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EXHIBIT 10.2

                          SEPARATION AGREEMENT BETWEEN

                          CALIFORNIA PIZZA KITCHEN, INC

                                       AND

                                FREDERICK R. HIPP

         This Separation Agreement (this "Agreement") sets forth the terms upon
which California Pizza Kitchen, Inc. (the "Company"), and Frederick R. Hipp
("Executive"), have agreed to terminate Executive's employment with the Company
pursuant to and in accordance with the Severance Agreement dated as of March 31,
1998 between the Company and Executive (the "Severance Agreement"). All
capitalized terms which are not defined herein have the meanings set forth in
the Severance Agreement.

1.       Termination. Effective July 24, 2003 (the "Termination Date"),
Executive shall resign from his position as President and Chief Executive
Officer of the Company and shall also resign from the Company's Board of
Directors and from the Board of Directors of LA Food Show, Inc.

2.       Compensation. Executive will be paid a severance payment (the
"Severance Payment") in the amount of Six Hundred Thousand Dollars ($600,000).
The Severance Payment will be paid to Executive in installments on the Company's
regular payroll intervals through the Company's last payroll date in calendar
year 2003 and the amount of each installment will be calculated as though
Executive were receiving a Base Salary of Six Hundred Thousand Dollars
($600,000) per annum. The balance of the Severance Payment will be paid to
Executive in a lump sum on the Company's first regular payroll date in calendar
year 2004. Executive shall be entitled to be paid for any vacation time accrued
through the Termination Date in accordance with Company policy, and shall be
entitled to receive reimbursement for all expenses incurred prior to the
Termination Date. Executive shall not be entitled to receive any bonus
compensation or other amounts except as set forth in this Agreement.

3.       Options. Executive has been granted options to purchase an aggregate of
200,000 shares of the Company's Common Stock, of which options to purchase an
aggregate of 62,500 shares are fully vested. All unvested options shall
terminate on the Termination Date. All vested options shall be exercisable by
Executive through close of business on July 23, 2006

4.       Insurance Benefits; Computer.

         (a)      The Company shall: (i) make direct payments to the Company's
insurance carrier with respect to all COBRA premiums payable by Executive for
himself and his family members who were covered under the Company's group health
insurance plans immediately prior to the Termination Date; and (ii) pay
Executive an amount equal to the state and federal taxes payable by Executive as
a result of the Company's payment of such premiums, as calculated at an

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assumed combined rate of forty percent (40%). The Company's obligation to make
such payments shall terminate on the earliest of: (i) the 18-month anniversary
of the Termination Date; (ii) the date the Company has paid an aggregate of
Twenty Thousand Dollars ($20,000) pursuant to this Section 4(a); and (iii) the
date Executive first becomes eligible to participate in another employer's
health insurance plan.

         (b)      Executive shall be entitled to retain the laptop computer
purchased for him by the Company subject to the Company's prior verification
that no confidential or proprietary information relating to the Company is
contained thereon.

5.       Press Release: Confidentiality. The parties will jointly prepare and
issue a press release describing Executive's departure from the Company which
will be issued no later than the Termination Date. The parties agree that after
execution hereof, the Company may announce internally to its employees that
Executive is terminating his employment effective on the Termination Date. Each
party agrees not to make any other public announcement with respect to
Executive's termination or to otherwise disclose or reveal any of the terms or
conditions of this Agreement to any person or entity other than to his spouse or
to his or its attorneys, accountants, auditors, and other financial advisors or
insurers (and even then only in confidence), except as expressly set forth
herein or as may be necessary to comply with the terms of this Agreement or any
lawful requirement or process of any court or governmental or administrative
entity, or to enforce his or its rights under this Agreement or to defend
against threatened claims by another party to this Agreement. Further, both the
Company and Executive may disclose to any and all persons, without limitation of
any kind, the U.S. federal tax treatment and tax structure of the transactions
contemplated by this Severance Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to either party
relating to such U.S. federal tax treatment and tax structure. Notwithstanding
the foregoing, any party may disclose the mere fact that Executive's employment
with the Company has been terminated.

6.       Confidential Information. Executive acknowledges that the information,
observations and data obtained by him while employed by the Company concerning
the business and affairs of the Company and its affiliates ("Confidential
Information") are the property of the Company or such affiliate. Therefore,
Executive agrees that he shall not disclose to any unauthorized person or use
for his own account any Confidential Information without the prior written
consent of the Company's Board of Directors, unless and to the extent required
by law, rule or regulation or pursuant to any administrative or court order.
Notwithstanding the foregoing, Executive may disclose Confidential Information
which (i) has become generally available to the public other than as a result of
breach of this Agreement by Executive, or (ii) Executive is compelled to
disclose pursuant to a subpoena or an order of a court of competent
jurisdiction; provided that if Executive is required to disclose any
Confidential Information pursuant to clause (ii), Executive shall provide
advance written notice to the Company, to the extent possible, to allow the
Company to seek an appropriate protective order therefor.

