the
      Administrator will determine; 

    

    (vi) to
      construe and interpret the terms of the Plan and Awards granted pursuant to
      the
      Plan, including the right to construe disputed or doubtful Plan and Award
      provisions; 

    

    (vii) to
      prescribe, amend and rescind rules and regulations relating to the Plan;

    

    (viii) to
      modify
      or amend each Award (subject to Section 17(c)), including the discretionary
      authority to extend the post-termination exercisability period of Awards, to
      the
      extent that such period can be extended without causing an award to become
      subject to Code Section 409A;

    

    (ix) to
      allow
      Participants to satisfy withholding tax obligations in such manner as prescribed
      in Section 14;

    

    (x) to
      authorize any person to execute on behalf of the Company any instrument required
      to effect the grant of an Award previously granted by the Administrator;
      and

    

    (xi) to
      make
      all other determinations deemed necessary or advisable for administering the
      Plan.

    

    (c)  Effect
      of Administrator's Decision.
      The
      Administrator’s decisions, determinations and interpretations will be final and
      binding on all Participants and any other holders of Awards. Any decision or
      action taken or to be taken by the Administrator, arising out of or in
      connection with the construction, administration, interpretation and effect
      of
      the Plan and of its rules and regulations, shall, to the maximum extent
      permitted by applicable law, be within its absolute discretion (except as
      otherwise specifically provided herein) and shall be final, binding and
      conclusive upon the Company, all Participants and any person claiming under
      or
      through any Participant.

     

    
      
        
        

      

      
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              5.

            	
              Eligibility.
                NSOs, Restricted Stock, Restricted Stock Units, SARs, Performance
                Units
                and Performance Shares may be granted to Service Providers. ISOs
                may be
                granted only to Employees.

            

    

    

    
      	6.	
              Stock
                Options.

            

    

    

    (a) Grants.
      Subject
      to the terms and provisions of the Plan, Options may be granted to Service
      Providers at any time as determined by the Administrator in its sole discretion.
      For purposes of the foregoing sentence, Service Providers shall include
      prospective employees or consultants to whom options are granted in connection
      with written offers of employment or engagement of services, respectively,
      with
      the Company; provided that no option granted to a prospective employee or
      consultant may be exercised prior to the commencement of employment or services
      with the Company. The Administrator may grant ISOs, NSOs or any combination
      of
      the two.

    

    (b) Limitations.
      Each
      Option will be designated in the Award Agreement as either an ISO or an NSO.
      Notwithstanding such designation, to the extent that the aggregate Fair Market
      Value of the Shares with respect to which ISOs are exercisable for the first
      time by the Participant during any calendar year (under all plans of the Company
      and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000),
      Options will be treated as NSOs. For purposes of this Section 6(a), ISOs will
      be
      taken into account in the order in which they were granted. The Fair Market
      Value of the Shares will be determined as of the time the Option with respect
      to
      such Shares is granted.

    

    (c) Exercise
      Price.
      The per
      Share exercise price for the Shares to be issued pursuant to exercise of an
      Option will be no less than the Fair Market Value per Share on the Grant Date,
      except that in the case of an ISO granted to a Ten Percent Owner, the per Share
      exercise price will be no less than one hundred ten percent (110%) of the Fair
      Market Value per Share on the Grant Date.

    

    (d) Term
      of Options.
      The
      term of each Option will be stated in the Award Agreement. Unless terminated
      sooner in accordance with the remaining provisions of this Section 6, each
      Option shall expire either eight (8) years after the Grant Date, or after a
      shorter term as may be fixed by the Board.

     

    (e) Exercise
      Date.
      Each
      Award Agreement shall specify how and when shares covered by a Stock Option
      may
      be purchased. The Award Agreement may specify waiting periods, the dates on
      which Options become exercisable or “vested” and, subject to the termination
      provisions of this section, exercise periods. The Administrator may accelerate
      the exercisability of any Option or portion thereof. 

     

    
      
        
        

      

      
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    (f) Exercise
      of Option.
      Any
      Option granted hereunder will be exercisable according to the terms of the
      Plan
      and at such times and under such conditions as determined by the Administrator
      and set forth in the Award Agreement. An Option may not be exercised for a
      fraction of a Share. An Option will be deemed exercised when the Company
      receives: (i) notice of exercise (in such form as the Administrator specify
      from
      time to time) from the person entitled to exercise the Option, and (ii) full
      payment for the Shares with respect to which the Option is exercised (together
      with an applicable withholding taxes). Full payment may consist of any
      consideration and method of payment authorized by the Administrator and
      permitted by the Award Agreement and the Plan (together with an applicable
      withholding taxes). Shares issued upon exercise of an Option will be issued
      in
      the name of the Participant or, if requested by the Participant, in the name
      of
      the Participant and his or her spouse. Until the Shares are issued (as evidenced
      by the appropriate entry on the books of the Company or of a duly authorized
      transfer agent of the Company), no right to vote or receive dividends or any
      other rights as a stockholder will exist with respect to the Optioned Stock,
      notwithstanding the exercise of the Option. The Company will issue (or cause
      to
      be issued) such Shares promptly after the Option is exercised. No adjustment
      will be made for a dividend or other right for which the record date is prior
      to
      the date the Shares are issued, except as provided in Section 13.

    

    (g) Form
      of Consideration.
      The
      Administrator will determine the acceptable form of consideration for exercising
      an Option, including the method of payment. In the case of an ISO, the
      Administrator will determine the acceptable form of consideration at the time
      of
      grant. Such consideration may consist entirely of: 

     

    (i) cash;

    

    (ii) check;
      

    

    (iii) to
      the
      extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, a
      promissory note; 

    

    (iv) other
      Shares, provided Shares have a Fair Market Value on the date of surrender equal
      to the aggregate exercise price of the Shares as to which said Option will
      be
      exercised; 

    

    (v) to
      the
      extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002,
      consideration received by the Company under a cashless exercise program;

    

    (vi) any
      combination of the foregoing methods of payment; or 

    

    (vii) such
      other consideration and method of payment for the issuance of Shares to the
      extent permitted by Applicable Laws.