7.       Non-Solicitation. Executive agrees that from the date hereof and
continuing for a period of one year following the Termination Date, neither
Executive nor any person or entity directly or indirectly controlled by or under
common control with Executive will, directly or indirectly, solicit for
employment or attempt to solicit for employment any person who was an employee,

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officer or director of the Company at any time during the twelve months
preceding the date of the act of solicitation.

8.       Release.

         (a)      Executive, on behalf of himself and his assigns, heirs, legal
representatives and agents, hereby releases and forever discharges the Company
and each of its past and present directors, shareholders, controlling persons,
officers, agents, Executives, legal representatives, attorneys, parents,
subsidiaries, affiliates, predecessors, successors, assigns, and attorneys and
each of them separately and collectively (hereinafter referred to separately and
collectively as the "Releasees") from: any and all claims, liens, demands,
actions, causes of action, suits, debts, contracts, promises, obligations,
damages, liabilities, losses, costs and expenses of any nature whatsoever, known
or unknown, in law or in equity, anticipated or unanticipated, conditional or
contingent (collectively, "Actions and Liabilities"), which Executive now owns
or holds, or at any time heretofore owned or held, or which Executive hereafter
can, shall or may own or hold against any of the Releasees, which in each case
arise out of or relate to Executive's employment by the Company, the termination
of Executive's employment, any status, term or condition of such employment,
Executive's service to the Company as a director, or any physical or mental harm
or distress from such employment or service or from termination of such
employment or service, including without limitation, (i) any and all claims
under California statutory or decisional law pertaining to wrongful discharge,
retaliation, breach of contract, breach of public policy, misrepresentation,
fraud or defamation; (ii) any and all claims under the California Fair
Employment and Housing Act, the California Labor Code (or any similar law or
regulation of the state in which I am employed), Title VII of the Civil Rights
Act of 1964, the Age Discrimination in Employment Act, the Executive Retirement
Income Security Act, the Fair Labor Standards Act and the Americans With
Disabilities Act; (iii) claims arising under any federal, state or local
statute, regulation, or ordinance prohibiting discrimination on the basis of
race, color, creed, religion, religious creed, sex, marital status, sexual
orientation, gender, veterans status, genetic characteristics, pregnancy,
childbirth or related medical condition, national origin, age, ancestry,
citizenship status, mental or physical disability/handicap, medical condition,
AIDS or related medical condition, arrest record, or other basis of
discrimination, any and all claims for costs, expenses or attorneys' fees; (iv)
any and all claims for costs, expenses or attorneys' fees; and (v) any claims to
rehire rights; provided, however, that claims for vested benefits and claims for
workers' compensation and unemployment insurance benefits are not waived.

         (b)      Nothing in the preceding Section 8(a) shall operate to
release, relieve, waive, relinquish, or discharge the Company from any
obligation it may have to indemnify Executive pursuant to California Labor Code
Section 2802 or Article IV of the Company's Amended and Restated Articles of
Incorporation.

9.       Waiver. Executive expressly understands and agrees that the releases
contained in Section 8 fully and finally release and forever resolve the matters
released and discharged in such Section, including those which may be unknown,
unanticipated and/or unsuspected, and upon the advice of legal counsel, hereby
expressly waives all benefits under Section 1542 of the California Civil Code,
as well as under any other statutes or common law principles of similar effect,
to the extent that such benefits may contravene the provisions of Section 8.
Executive

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acknowledges that he has read and understands Section 1542 of the California
Civil Code, which provides as follows:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
                  DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
                  EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

10.      Prior Assignment. Executive represents that he has not filed with any
government agency or court any claim against the Company relating to his
employment, termination of employment or otherwise. Executive covenants and
agrees that he will never, individually or with any person, or through any
agent, commence or prosecute against any Releasee any of the Actions and
Liabilities which are released in Section 8 of this Agreement. Executive further
agrees that he will not aid, assist, abet or in any way encourage any third
party or third-party entity to, in any way, pursue any Actions or Liabilities of
any kind against the Company or any Releasee unless he is specifically required
by law to engage in such activity. This Agreement shall be deemed breached
immediately upon the commencement or prosecution of any such Action or
Liability. Executive represents and warrants that he has not assigned or
otherwise transferred (voluntarily, involuntarily or by operation of law) any
right, title or interest in any Actions or Liabilities which he has, may have or
may have had which is the subject of the release in Section 8 hereof. Executive
agrees to indemnify, save and hold forever harmless the Releasees from any
Actions and Liabilities incurred as a result of any person or entity asserting
any claim pursuant to any such assignment or transfer. It is the intention of
the parties hereto that this indemnity does not require payment as a condition
precedent to recovery.

11.      EEOC Actions. This Agreement recognizes the rights and responsibilities
of the Equal Employment Opportunity Commission ("EEOC") to enforce the statutes
which come under its jurisdiction and is not intended to prevent Executive from
filing a charge or participating in any investigation or proceeding conducted by
the EEOC; provided, however, that nothing in this section limits or affects the
finality or the scope of the release provided in Section 8, the waiver provided
in Section 9, the covenant not to sue provided in Section 10 or the agreement to
submit claims to final and binding arbitration in Section 14.