    

    (h) Termination
      of Options.
      An
      Option may terminate prior to the end of the term specified in an Award
      Agreement as follows:

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (i) Termination
      of Relationship as a Service Provider.
      If a
      Participant ceases to be a Service Provider, other than upon the Participant's
      death or Disability, the Participant may exercise his or her Option within
      such
      period of time as is specified in the Award Agreement to the extent that the
      Option is vested on the date of termination (but in no event later than the
      expiration of the term of such Option as set forth in the Award Agreement).
      In
      the absence of a specified time in the Award Agreement, the Option will remain

      exercisable for three (3) months following the Participant's termination. Unless
      otherwise provided by the Administrator, if on the date of termination the
      Participant is not vested as to his or her entire Option, the Shares covered
      by
      the unvested portion of the Option will be forfeited and revert to the Plan.
      If
      after termination the Participant does not exercise his or her Option within
      the
      time specified by the Administrator, the Option will terminate, and the Shares
      covered by such Option will be forfeited and revert to the Plan.

    

    (ii) Disability
      of Participant.
      If a
      Participant ceases to be a Service Provider as a result of the Participant's
      Disability, the Participant may exercise his or her Option within such period
      of
      time as is specified in the Award Agreement to the extent the Option is vested
      on the date of termination (but in no event later than the expiration of the
      term of such Option as set forth in the Award Agreement). In the absence of
      a
      specified time in the Award Agreement, the Option will remain exercisable for
      twelve (12) months following the Participant's termination. Unless otherwise
      provided by the Administrator, if on the date of termination the Participant
      is
      not vested as to his or her entire Option, the Shares covered by the unvested
      portion of the Option will be forfeited and revert to the Plan. If after
      termination the Participant does not exercise his or her Option within the
      time
      specified herein, the Option will terminate, and the Shares covered by such
      Option will be forfeited and revert to the Plan.

    

    (iii) Death
      of Participant.
      If a
      Participant dies while a Service Provider, the Option may be exercised following
      the Participant's death within such period of time as is specified in the Award
      Agreement to the extent that the Option is vested on the date of death (but
      in
      no event may the option be exercised later than the expiration of the term
      of
      such Option as set forth in the Award Agreement), by the Participant's
      designated beneficiary, provided such beneficiary has been designated prior
      to
      Participant's death in a form acceptable to the Administrator. If no such
      beneficiary has been designated by the Participant, then such Option may be
      exercised by the personal representative of the Participant's estate or by
      the
      person(s) to whom the Option is transferred pursuant to the Participant's will
      or in accordance with the laws of descent and distribution. In the absence
      of a
      specified time in the Award Agreement, the Option will remain exercisable for
      twelve (12) months following Participant's death. Unless otherwise provided
      by
      the Administrator, if at the time of death Participant is not vested as to
      his
      or her entire Option, the Shares covered by the unvested portion of the Option
      will be forfeited and revert to the Plan. If the Option is not so exercised
      within the time specified herein, the Option will terminate, and the Shares
      covered by such Option will be forfeited and revert to the Plan.

    

    
      
        
        

      

      
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      	7.	
              Restricted
                Stock.

            

    

    

    
      	
              (a)

            	
              Grant.
                Subject to the terms and provisions of the Plan, the Administrator,
                at any
                time and from time to time, may grant Shares of Restricted Stock
                to
                Service Providers in such amounts as the Administrator, in its sole
                discretion, will determine.

            

    

    

    
      	
              (b)

            	
              Restricted
                Stock Agreement.
                Each Award of Restricted Stock will be evidenced by an Award Agreement
                that will specify the Period of Restriction, the number of Shares
                granted,
                and such other terms and conditions as the Administrator, in its
                sole
                discretion, will determine. Unless the Administrator determines otherwise,
                the Company as escrow agent will hold Shares of Restricted Stock
                until the
                restrictions on such Shares have
                lapsed.

            

    

    

    (c) Transferability.
      Except
      as provided in this Section, Shares of Restricted Stock may not be sold,
      transferred, pledged, assigned, or otherwise alienated or hypothecated until
      the
      end of the applicable Period of Restriction.

    

    (d) Period
      of Restriction.
      The
      Administrator, in its sole discretion, may impose such conditions on the vesting
      of Shares of Restricted Stock as it may deem advisable or appropriate, including
      but not limited to, achievement of Company-wide, business unit, or individual
      goals (including, but not limited to, continued employment), or any other basis
      determined by the Administrator in its discretion. All restrictions imposed
      on
      Restricted Stock shall lapse and the Period of Restriction shall end upon the
      satisfaction of vesting conditions imposed by the Administrator. The
      Administrator may, in its discretion, also provide for such complete or partial
      exceptions to an employment restriction as it deems equitable. 

    

    (e) Removal
      of Restrictions.
      Except
      as otherwise provided in this Section, Shares of Restricted Stock covered by
      each Restricted Stock grant made under the Plan will be released from escrow
      as
      soon as practicable after the last day of the Period of Restriction or at such
      other time as the Administrator may determine. The Administrator, in its
      discretion, may accelerate the time at which any restrictions will lapse or
      be
      removed.

    

    (f) Voting
      Rights.
      During
      the Period of Restriction, Service Providers holding Shares of Restricted Stock
      granted hereunder may exercise full voting rights with respect to those Shares,
      unless the Administrator determines otherwise.

    

    (g) Dividends
      and Other Distributions.
      During
      the Period of Restriction, Service Providers holding Shares of Restricted Stock
      will be entitled to receive all dividends and other distributions paid with
      respect to such Shares, unless the Administrator determines otherwise. If any
      such dividends or distributions are paid in Shares, the Shares will be subject
      to the same restrictions on transferability and forfeitability as the Shares
      of
      Restricted Stock with respect to which they were paid.

    

    (h) Return
      of Restricted Stock to Company.
      On the
      date set forth in the Award Agreement, the Restricted Stock for which
      restrictions have not lapsed will be forfeited and revert to the Company and
      again will become available for grant under the Plan.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	8.	
              Restricted
                Stock Units.

            

    

    

    (a) Grant.
      Subject
      to the terms and provisions of the Plan, the Administrator, at any time and
      from
      time to time, may grant Restricted Stock Units to Service Providers in such
      amounts as the Administrator, in its sole discretion, will determine.

    

    (b) Vesting
      Criteria and Other Terms.
      The
      Administrator shall set vesting criteria in its discretion, which, depending
      on
      the extent to which the criteria are met, will determine the number of
      Restricted Stock Units that will be paid out to the Participant. The
      Administrator may set vesting criteria based upon the achievement of
      Company-wide, business unit, or individual goals (including, but not limited
      to,
      continued employment), or any other basis determined by the Administrator in
      its
      discretion. The Administrator will determine the other terms, conditions, and
      restrictions related to the grant, including the number of Restricted Stock
      Units and the form of payout, which, subject to Section 8(d), may be left to
      the
      discretion of the Administrator.

    

    (c) Earning
      Restricted Stock Units.
      Upon
      satisfaction of the applicable vesting conditions, the Participant shall be
      entitled to receive a payout at such time as the Administrator determines.
      At
      any time after the grant of Restricted Stock Units, the Administrator, in its
      sole discretion, may reduce or waive any vesting criteria that must be met
      to
      receive a payout.

    

    (d) Form
      and Timing of Payment.
      Payment
      of earned Restricted Stock Units shall be made as soon as practicable after
      the
      date(s) determined by the Administrator and set forth in the Award Agreement.
      The Administrator, in its sole discretion, may pay earned Restricted Stock
      Units
      in cash, Shares, or a combination thereof. Restricted Stock Units that are
      fully
      paid in cash will not reduce the number of Shares available for issuance under
      the Plan.

    

    (e) Cancellation.
      On the
      date set forth in the Award Agreement, all unearned Restricted Stock Units
      shall
      be forfeited to the Company. 

    

    
      	9.	
              Stock
                Appreciation Rights.

            

    

    

    (a) Grant
      of SARs.
      Subject
      to the terms and conditions of the Plan, SARs may be granted to Service
      Providers at any time and from time to time as will be determined by the
      Administrator, in its sole discretion.

    

    (b) Number
      of Shares.
      The
      Administrator will have complete discretion to determine the number of SARs
      granted to any Service Provider.

    

    (c) Exercise
      Price and Other Terms.
      The per
      Share exercise price for the exercise of an SAR will be no less than the Fair
      Market Value per Share on the Grant Date. The Administrator, subject to the
      provisions of the Plan, will have complete discretion to determine the other
      terms and conditions of SARs granted under the Plan.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (d) Award
      Agreement.
      Each
      SAR grant will be evidenced by an Award Agreement that will specify the exercise
      price, the term of the SAR, the conditions of exercise, and such other terms
      and
      conditions as the Administrator, in its sole discretion, will
      determine.

    

    (e) Expiration
      of SARs.
      An SAR
      granted under the Plan will expire upon the date determined by the
      Administrator, in its sole discretion, and set forth in the Award Agreement.
      

    

    (f) Payment
      of SAR Amount.
      Upon
      exercise of an SAR, a Participant will be entitled to receive payment from
      the
      Company in an amount determined by multiplying:

    

    (i) The
      difference between the Fair Market Value of a Share on the date of exercise
      over
      the exercise price; times 

    

    (ii) The
      number of Shares with respect to which the SAR is exercised.

    

    (g) Form
      of Payment.
      At the
      discretion of the Administrator, the payment upon SAR exercise may be in cash,
      in Shares of equivalent value, or in some combination thereof.

    

    
      	10.	
              Performance
                Units and Performance Shares.

            

    

    

    (a) Grant
      of Performance Units and Performance Shares.
      Performance Units or Performance Shares may be granted to Service Providers
      at
      any time and from time to time, as will be determined by the Administrator,
      in
      its sole discretion. The Administrator will have complete discretion in
      determining the number of Performance Units and Performance Shares granted
      to
      each Participant. 

    

    (b) Value
      of Performance Units and Shares.
      Each
      Performance Unit will have an initial value that is established by the
      Administrator on or before the Grant Date. Each Performance Share will have
      an
      initial value equal to the Fair Market Value of a Share on the Grant
      Date.

    

    (c) Performance
      Objectives and Other Terms.
      The
      Administrator will set performance objectives or other vesting provisions
      (including, without limitation, continued status as a Service Provider) in
      its
      discretion which, depending on the extent to which they are met, will determine
      the number or value of Performance Units or Performance Shares that will be
      paid
      out to the Service Providers. The time period during which the performance
      objectives or other vesting provisions must be met will be called the
“Performance Period.” Each Award of Performance Units or Performance Shares will
      be evidenced by an Award Agreement that will specify the Performance Period,
      and
      such other terms and conditions as the Administrator, in its sole discretion,
      will determine. The Administrator may set performance objectives based upon
      the
      achievement of Company-wide, divisional, or individual goals, applicable federal
      or state securities laws, or any other basis determined by the Administrator
      in
      its discretion.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (d) Earning
      of Performance Units and Shares.
      After
      the applicable Performance Period has ended, the holder of Performance Units
      or
      Performance Shares will be entitled to receive a payout of the number of
      Performance Units or 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 or other vesting provisions have been
      achieved.