12.      Representations and Warranties. Each of the parties hereto warrants,
represents and agrees that in executing this Agreement:

         (a)      He or it has received independent legal advice from his or its
attorneys with respect to each aspect of this Agreement;

         (b)      He or it assumes the risk of any mistake of fact with regard
to any aspect of this Agreement; and

         (c)      He or it carefully has read and considered this Agreement in
its entirety and fully understands its contents and the significance of each of
its aspects.

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13.      Escrow. Executive agrees that if he brings an action to challenge the
enforceability of this Agreement, he will tender to a neutral escrow, as
designated by the Company, all consideration that he received pursuant to this
Agreement.

14.      Arbitration. Executive agrees that any future disputes between him and
the Company (the "parties"), including but not limited to disputes arising out
of or related to this Agreement, shall be resolved by binding arbitration,
except where the law specifically forbids the use of arbitration as a final and
binding remedy, or where Section 14(g) below specifically allows a different
remedy.

         (a)      The complainant shall provide the other party a written
statement of the claim identifying any supporting witnesses or documents and the
relief requested.

         (b)      The respondent shall furnish a statement of the relief, if
any, that it is willing to provide, and identifying supporting witnesses or
documents. If the matter is not resolved, the parties shall submit the dispute
to nonbinding mediation, paid for by the Company, before a mediator selected by
the parties.

         (c)      If the matter is not resolved through mediation, the parties
agree that the dispute shall be resolved by binding arbitration. If the parties
are unable to jointly select an arbitrator, they will obtain a list from the
Federal Mediation and Conciliation Service and select an arbitrator by striking
names from that list.

         (d)      The arbitrator shall have the authority to determine whether
the conduct complained of in Section 14(a) violates the complainant's rights
and, if so, to grant any relief authorized by law; subject to the exclusions of
Section 14(g) below. The arbitrator shall not have the authority to modify,
change or refuse to enforce any lawful terms of this Agreement.

         (e)      The Company shall bear the costs of the arbitration if
Executive prevails. If the Company prevails, Executive will pay the cost of the
arbitration. Each party shall pay his or its own attorneys' fees, unless the
arbitrator orders otherwise, pursuant to applicable law.

         (f)      ARBITRATION SHALL BE THE EXCLUSIVE FINAL REMEDY FOR ANY
DISPUTE BETWEEN THE PARTIES, SUCH AS DISPUTES INVOLVING CLAIMS FOR
DISCRIMINATION OR HARASSMENT (SUCH AS CLAIMS UNDER THE CALIFORNIA FAIR
EMPLOYMENT AND HOUSING ACT, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE
AMERICANS WITH DISABILITIES ACT, OR THE AGE DISCRIMINATION IN EMPLOYMENT ACT),
WRONGFUL TERMINATION, BREACH OF CONTRACT, BREACH OF PUBLIC POLICY, PHYSICAL OR
MENTAL HARM OR DISTRESS OR ANY OTHER DISPUTES, AND THE PARTIES AGREE THAT NO
DISPUTE SHALL BE SUBMITTED TO ARBITRATION WHERE THE COMPLAINANT HAS NOT COMPLIED
WITH THE PRELIMINARY STEPS PROVIDED FOR IN SECTIONS 14(a) AND (b) ABOVE.

         (g)      The parties agree that the arbitration award shall be
enforceable in any court having jurisdiction to enforce this Agreement, so long
as the arbitrator's findings of fact are supported by substantial evidence on
the whole and the arbitrator has not made errors of law; however, either party
may bring an action, including, but not limited to an action for injunctive
relief, in a court of competent jurisdiction, regarding or related to matters
involving the Company's Confidential Information, or regarding or related to
inventions that Executive may claim to have developed prior to or after joining
the Company, pursuant to California Labor

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Code section 2870 ("Disputes Related to Inventions"). The parties further agree
that for Disputes Related to Inventions which the parties have elected to submit
to arbitration, each party retains the right to seek preliminary injunctive
relief in court to preserve the status quo or prevent irreparable injury before
the matter can be heard in arbitration.

15.      No Admissions. Each of the parties hereto understands and acknowledges
that this Agreement and the consideration transferred hereunder are being made
solely for the purpose of avoiding the expense and inconvenience of litigation
and it shall not be construed as an admission of any wrongful conduct or
liability whatsoever on the part of any party hereto.

16.      Period for Review and Consideration of Agreement. Executive understands
that such Executive has been given a period of twenty-one (21) days to review
and consider this Agreement before signing it. Executive further understands
that he may use as much of this twenty-one (21) day period as Executive wishes
prior to signing. Executive represents that Executive consulted with his
attorney to the full extent that Executive so desired.

17.      Executive's Right to Revoke Agreement. Executive may revoke this
Agreement within seven (7) days of the date Executive signs it. Revocation can
be made by delivering a written notice of revocation to Anna M. Graves at the
address set forth in Section 25. For this revocation to be effective, written
notice must be received no later than the close of business on the seventh day
after the date the Executive delivers an executed copy of this Agreement to the
Company (the "Delivery Date"). Such seventh day is referred to herein as the
"Release Date". If Executive revokes this Agreement it shall not be effective or
enforceable and Executive will not receive the benefits described in Sections 1,
2, 3, 4 and 5 hereof.

18.      Entire Understanding; Amendments. No promise or inducement of any
nature has been made or given to any party other than those set forth in this
Agreement. This Agreement constitutes the entire agreement and understanding
between and among the parties hereto with respect to the subject matter hereof,
including without limitation, the release of any and all Actions and Liabilities
by or against the parties hereto, and supersedes all prior agreements,
representations and understandings, both written and oral, between and among the
parties hereto with respect to the subject matter hereof. This Agreement may not
be amended or modified except by a written instrument executed by all of the
parties hereto.

19.      Further Assurances. Each of the parties hereto, acting by himself or
itself or through his or its respective attorneys, shall promptly prepare and
execute all documents and do all things necessary to consummate the agreements
set forth in this Agreement.

20.      Assignment. This Agreement shall be binding upon and shall inure to the
benefit of the assignees, licensees, heirs, executors, legal representatives,
successors and transferees of the entities and persons released hereunder,
whether by license, sale, merger, reverse merger, sale of stock, insolvency,
sale of assets, death, incapacity, operation of law, or, without limitation,
otherwise.

21.      Interpretation. This Agreement has been negotiated at arms' length
between persons knowledgeable in the matters dealt with herein. Each of the
parties acknowledges that he or it has been represented throughout all
negotiations preceding the execution of this Agreement by

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experienced and knowledgeable legal counsel of his or its choice. Accordingly,
any rule of law, including, but not limited to, Section 1654 of the California
Civil Code, or any legal decision that would require interpretation of any
ambiguities in this Agreement against the party that has drafted it, is of no
application and is hereby expressly waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intentions of the
parties and of this Agreement.

22.      Governing Law. This Agreement has been executed in and shall be
governed by and construed in accordance with the internal laws of the State of
California without giving effect to the principles of conflicts of laws thereof.

23.      Enforceability. If any provision of this Agreement is found,
determined, and/or adjudicated to be illegal, invalid or unenforceable, then
such provision shall be deemed to modified or restricted to the extent necessary
to make such provision valid, binding and enforceable, or, if such provision
cannot be modified or restricted in a manner so as to make such provision valid,
binding and enforceable, then such provision shall be deemed to be excised from
this Agreement and the validity, binding effect and enforceability of the
remaining provisions of this Agreement shall not be affected or impaired in any
manner.

24.      No Waiver; Cumulative Remedies. No failure or delay on the part of any
party in exercising any right, power or remedy hereunder shall operate as a
waiver hereof; nor shall any single or partial exercise of any right, power or
remedy preclude any other or future exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

25.      Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been delivered
and received five business days after having been deposited in the United States
Mail enclosed in a registered or certified post-paid envelope; one business day
after having been sent by overnight courier; when personally delivered on a
business day, or otherwise on the next succeeding business day thereafter; and
in each case addressed to the respective parties at the addresses set forth
below or to such other changed addresses the parties may have fixed by notice as
provided herein:

If to Executive:           Frederick R. Hipp
                           321 Dalehurst Avenue
                           Los Angeles, CA 90024
                           Tel: (310) 470-5195
                           Email: Fred@Hipp.com

If to Company:             California Pizza Kitchen
                           6053 W. Century Boulevard, Suite 1100
                           Los Angeles, CA 90045-6430
                           Attn: Chief Executive Officer
                           Tel: (310) 342-5000
                           Fax: (310) 319-1360

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With a copy to:            Pillsbury Winthrop LLP
                           725 South Figueroa Street, Suite 2800
                           Los Angeles, CA 90017
                           Attn:  Anna M. Graves, Esq.
                           Tel: (213) 488-7164
                           Fax: (213) 226-4017

26.      Counterparts. This Agreement may be executed and delivered in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties has executed this Agreement as of July
15, 2003.

                                             By:      /s/ RICHARD L. ROSENFIELD
                                                      -------------------------

                                                      Richard L. Rosenfield

                                                      Co-Chief Executive Officer

                                             By:      /s/ FREDERICK R. HIPP
                                                      ---------------------

                                                      Frederick R. Hipp

                                                      Executive

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                                                                 Exhibit 10.40

                            NORTH COAST ENERGY, INC.

                         1999 EMPLOYEE STOCK OPTION PLAN

North Coast Energy, Inc. (the "Company") hereby adopts a stock option plan for
eligible employees of the Company and its subsidiary corporations pursuant to
the following terms and provisions.