    

    (e) Form
      and Timing of Payment of Performance Units or Shares.
      Payment
      of earned Performance Units or Performance Shares will be made as soon as
      practicable after the expiration of the applicable Performance Period. The
      Administrator, in its sole discretion, may pay earned Performance Units and
      Performance Shares in the form of cash, in Shares (which have an aggregate
      Fair
      Market Value equal to the value of the earned Performance Units or Performance
      Shares at the close of the applicable Performance Period) or in a combination
      thereof.

    

    (f) Cancellation
      of Performance Units and Performance Shares.
      On the
      date set forth in the Award Agreement, all unearned or unvested Performance
      Units or Performance Shares will be forfeited to the Company, and again will
      be
      available for grant under the Plan.

    

    
      	
              11.

            	
              Leaves
                of Absence/Transfer Between Locations.
                

            

    

    

    
      	 	
              Unless
                the Administrator provides otherwise or as required by Applicable
                Law,
                vesting of Awards granted hereunder will be suspended during any
                unpaid
                leave of absence. An Employee will not cease to be an Employee in
                the case
                of (i) any leave of absence approved by the Company or (ii) transfers
                between locations of the Company or between the Company, its Parent,
                or
                any Subsidiary. For purposes of ISOs, 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, then three (3) months
                following the ninety-first (91st) day of such leave any ISO held
                by the
                Participant will cease to be treated as an ISO and will be treated
                for tax
                purposes as an NSO.

            

    

    

    
      	
              12.

            	
              Transferability
                of Awards.
                

            

    

    

    
      	 	
              Unless
                determined otherwise by the Administrator, an Award may not be sold,
                pledged, assigned, hypothecated, transferred, or disposed of in any
                manner
                other than by will or by the laws of descent or distribution and
                may be
                exercised, during the lifetime of the Participant, only by the
                Participant. If the Administrator makes an Award transferable, such
                Award
                will contain such additional terms and conditions as the Administrator
                deems appropriate. 

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	13.	
              Adjustments;
                Dissolution or Liquidation; Merger or Change in Control.

            

    

    

    (a) Adjustments.
      In the
      event that any dividend or other distribution (whether in the form of cash,
      Shares, other securities, or other property), recapitalization, stock split,
      reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
      combination, repurchase, or exchange of Shares or other securities of the
      Company, or other change in the corporate structure of the Company affecting
      the
      Shares occurs, the Administrator, in order to prevent diminution or enlargement
      of the benefits or potential benefits intended to be made available under the
      Plan, shall adjust the number and class of Shares that may be delivered under
      the Plan and/or the number, class, and price of Shares covered by each
      outstanding Award, the numerical Share limit in Section 3. 

    

    (b) Dissolution
      or Liquidation.
      In the
      event of the proposed dissolution or liquidation of the Company, the
      Administrator will notify each Participant as soon as practicable prior to
      the
      effective date of such proposed transaction. To the extent it has not been
      previously exercised, an Award will terminate immediately prior to the
      consummation of such proposed action.

    

    (c) Change
      in Control.
      In the
      event of a merger or Change in Control, any or all outstanding Awards may be
      assumed or replaced by the successor corporation, which assumption or
      replacement shall be binding on all Participants. In the alternative, the
      successor corporation may substitute equivalent Awards or provide substantially
      similar consideration to Participants as was provided to stockholders (after
      taking into account the existing provisions of the Awards). The successor
      corporation may also issue, in place of outstanding Shares of the Company held
      by the Participant, substantially similar shares or other property subject
      to
      repurchase restrictions no less favorable to the Participant. 

    

    In
      the
      event that the successor corporation does not assume or substitute for the
      Award, unless the Administrator provides otherwise, the Participant will fully
      vest in and have the right to exercise all of his or her outstanding Options
      and
      SARs, including Shares as to which such Awards would not otherwise be vested
      or
      exercisable, all restrictions on Restricted Stock and Restricted Stock Units
      will lapse, and, with respect to Performance Shares and Performance Units,
      all
      Performance Goals or other vesting criteria will be deemed achieved at target
      levels and all other terms and conditions met. In addition, if an Option or
      SAR
      is not assumed or substituted in the event of a Change in Control, the
      Administrator will notify the Participant in writing or electronically that
      the
      Option or SAR will be exercisable for a period of time determined by the
      Administrator in its sole discretion, and the Option or SAR will terminate
      upon
      the expiration of such period.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    For
      the
      purposes of this subsection (c), an Award will be considered assumed if,
      following the Change in Control, the Award confers the right to purchase or
      receive, for each Share subject to the Award immediately prior to the Change
      in
      Control, the consideration (whether stock, cash, or other securities or
      property) or, in the case of an SAR upon the exercise of which the Administrator
      determines to pay cash or a Performance Share or Performance Unit which the
      Administrator can determine to pay in cash, the fair market value of the
      consideration received in the merger or Change in Control by holders of Common
      Stock for each Share held on the effective date of the transaction (and if
      holders were offered a choice of consideration, the type of consideration chosen
      by the holders of a majority of the outstanding Shares); provided, however,
      that
      if such consideration received in the Change in Control is not solely common
      stock of the successor corporation or its Parent, the Administrator may, with
      the consent of the successor corporation, provide for the consideration to
      be
      received upon the exercise of an Option or SAR or upon the payout of a
      Restricted Stock Unit, Performance Share or Performance Unit, for each Share
      subject to such Award (or in the case of Restricted Stock Units and Performance
      Units, the number of implied shares determined by dividing the value of the
      Restricted Stock Units and Performance Units, as applicable, by the per share
      consideration received by holders of Common Stock in the Change in Control),
      to
      be solely common stock of the successor corporation or its Parent equal in
      fair
      market value to the per share consideration received by holders of Common Stock
      in the Change in Control.