1.  Purpose of the Plan. The purpose of this plan (the "Plan") is to provide
additional incentive to such key employees of the Company and its subsidiary
corporations as may be designated for participation herein by encouraging them
to acquire a new or an additional share ownership in the Company, thus
increasing their proprietary interest in the Company's business and providing
them with an increased personal interest in the Company's continued success and
progress and to attract and retain individuals with experience and/or ability
for the Company. These objectives will be promoted through the grant of options
to acquire shares of the Company's common stock pursuant to the terms of the
Plan. It is intended that eligible employees may be granted, simultaneously or
from time to time, "incentive stock options" under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or other stock options, but no
provision of the Plan is intended or shall be construed to grant employees
alternative rights in incentive stock options and other stock options so as to
prevent options granted as incentive stock options under the Plan from
qualifying as such options within the meaning of Section 422 of the Code. In
this Plan, the terms "employees of the Company", "employment by the Company",
and "in the employ of the Company", shall be deemed to include employees of,
employment by, and in the employ of, a "subsidiary corporation" or "parent
corporation" of the Company, as those terms are defined in Section 424 of the
Code.

2.  Effective Date of the Plan. The Plan shall become effective as of October
18, 1999, the date of adoption by the Board of Directors of the Company, subject
to approval by holders of shares representing a majority of the outstanding
voting stock of the Company present at a meeting of stockholders called for that
purpose.

3.  Administration of the Plan. The Plan shall be administered by the Stock
Option and Compensation Committee of the Board of Directors of the Company (the
"Committee") as appointed from time to time by the Board of Directors from among
its members, none of whom shall be eligible to be granted stock options under
the Plan and each of whom shall be (a) a "disinterested person" within the
meaning of Rule 16b-3(c)(2)(i) under the Securities Exchange Act of 1934, as
amended (the "34 Act") and (b) an "outside director" within the meaning of
Section 162(m)(4) of the Code.

Subject to the terms and conditions of the Plan, the Committee shall be
authorized:

         (a)      To select the key employees to whom options may be granted;

         (b)      To determine the number of shares of Common Stock to be
                  covered by any option;

         (c)      To determine the time or times when options will be granted;

         (d)      To determine the time or times when each option may be
                  exercised;

         (e)      To determine at the time of grant of an option under the Plan
                  whether and to what extent such option is an incentive stock
                  option entitled to the benefits of Section 422 of Code;

         (f)      To determine whether stock appreciation rights shall be made
                  part of any option grant to any key employee employed by the
                  Company and to approve such stock appreciation

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                  rights made part of any option grant to any key employee
                  employed by any subsidiary corporation of the Company pursuant
                  to Section 8 hereof;

         (g)      To prescribe the form of the option agreements to be granted
                  under the Plan; and

         (h)      To establish such other provisions of the option agreements
                  not contrary to the terms and conditions of the Plan or, where
                  the option is an incentive stock option, of Section 422 of the
                  Code as the Committee may deem necessary or desirable.

4.  Employees Eligible for Options. Options may be granted from time to time in
the discretion of the Committee only to such key employees of the Company or of
a subsidiary corporation of the Company as may be designated by the Committee
whose initiative and efforts contribute or may be expected to contribute to the
Company's continued growth and future success, including key employees who may
also be members of the Board of Directors or officers, subject to the
restrictions herein contained. Members of the Committee shall not be eligible to
participate in this Plan, or to receive options under it, while serving on the
Committee. The Committee may grant more than one option, with or without stock
appreciation rights, to the same employee. No option shall be granted to any
employee during any period of time when he is on leave of absence.

5.  Shares Subject to the Plan. The shares to be issued upon the exercise of
options granted under the Plan shall be shares of common stock, par value $.01
per share of the Company ("Common Stock"). Either treasury or authorized and
unissued shares of Common Stock, or both, in such amount or amounts, within the
maximum limits of the Plan, as the Board of Directors shall from time to time
determine, may be so issued. All shares of Common Stock which are the subject of
any lapsed, expired or terminated options may be made available for reoffering
under the Plan to any eligible employee. In the event a stock appreciation right
is granted in conjunction with an option pursuant to Section 8 and such stock
appreciation right is thereafter exercised in whole or in part, then such option
or the portion thereof to which the duly exercised stock appreciation right
relates shall be deemed to have been exercised. The shares of Common Stock which
otherwise would have been issued upon exercise of such option may be made
available for reoffering under the Plan to any eligible employee.

Subject to the provisions of the next succeeding paragraph of this Section 5,
the aggregate number of shares of Common Stock for which options may be granted
under the Plan shall be eight hundred thousand (800,000) shares of Common Stock.

In the event that subsequent to the date of adoption of the Plan by the Board of
Directors the authorized number of shares of Common Stock should, as a result of
a stock split, stock dividend, combination or exchange of shares, exchange for
other securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or other such change, be increased or decreased
or changed into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation, then (i) there
shall automatically be substituted for each share of Common Stock subject to an
unexercised option (in whole or in part) granted under the Plan and each share
of Common Stock available for additional grants of options under the Plan the
number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall be changed or for which each such share
of Common Stock shall be exchanged, (ii) the option price per share of Common
Stock or unit of securities shall be increased or decreased proportionately so
that the aggregate purchase price for the securities subject to the option shall
remain the same as immediately prior to such event, and (iii) the Board shall
make such other adjustments to the securities subject to options and the
provisions of the Plan and option agreements as may be appropriate and
equitable. Any such adjustment may provide for the elimination of fractional
shares.