    

    
      	 	
              Notwithstanding
                anything in this Section 13(c) to the contrary, an Award that vests,
                is
                earned or paid-out upon the satisfaction of one or more performance
                goals
                will not be considered assumed if the Company or its successor modifies
                any of such performance goals without the Participant's consent;
                provided,
                however, a modification to such performance goals only to reflect
                the
                successor corporation's post-Change in Control corporate structure
                will
                not be deemed to invalidate an otherwise valid Award
                assumption.

            

    

    

    
      	14.	
              Tax
                Withholding.

            

    

    

    (a) Withholding
      Requirements.
      Prior
      to the delivery of any Shares or cash pursuant to an Award (or exercise
      thereof), the Company will have the power and the right to deduct or withhold,
      or require a Participant to remit to the Company, an amount sufficient to
      satisfy federal, state, local, foreign or other taxes (including the
      Participant's FICA obligation) required to be withheld with respect to such
      Award (or exercise thereof).

    

    (b) Withholding
      Arrangements.
      The
      Administrator, in its sole discretion and pursuant to such procedures as it
      may
      specify from time to time, may permit a Participant to satisfy such tax
      withholding obligation, in whole or in part by (without limitation) (i) paying
      cash, (ii) electing to have the Company withhold otherwise deliverable cash
      or
      Shares having a Fair Market Value equal to the amount required to be withheld,
      or (iii) delivering to the Company already-owned Shares having a Fair Market
      Value equal to the amount required to be withheld. The amount of the withholding
      requirement will be deemed to include any amount which the Administrator agrees
      may be withheld at the time the election is made. The Fair Market Value of
      the
      Shares to be withheld or delivered will be determined as of the date that the
      taxes are required to be withheld.

    

    
      	
              15.

            	
              No
                Effect on Employment or Service.
                

            

      	 	 

    

    
      	 	
              Neither
                the Plan nor any Award will confer upon a Participant any right with
                respect to continuing the Participant's relationship as a Service
                Provider
                with the Company, nor will they interfere in any way with the
                Participant's right or the Company's right to terminate such relationship
                at any time, with or without cause, to the extent permitted by Applicable
                Laws.

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	16.	
              Term
                of Plan.
                

            

    

    

    
      	 	
              The
                Plan will terminate eight years following the earlier of (i) the date
                it was adopted by the Board or (ii) the date it became effective upon
                approval by stockholders of the Company, unless sooner terminated
                by the
                Board pursuant to Section 17. 

            

    

    

    
      	17.	
              Amendment
                and Termination of the Plan.

            

    

    

    (a) Amendment
      and Termination.
      The
      Board may at any time amend, alter, suspend or terminate the Plan.

    

    (b) Stockholder
      Approval.
      The
      Company will obtain stockholder approval of any Plan amendment to the extent
      necessary and desirable to comply with Applicable Laws.

    

    (c) Effect
      of Amendment or Termination.
      No
      amendment, alteration, suspension or termination of the Plan will impair the
      rights of any Participant, unless mutually agreed otherwise between the
      Participant and the Administrator, which agreement must be in writing and signed
      by the Participant and the Company. Termination of the Plan will not affect
      the
      Administrator's ability to exercise the powers granted to it hereunder with
      respect to Awards granted under the Plan prior to the date of such
      termination.

    

    
      	18.	
              Conditions
                Upon Issuance of Shares.

            

    

    

    (a) Legal
      Compliance.
      Shares
      will not be issued pursuant to the exercise of an Award unless the exercise
      of
      such Award and the issuance and delivery of such Shares will comply with
      Applicable Laws and will be further subject to the approval of counsel for
      the
      Company with respect to such compliance.

    

    (b) Investment
      Representations.
      As a
      condition to the exercise of an Award, the Company may require the person
      exercising such Award to represent and warrant at the time of any such exercise
      that the Shares are being purchased only for investment and without any present
      intention to sell or distribute such Shares if, in the opinion of counsel for
      the Company, such a representation is required.

    

    
      	19.	
              Inability
                to Obtain Authority.
                

            

    

    

    
      	 	
              The
                inability of the Company to obtain authority from any regulatory
                body
                having jurisdiction, which authority is deemed by the Company’s counsel to
                be necessary to the lawful issuance and sale of any Shares hereunder,
                will
                relieve the Company of any liability in respect of the failure to
                issue or
                sell such Shares as to which such requisite authority will not have
                been
                obtained.

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	
              20.

            	
              Buyout
                Of Awards.
                The Administrator may authorize the Company, with prior stockholder
                approval and the consent of the respective Participants, to issue
                new
                Option or SAR Awards in exchange for the surrender and cancellation
                of any
                or all outstanding Awards. The Administrator may at any time buy
                from a
                Participant an Option previously granted with payment in cash, Shares
                or
                other consideration, based on such terms and conditions as the
                Administrator and the Participant shall
                agree.

            

    

    

    
      	
              21.

            	
              Governing
                Law.
                The Plan and all Agreements shall be construed in accordance with
                and
                governed by the laws of the State of
                Nevada.

            

    

    

    
      	
              22.

            	
              Effective
                Date.
                The
                Plan’s effective date is the date on which it is adopted by the Board,
                so
                long as it is approved by the Company’s shareholders at any time within 12
                months of such adoption. 

            

    

     

    Adopted
      by the Board of Directors on April 25, 2008.

    
      
        
        

      

      
        18WAIVER
      AND AMENDMENT TO SENIOR SECURED NOTE

     

    THIS
      WAIVER AND AMENDMENT TO SENIOR SECURED NOTE (this “Agreement”)
      is
      made as of May 15, 2008, among Sonterra Resources, Inc. (f/k/a River Capital
      Group, Inc.) (the “Company”),
      the
      Subsidiaries and The Longview Fund, L.P. (“Buyer”).
      Any
      capitalized terms used but not otherwise defined herein shall have the meaning
      given thereto in the Note (as defined below) or, if not defined in the Note,
      in
      the Exchange Agreement (as defined below).

     

    WITNESSETH:

     

    WHEREAS,
      the Company and Buyer and entered into that certain Securities Exchange and
      Additional Note Purchase Agreement, dated as of August 3, 2007 (as amended
      by
      that certain February 2008 Amendment Agreement, dated as of February 14, 2008,
      and as may be further amended, restated, supplemented or otherwise modified
      and
      in effect from time to time, the “Exchange
      Agreement”),
      pursuant to which the Company issued to Buyer an RCGI Note, dated February
      14,
      2008, in an original principal amount of $2,000,000 (such note, together with
      any promissory notes or other securities issued in exchange or substitution
      therefor or replacement thereof, and as any of the same may be amended,
      restated, supplemented or otherwise modified and in effect from time to time,
      the “Note”);
      

     

    WHEREAS,
      as of December 31, 2007, the last day of the year covered by the Company’s
      annual report on Form 10-KSB filed with the SEC on April 14, 2008 (the
“10-KSB”),
      (i)
      the Total Proved Reserves were less than the Required Total Proved Reserves
      as
      of such date, and (ii) the PRV Ratio was less than the Required PRV Ratio as
      of
      such date, meaning that there was a Financial Covenant Test Failure as of
      December 31, 2007 (the “December Failure”);
      

     

    WHEREAS,
      as of March 31, 2008, the last day of the three-month period to be covered
      by
      the Company’s quarterly report on Form 10-Q to be filed with the SEC on or about
      May 15, 2008 (the “March
      10-Q”), (i)
      the
      Revenue from the sale of hydrocarbons and the provision of related services
      for
      the three-month period ending on such date was less than the Required Revenue
      as
      of such date, (ii) the Total Proved Reserves were less than the Required Total
      Proved Reserves as of such date, and/or (iii) the PRV Ratio was less than the
      Required PRV Ratio as of such date, meaning that, following the filing of the
      March 10-Q, there would be another Financial Covenant Test Failure (the
“March Failure”);
      

     

    WHEREAS,
      pursuant to the Section 3(b)(i) of the Note, as a result of the December
      Failure, the Company was required to pay Buyer an amount equal to Buyer’s Pro
      Rata Financial Covenant Test Failure Amount as of December 31, 2007 (the
“December
      Failure Amount”),
      but
      the Company has not made such payment; 

     

    WHEREAS,
      pursuant to Section 3(b)(i) of the Note, as a result of the March Failure,
      following the filing of the March 10-Q, the Company would be required to pay
      Buyer an amount equal to Buyer’s Pro Rata Financial Covenant Test Failure Amount
      as of March 31, 2008 (the “March
      Failure Amount”);
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    WHEREAS,
      the Company’s failure to pay the December Failure Amount constitutes an Event of
      Default pursuant to Section 4(a)(i) of the Note (the “December
      Default”);
      and

     

    WHEREAS,
      in light of the current condition of the Company, the Company and Buyer hereby
      deem it advisable and in the best interests of the parties to amend the Note
      and
      take other actions, all as provided herein.

     

    NOW,
      THEREFORE, in consideration of the agreements, provisions and covenants
      contained herein and for other good and valuable consideration, the receipt
      and
      sufficiency of which are hereby acknowledged, each of the undersigned agrees
      as
      follows:

     

    1.  Amendment
      to the Note and Form of Note.

     

    a.  Buyer
      hereby agrees with the Company that, as of the date first above written, the
      definition of “Financial Covenant Test Failure Amount” contained in Section 2 of
      each of the Note and the form of note attached to the Exchange Agreement as
      Exhibit A (for purposes of Additional RCGI Notes) is hereby amended by adding
      the following at the end thereof:

     

    “;
      provided,
      however,
      that
      solely for purposes of determining the Financial Covenant Test Failure Amount
      as
      of a determination date from and including March 31, 2008 through and including
      December 31, 2008, (X) the Required Revenue as of such date shall be deemed
      to
      be $50,000, (Y) the Required Total Proved Reserves as of such date shall be
      deemed to be 0.70 BCFE, and (Z) the Required PRV Ratio as of such date shall
      be
      deemed to be 0.75; and, provided,
      further,
      that,
      if any of the products calculated pursuant to clauses (i), (ii) and (iii) of
      this definition is less than zero (0), such product shall, for purposes of
      determining the Financial Covenant Test Failure Amount, be deemed to be zero
      (0).”

     

    b.  As
      amended hereby, the Note remains in full force and effect.

     

    2.  Limited
      Waivers.
      

     

    a.  Buyer
      hereby waives (i) the Company’s obligation to pay, and Buyer’s right to receive,
      the mandatory prepayment due pursuant to Section 3(b)(i) of the Note with
      respect to the December Failure Amount and (ii) the occurrence of the December
      Default. 