6.       Option Provisions.

         (a)      Option price. The option price per share of Common Stock which
                  is the subject of an incentive stock option under the Plan
                  shall be determined by the Committee at the time of grant but
                  shall not be less than one hundred percent (100%) of the fair
                  market value of the

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                  Company's shares of Common Stock on the date such an option is
                  granted; provided, however, that if the employee to whom an
                  option is granted is at the time of the grant of the option an
                  owner as defined in Section 425(d) of the Code of more than
                  ten percent (10%) of the total combined voting power of all
                  classes of stock of the Company or any subsidiary corporation
                  (a "Substantial Shareholder") the option price per share of
                  Common Stock shall be determined by the Committee from time to
                  time but shall never be less than one hundred ten percent
                  (110%) of the fair market value of the Company's shares of
                  Common Stock on the date such an option is granted. The option
                  price per share of Common Stock under each option granted
                  pursuant to the Plan which is not an incentive stock option
                  shall be determined by the Committee at the time of grant but
                  shall not be less than fifty percent (50%) of the fair market
                  value of the Company's shares of Common Stock on the date such
                  option is granted. Such fair market value shall be determined
                  in accordance with procedures to be established by the
                  Committee. The day on which the Committee approves the
                  granting of an option shall be considered the date on which
                  such option is granted.

         (b)      Period of option. The Committee shall determine when each
                  option is to expire but no option shall be exercisable for a
                  period of more than ten (10) years from the date upon which
                  the option is granted; provided, however, no incentive stock
                  option granted to an employee who is a Substantial Shareholder
                  at the time of the grant of such option shall be exercisable
                  after the expiration of five (5) years from the date of the
                  grant of the option.

         (c)      Limitation on exercise and transfer of options. No option
                  granted hereunder shall be transferable except (i) by the Last
                  Will and Testament of the employee to whom it is granted or,
                  if the employee dies intestate, by the applicable laws of
                  descent and distribution, or (ii) subject to the prior
                  approval of the Committee, for transfers to "family members"
                  (as defined below) or charitable institutions (subject to such
                  limitations as the Committee in its discretion may impose, if
                  necessary, to comply with applicable securities laws), in each
                  case subject to the condition that the Committee be satisfied
                  that such transfer is being made by the participant for estate
                  planning, tax planning or donative purposes and no
                  consideration (other than nominal consideration or interests
                  in a family partnership, family corporation or other
                  family-related entity) is received by the participant
                  therefor. Except as provided above, during the lifetime of a
                  participant, awards hereunder are exercisable only by, and
                  payable only to, the participant.

                  For purposes hereof, a "family member" shall mean any child,
                  stepchild, grandchild, parent, stepparent, grandparent,
                  spouse, former spouse, sibling, niece, nephew, mother-in-law,
                  father-in-law, son-in-law, daughter-in-law, brother-in-law, or
                  sister-in-law, including adoptive relationships, any person
                  sharing the participant's household (other than a tenant or
                  employee) a trust in which these persons have more than fifty
                  percent of the beneficial interest, a foundation in which
                  these persons (or the participant) control the management of
                  assets, and any other entity in which these persons (or the
                  participant) own more than fifty percent of the voting
                  interests. No option granted hereunder may be pledged or
                  hypothecated, nor shall any such option be subject to
                  execution, attachment or similar process.

         (d)      Employment required before exercise of option. The Committee
                  may, in its absolute discretion, require that prior to the
                  exercise of all or any part of any option granted hereunder,
                  the optionee shall have remained in the employ of the Company
                  or any subsidiary corporation for a specified period after the
                  date of such option, but always subject to the right of the
                  Company or any such subsidiary corporation to terminate his
                  employment during such period, or the Committee may determine
                  to make any option granted hereunder immediately exercisable.
                  Each option shall be subject to such additional restrictions
                  as to the time and method of exercise as shall be prescribed
                  by the Committee. Upon completion of the required period or
                  periods of employment, if any, the option or the appropriate
                  portion thereof may be exercised in whole or in part from time

                                       3
<PAGE>

                  to time during the option period, but this right of exercise
                  shall be limited to whole shares. Options shall be exercised
                  by the optionee giving written notice to the Company of
                  intention to exercise the same accompanied by full payment of
                  the purchase price in cash or, with the consent of the
                  Committee, in whole or in part through the delivery of shares
                  of Common Stock having a fair market value on the date the
                  option is exercised equal to that portion of the purchase
                  price for which payment in cash is not made.