     

    b.  Solely
      for purposes of the Company’s issuance and sale to Buyer of up to an aggregate
      of $750,000 in principal amount of Additional RCGI Notes in accordance with,
      and
      subject to the terms and conditions of, the Exchange Agreement, Buyer hereby
      waives: (i) the Additional Note Issuance Amount Limitation set forth in clause
      (B) of Section 1(b) of the Exchange Agreement to the extent (and only to the
      extent) relating to the PRV Ratio at December 31, 2007, (ii) the Company’s
      failure to satisfy the Additional Sale Notice Election Conditions set forth
      in
      clauses (i)(Y), (ii) and (vi) of Section 1(d) of the Exchange Agreement to
      the
      extent (and only to the extent) resulting from the December Failure and there
      having been a Financial Covenant Test Failure at December 31, 2007 and March
      31,
      2008.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    c.  The
      limited waivers set forth in Sections 2(a) and 2(b) hereof are not, nor shall
      be
      deemed to be, a waiver under any other circumstance or a waiver of any other
      condition, requirement, provision or breach of any provision of any RCGI Note,
      this Agreement, the Exchange Agreement or any other agreement or instrument,
      and
      shall not be deemed to establish a custom or course of dealing. 

     

    3.  Representations
      and Warranties of the Company.
      The
      Company represents and warrants to Buyer that:

     

    a.  Authorization;
      Enforcement; Validity.
      Each of
      the Company and the Subsidiaries has the requisite corporate power and authority
      to enter into and perform its obligations under this Agreement, the RCGI Notes
      (as amended hereby) and the other Transaction Documents. The execution and
      delivery of this Agreement has been duly authorized by the board of directors
      of
      the Company, and no further consent or authorization is required by the Company,
      the Subsidiaries or their respective boards of directors or stockholders. This
      Agreement has been duly executed and delivered by each of the Company and the
      Subsidiaries, and each of this Agreement and the Note constitutes a valid and
      binding obligation of the Company and each of the Subsidiaries (as applicable),
      enforceable against the Company and each of the Subsidiaries (as applicable)
      in
      accordance with its terms. 

     

    b.  No
      Conflicts.
      The
      execution and delivery of this Agreement by each of the Company and the
      Subsidiaries, the performance by each of the Company and the Subsidiaries (as
      applicable) of its obligations hereunder and under the RCGI Notes (as amended
      hereby) and the other Transaction Documents, and the consummation by the Company
      and the Subsidiaries (as applicable) of the transactions contemplated hereby
      and
      thereby have not and will not (i) result in a violation of the certificate
      of
      incorporation or the bylaws of the Company or the or the organizational
      documents of any of the Subsidiaries; (ii) conflict with, or constitute a breach
      or default (or an event which, with the giving of notice or lapse of time or
      both, constitutes or would constitute a breach or default) under, or give to
      others any right of termination, amendment, acceleration or cancellation of,
      or
      other remedy with respect to, any agreement, indenture or instrument to which
      the Company or any of the Subsidiaries is a party; or (iii) result in a
      violation of any law, rule, regulation, order, judgment or decree (including
      federal and state securities laws and regulations) applicable to the Company
      or
      any of the Subsidiaries or by which any property or asset of the Company or
      any
      of the Subsidiaries is bound or affected. Neither the Company nor any of the
      Subsidiaries is required to obtain any consent, authorization or order of,
      or
      make any filing or registration with, any court or governmental agency or any
      regulatory or self-regulatory agency in order for it to execute, deliver or
      perform any of its obligations under, or contemplated by, this Agreement in
      accordance with the terms hereof.

     

    c.  No
      Violation of Security Documents.
      Neither
      the Company nor any of the Subsidiaries has breached or violated any of the
      provisions of the Security Documents or taken any action that would impair,
      or
      otherwise adversely affect, the rights of Buyer or the Collateral Agent under
      the Security Documents or otherwise with respect to the Collateral (as defined
      in the Security Documents).

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    4.  Representations
      and Warranties of Buyer.
      Buyer
      hereby represents and warrants to the Company that (a) Buyer is a validly
      existing limited partnership and has the requisite partnership power and
      authority to enter into and perform its obligations under this Amendment, and
      (b) this Amendment has been duly and validly authorized, executed and delivered
      on behalf of Buyer and is a valid and binding agreement of Buyer, enforceable
      against Buyer in accordance with its terms.

     

    5.  Acknowledgement
      of the Company.Each
      of
      the Company and the Subsidiaries hereby irrevocably and unconditionally
      acknowledges, affirms and covenants to Buyer that:

     

    a.  Buyer
      is
      not in default under any of the Transaction Documents nor otherwise has breached
      any obligations to the Company or any of the Subsidiaries; and

     

    b.  there
      are
      no offsets, counterclaims or defenses to the Liabilities (as such term is
      defined in the Security Agreement), including the liabilities and obligations
      of
      the Company under the Exchange Agreement (as amended hereby), or to the rights,
      remedies or powers of Buyer in respect of any of the Liabilities or any of
      the
      Transaction Documents, and the Company agrees not to interpose (and does hereby
      waive and release) any such defense, set-off or counterclaim in any action
      brought by such Buyer with respect thereto.

     

    6.  Disclosure
      of Transactions and Other Material Information.
      On or
      prior to 5:30 p.m., New York City time, on the fourth (4th)
      Business Day following the date hereof, the Company shall file a Form 8-K (the
      “Form
      8-K”)
      with
      the SEC, describing this Amendment, and the transactions contemplated thereby,
      providing any other information required to be disclosed pursuant to the rules
      and regulations of the SEC, and including as an exhibit this Amendment, in
      the
      form required by the 1934 Act. From and after the filing of this Form 8-K with
      the SEC, Buyer shall not be in possession of any material nonpublic information
      received from the Company, any of the Subsidiaries or any of their respective
      officers, directors, employees, agents or Affiliates. The Company shall provide
      Buyer and its counsel with a reasonable opportunity to review and comment upon
      the Form 8-K prior to the filing thereof.