         (e)      Termination of employment. If the optionee ceases to be an
                  employee of the Company or one of its subsidiary corporations,
                  his option shall, unless extended by the Committee on or
                  before his date of termination of employment, terminate on the
                  effective date of termination of his employment and neither he
                  nor any other person shall have any right after such date to
                  exercise all or any part of his option. If, however, the
                  cessation of employment is because of such optionee's death,
                  then the option may be exercised within twelve (12) months
                  after the optionee's death by the optionee's estate or the
                  person designated in the optionee's Last Will and Testament or
                  to whom transferred by the applicable laws of descent and
                  distribution. Notwithstanding the foregoing, in no event shall
                  any option be exercisable after the expiration of the option
                  period and not to any greater extent than the optionee would
                  have been entitled to exercise the option at the time of his
                  death.

                  In the event an employee of the Company or one of its
                  subsidiaries is granted a leave of absence by the Company or
                  such subsidiary to enter military service or because of
                  sickness, his employment with the Company or such subsidiary
                  shall not be considered as terminated and he shall be deemed
                  an employee of the Company or such subsidiary during such
                  leave of absence or any extension thereof granted by the
                  Company or such subsidiary.

         (f)      Limitations on grant of incentive stock options. The aggregate
                  fair market value, determined as of the date an incentive
                  stock option is granted, of the shares of Common Stock for
                  which any employee may be granted incentive stock options
                  which are exercisable for the first time in any calendar year
                  shall not exceed One Hundred Thousand Dollars ($100,000).

7.  Amendments to Plan. The Committee is authorized to interpret the Plan and
from time to time adopt any rules and regulations for carrying out the Plan that
it may deem advisable. Subject to the approval of the Board of Directors of the
Company, the Committee may at any time amend, modify, suspend or terminate the
Plan. In no event, however, without the approval of shareholders, shall any
action of the Committee or the Board of Directors result in:

         (a)      Amending, modifying or altering the eligibility requirements
                  provided in Section 4 hereof;

         (b)      Increasing or decreasing, except as provided in Section 5
                  hereof, the maximum number of shares as to which options may
                  be granted;

         (c)      Decreasing the minimum option price per share at which options
                  may be granted under the Plan as provided in Section 6(a)
                  hereof;

         (d)      Extending either the maximum period during which an option is
                  exercisable as provided in Section 6(b) hereof or the date on
                  which the Plan shall terminate as provided in Section 11
                  hereof;

         (e)      Changing the requirements relating to the Committee; or

         (f)      Making any other change which would cause any options granted
                  under the Plan as incentive stock options not to qualify as
                  such options within the meaning of Section 422

                                       4
<PAGE>

                  of the Code; except to conform the Plan and the option
                  agreements to changes in the Code or governing law.

8.  Stock Appreciation Rights. A key employee may be awarded, either at the time
of grant or subsequently, the right to elect alternative payment in lieu of
exercising all or a portion of the options granted to him. Stock appreciation
rights must be specifically granted upon such terms and conditions as specified
by the Committee, if the Company is the employer of the key employee, or by the
Board of Directors of a subsidiary corporation subject to the Committee's
approval, if such subsidiary corporation is the employer of the key employee. No
optionee shall be entitled to such rights solely as a result of the grant of an
option to him. Such right if granted, may be exercised by said option holder
either with respect to all or a portion of the option to which it applies. Stock
appreciation rights are exercisable only during the periods beginning on the
third business day following the release of a summary statement of the Company's
quarterly or annual sales and earnings and ending on the twelfth business day
following said date. The stock appreciation right shall provide that an option
holder shall have the right to receive an amount equal to one hundred percent
(100%) of the excess, if any, of the fair market value of the shares of Common
Stock covered by the option, determined as of the date of exercise of the stock
appreciation right by the Committee in the same manner as such value is
determined for purposes of the granting of options, over the option price. Such
amount shall be payable by either the Company or the subsidiary corporation,
whichever such corporation is the employer of the key employee, in one or more
of the following manners, as shall be determined by the Committee, if the
Company is the employer of the key employee, or by the Board of Directors of the
subsidiary corporation subject to the Committee's approval, if such subsidiary
corporation is the employer of the key employee:

         (a)      cash;

         (b)      fully-paid shares of Common Stock having a fair market value
                  equal to such amount; or

         (c)      a combination of cash and shares of Common Stock.

In no event may any person exercise any stock appreciation rights granted
hereunder unless (i) such person is then permitted to exercise the option or the
portion thereof with respect to which such stock appreciation rights relate, and
(ii) the fair market value of the shares of Common Stock covered by the option,
determined as provided above, exceeds the option price of such shares of Common
Stock. Upon the exercise of any stock appreciation rights, the option, or that
portion thereof to which such stock appreciation rights relate, shall be
cancelled and such person shall surrender such option for cancellation and
reissuance, if appropriate. Stock appreciation rights granted hereunder shall be
made a part of the option agreements in such form as the Committee shall approve
from time to time and which shall not be inconsistent with this Plan. The
granting of an option or stock appreciation right shall impose no obligation
upon the optionee to exercise such option or right. The Company's or a
subsidiary corporation's obligation to satisfy stock appreciation rights shall
not be funded or secured in any manner.