     

    7.  Issuance
      of Amended and Restated Note.
      Promptly following the date hereof, and in no event later than three (3)
      Business Days following the date hereof, the Company shall issue to Buyer an
      amended and restated RCGI Note, in a form acceptable to Buyer, reflecting the
      terms of the Note as amended hereby (the “New
      Note”).
      Upon
      the issuance by the Company to Buyer of the New Note, the Note previously held
      by Buyer (the “Original
      Note”)
      will
      be void and of no further force and effect, and Buyer shall promptly return
      the
      Original Note to the Company for cancellation.

     

    8.  Expenses.
      In
      accordance with Section 4(i) of the Exchange Agreement, contemporaneously with
      the execution and delivery of this Amendment, the Company shall reimburse Buyer
      for all of its out-of-pocket fees, costs and expenses, including attorneys’ fees
      and expenses, incurred in connection with the drafting, negotiation and
      execution of this Amendment. 

     

    9.  Reservation
      of Rights.
      Except
      as specifically set forth in Section 2, Buyer has not waived (a) any breach,
      default or event of default that may be continuing under any of the Transaction
      Documents or (b) any of Buyer’s rights or remedies arising from any such breach,
      default or event of default or otherwise available under the Transaction
      Documents or at law or in equity. Buyer expressly reserves all such rights
      and
      remedies.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    10.  Successors
      and Assigns.
      This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective successors and permitted assigns. The successors
      and
      assigns of such entities shall include their respective receivers, trustees
      or
      debtors-in-possession.

     

    11.  Further
      Assurances.
      The
      Company hereby agrees from time to time, as and when requested by Buyer, to
      execute and deliver or cause to be executed and delivered, all such documents,
      instruments and agreements, including secretary’s certificates, stock powers and
      irrevocable transfer agent instructions, and to take or cause to be taken such
      further or other action, as Buyer may reasonably deem necessary or desirable
      in
      order to carry out the intent and purposes of this Agreement, the RCGI Notes
      (as
      amended hereby) and the other Transaction Documents.

     

    12.  Rules
      of Construction.
      All
      words in the singular or plural include the singular and plural and pronouns
      stated in either the masculine, the feminine or neuter gender shall include
      the
      masculine, feminine and neuter, and the use of the word “including” in this
      Agreement shall be by way of example rather than limitation. The language used
      in this Agreement will be deemed to be the language chosen by the parties to
      express their mutual intent, and no rules of strict construction will be applied
      against any party.

     

    13.  Governing
      Law; Jurisdiction; Jury Trial.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdiction) that would
      cause the application of the laws of any jurisdiction other than the State
      of
      New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in the City of New York, borough of
      Manhattan, for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein, and
      hereby irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such suit, action or proceeding is brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
      TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    14.  Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to each other party.
      In
      the
      event that any signature to this Agreement or any amendment hereto is delivered
      by facsimile transmission or by e-mail delivery of a “.pdf” format data file,
      such signature shall create a valid and binding obligation of the party
      executing (or on whose behalf such signature is executed) with the same force
      and effect as if such facsimile or “.pdf” signature page were an original
      thereof. No party hereto shall raise the use of a facsimile machine or e-mail
      delivery of a “.pdf” format data file to deliver a signature to this Agreement
      or any amendment hereto or the fact that such signature was transmitted or
      communicated through the use of a facsimile machine or e-mail delivery of a
      “.pdf” format data file as a defense to the formation or enforceability of a
      contract, and each party hereto forever waives any such defense.

     

    15.  Section
      Headings.
      The
      section headings herein are for convenience of reference only, and shall not
      affect in any way the interpretation of any of the provisions
      hereof.

     

    16.  Merger.
      This
      Agreement, the Exchange Agreement, the RCGI Notes (as amended hereby) and the
      other Transaction Documents represent the final agreement of each of the parties
      hereto with respect to the matters contained herein and may not be contradicted
      by evidence of prior or contemporaneous agreements, or prior or subsequent
      oral
      agreements, among any of the parties hereto.

     

    17.  Ratification
      by Guarantors.
      By
      execution hereof, each of the Subsidiaries hereby acknowledges and agrees that
      it has reviewed this Agreement and hereby ratifies and confirms its respective
      obligations under the Transaction Documents, including the Note and the other
      RCGI Notes (each as amended hereby).

     

    [Remainder
      of page intentionally left blank; Signature page follows]

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, this Waiver and Amendment to Senior Secured Note has been
      duly
      executed and delivered by each of the undersigned as of the date first above
      written.

     

    
      	 	
              SONTERRA
                RESOURCES, INC. 

            
	 	 
	 	 
	 	
              By:     
                /s/
                Michael J.
                Pawelek                           
                

              Name:
                Michael
                J. Pawelek

              Title:  
                President
                and Chief Executive Officer

            
	 	 
	 	 
	 	
              SONTERRA
                OIL & GAS, INC.

            
	 	 
	 	 
	 	
              By:     
                /s/
                Michael J.
                Pawelek                           
                

              Name: Michael
                J. Pawelek

              Title:  
                President
                and Chief Executive Officer

            
	 	 

    

     

    
      	 	
              SONTERRA
                OPERATING, INC.

            
	 	 
	 	 
	 	
              By:      /s/
                Wayne A.
                Psencik                           
                

              Name: Wayne
                A. Psencik

              Title:   President

            
	 	 

    

    

    
      	 	
              THE
                LONGVIEW FUND, L.P., a

              California
                limited partnership

               

              By:    
                Viking Asset Management, LLC

              Its:     
                Investment Adviser

               

              By:     
                /s/
                S. Michael
                Rudolph                         
                

              Name:
                S.
                Michael Rudolph

              Title:  
                Chief
                Financial Officer

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