9.  Investment Representation, Approvals and Listing. The Committee may, if it
deems appropriate, condition its grant of any option hereunder upon receipt of
the following investment representation from the optionee:

                  "I further agree that any shares of Common Stock of North
         Coast Energy, Inc. which I may acquire by virtue of this option shall
         be acquired for investment purposes only and not with a view to
         distribution or resale; provided, however, that this restriction shall
         become inoperative in the event the said shares of Common Stock subject
         to this option shall be registered under the Securities Act of 1933, as
         amended, or in the event there is presented to North Coast Energy, Inc.
         an opinion of counsel satisfactory to North Coast Energy, Inc. to the
         effect that the offer or sale of the shares of Common Stock subject to
         this option may lawfully be made without registration of the said
         shares of stock under the Securities Act of 1933, as amended."

                                       5
<PAGE>

The Company shall not be required to issue any certificate or certificates for
shares of Common Stock upon the exercise of an option or a stock appreciation
right granted under the Plan prior to (i) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable, (ii) the admission of such shares to listing on
any national securities exchange on which the shares of Common Stock may be
listed, (iii) the completion of any registration or other qualification of the
shares of Common Stock under any state or federal law or ruling or regulations
of any governmental body which the Company shall, in its sole discretion,
determine to be necessary or advisable or the determination by the Company, in
its sole discretion, that any registration or other qualification of the shares
of Common Stock is not necessary or advisable and (iv) the obtaining of an
investment representation from the optionee in the form stated above or in such
other form as the Company, in its sole discretion, shall determine to be
adequate.

10.  General Provisions. The form and substance of option agreements and grants
of stock appreciation rights, whether granted at the same or different times,
need not be identical.

Nothing in the Plan or in any option agreement shall confer upon any employee
any right to continue in the employ of the Company or any of its subsidiary
corporations, to be entitled to any remuneration or benefits not set forth in
the Plan or such option, or to interfere with or limit the right of the Company
or any subsidiary corporation to terminate his employment at any time, with or
without cause. No employee of the Company or other person shall have any right
to be granted an award under the Plan except in the discretion of the Committee.

Nothing contained in the Plan or in any option agreement shall be construed as
entitling any optionee to any rights of a shareholder as a result of the grant
of an option until such time as shares of Common Stock are actually issued to
such optionee pursuant to the exercise of an option or stock appreciation
rights.

The Plan may be assumed by the successors and assigns of the Company.

The liability of the Company under the Plan and any distribution of Common Stock
made hereunder is limited to the obligations set forth herein with respect to
such distribution and no term or provision of the Plan shall be construed to
impose any liability on the Company in favor of any person with respect to any
loss, cost or expense which the person may incur in connection with or arising
out of any transaction in connection with the Plan, including, but not limited
to, any liability to any federal, state, or local tax authority and/or any
securities regulatory authority.

The cash proceeds received by the Company from the issuance of shares of Common
Stock pursuant to the Plan will be used for general corporate purposes or in
such other manner as the Board of Directors deems appropriate.

The expense of administering the Plan shall be borne by the Company.

The captions and section numbers appearing in the Plan are inserted only as a
matter of convenience. They do not define, limit, construe or describe the scope
or intent of the provisions of the Plan.

11.  Termination of the Plan. The Plan shall terminate on the tenth (10th)
anniversary of the adoption hereof by the Board of Directors, and thereafter no
options shall be granted hereunder. All options outstanding at the time of
termination of the Plan shall continue in full force and effect according to
their terms and the terms and conditions of the Plan. The Board may at any time
terminate or from time to time amend the Plan in whole or in part, but no such
action shall adversely affect any rights or obligations with respect to any
awards theretofore made under the Plan.

12.  Taxes. Appropriate provisions shall be made for all taxes required to be
withheld and/or paid in connection with the options or the exercise thereof and
the transfer of Common Stock pursuant thereto, under the applicable laws or
other regulations of any governmental authority, whether federal, state, or
local and whether domestic or foreign. In its discretion, the Company may permit
the optionee to satisfy such

                                       6
<PAGE>

withholding requirements by (a) the Company withholding from issuance to the
optionee such number of Common Stock otherwise issuable upon exercise of the
option as the Company and the optionee may agree, provided, however, that the
optionee must have had on file with the Company, for at least six (6) months
prior thereto, an effective standing election to satisfy said optionee's tax
withholding obligations in such a fashion, which election form by its terms
shall not be revocable or amendable for at least six (6) months, or (b) with the
consent of the Board, in whole or in part, in Common Stock having a fair market
value on the date the option is exercised equal to that portion of the
withholding obligation for which payment in cash is not made.

13.  Changes in Governing Rules and Regulations. All references herein to the
Internal Revenue Code of 1986, as amended, or sections thereof, or to rules and
regulations of the Department of Treasury or of the Securities and Exchange
Commission, shall mean and include the Code sections thereof and such rules and
regulations as are now in effect or as they may be subsequently amended,
modified, substituted or superseded.

                                       7

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