Document:

Exhibit 4.1  

BRAZAURO RESOURCES CORPORATION 

(filed previously under Star Resources Corp.)

2003 STOCK OPTION PLAN

AMENDED AS AT JULY 28, 2005, AMENDED AS AT JULY 31, 2006 

and AMENDED AS AT JULY 30, 2007

	
            1.
 	
            PURPOSE OF THE PLAN
 

The Company hereby establishes a stock option plan for directors, senior officers Employees, Management Company Employees and Consultants (as such terms are defined below) of the Company and its subsidiaries (collectively "Eligible Persons"), to be known as the "2003 Stock Option Plan" (the "Plan").  The purpose of the Plan is to give to Eligible Persons, as additional compensation, the opportunity to participate in the success of the Company by granting to such individuals options, exercisable over periods of up to five years as determined by the board of directors of the Company, to buy shares of the Company at a price not less than the Market Price prevailing on the date the option is granted.

	
            2.
 	
            DEFINITIONS
 

In this Plan, the following terms shall have the following meanings:

	
             
 	
            2.1
 	
            "Associate" means an "Associate" as defined in the Exchange Policies.
 
	
             
 	
            2.2
 	
            "Board" means the Board of Directors of the Company.
 	
             

	
             
 	
            2.3
 	
            "Change of Control" means the acquisition by any person or by any person and all Joint Actors, whether directly or indirectly, of voting securities (as defined in the Securities Act) of the Company, which, when added to all other voting securities of the Company at the time held by such person or by such person and a Joint Actor, totals for the first time not less than fifty percent (50%) of the outstanding voting securities of the Company or the votes attached to those securities are sufficient, if exercised, to elect a majority of the Board of Directors of the Company.
 

	
             
 	
            2.4
 	
            "Company" means Brazauro Resources Corporation (previously Star Resources Corp.) and its successors.
 

	
             
 	
            2.5
 	
            "Consultant" means a "Consultant" as defined in the TSX Policies.
 

	
             
 	
            2.6
 	
            "Consultant Company" means a "Consultant Company" as defined in the TSX Policies.
 

	
             
 	
            2.7
 	
            "Disability" means any disability with respect to an Optionee which the Board, in its sole and unfettered discretion, considers likely to prevent permanently the Optionee from:
 

	
             
 	
            (a)
 	
            being employed or engaged by the Company, its subsidiaries or another employer, in a position the same as or similar to that in which he was last employed or engaged by the Company or its subsidiaries; or
 

	
             
 	
            (b)
 	
            acting as a director or officer of the Company or its subsidiaries.
 

	
             
 	
            2.8
 	
            "Distribution" means a "Distribution" as defined in the TSX Policies.
 

	
             
 	
            2.9
 	
            "Eligible Persons" has the meaning given to that term in paragraph 1 hereof.
 

	
             
 	
            2.10
 	
            "Employee" means an "Employee" as defined in the TSX Policies.
 

	
             
 	
            2.11
 	
            "Exchanges" means the TSX Venture Exchange and, if applicable, any other stock exchange on which the Shares are listed.
 

 

 

- 2 -

 

	
             
 	
            2.12
 	
            "Expiry Date" means the date set by the Board under section 3.1 of the Plan, as the last date on which an Option may be exercised.
 

	
             
 	
            2.13
 	
            "Grant Date" means the date specified in an Option Agreement as the date on which an Option is granted.
 

	
             
 	
            2.14
 	
            "Insider" means an "Insider" as defined in the TSX Policies, other than a person who is an insider solely by virtue of being a director or senior officer of a subsidiary of the Company.
 

	
             
 	
            2.15
 	
            "Investor Relations Activities" means "Investor Relations Activities" as defined in the TSX Policies.
 

	
             
 	
            2.16
 	
            "Joint Actor" means a person acting "jointly or in concert with" another person as that phrase is interpreted in section 96 of the Securities Act.
 

	
             
 	
            2.17
 	
            "Management Company Employee" means a "Management Company Employee" as defined in the TSX Policies.
 

	
             
 	
            2.18
 	
            "Market Price" of Shares at any Grant Date means the last closing price per Share on the trading day immediately preceding the day on which the Company announces the grant of the option or, if the grant is not announced, on the Grant Date, or if the Shares are not listed on any stock exchange, "Market Price" of Shares means the price per Share on the over-the-counter market determined by dividing the aggregate sale price of the Shares sold by the total number of such Shares so sold on the applicable market for the last day prior to the Grant Date.
 

	
             
 	
            2.19
 	
            "Option" means an option to purchase Shares granted pursuant to this Plan.
 

	
             
 	
            2.20
 	
            "Option Agreement" means an agreement, in the form attached hereto as Schedule "A", whereby the Company grants to an Optionee an Option.
 

	
             
 	
            2.21
 	
            "Optionee" means each of the Eligible Persons granted an Option pursuant to this Plan and their heirs, executors and administrators.
 

	
             
 	
            2.22
 	
            "Option Price" means the price per Share specified in an Option Agreement, adjusted from time to time in accordance with the provisions of section 5.
 

	
             
 	
            2.23
 	
            "Option Shares" means the aggregate number of Shares which an Optionee may purchase under an Option.
 

	
             
 	
            2.24
 	
            "Plan" means this 2003 Stock Option Plan.  
 

	
             
 	
            2.25
 	
            "Shares" means the common shares in the capital of the Company as constituted on the Grant Date provided that, in the event of any adjustment pursuant to section 5, "Shares" shall thereafter mean the shares or other property resulting from the events giving rise to the adjustment.
 

	
             
 	
            2.26
 	
            "Securities Act" means the Securities Act, R.S.B.C. 1996, c.418, as amended, as at the date hereof.
 

	
             
 	
            2.27
 	
            "TSX Policies" means the policies included in the TSX Venture Exchange Corporate Finance Manual and "TSX Policy" means any one of them.
 

	
             
 	
            2.28
 	
            "Unissued Option Shares" means the number of Shares, at a particular time, which have been reserved for issuance upon the exercise of an Option but which have not been issued, as adjusted from time to time in accordance with the provisions of section 5, such adjustments to be cumulative.
 

 

 

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            2.29
 	
            "Vested" means that an Option has become exercisable in respect of a number of Option Shares by the Optionee pursuant to the terms of the Option Agreement.
 

	
            3.
 	
            GRANT OF OPTIONS
 
	
             
 	
            3.1
 	
            Option Terms
 	
             

The Board may from time to time authorize the issue of Options to Eligible Persons.  The Option Price under each Option shall be not less than the Market Price on the Grant Date.  The Expiry Date for each Option shall be set by the Board at the time of issue of the Option and shall not be more than five years after the Grant Date.  Options shall not be assignable (or transferable) by the Optionee.

	
             
 	
            3.2
 	
            Limits on Shares Issuable on Exercise of Options
 

The maximum number of Shares which may be issuable pursuant to options granted under the Plan shall be 13,000,000 Shares or such additional amount as may be approved from time to time by the shareholders of the Company.  The number of Shares reserved for issuance under the Plan and all of the Company's other previously established or proposed share compensation arrangements:

	
             
 	
            (a)
 	
            in aggregate shall not exceed 20% of the total number of issued and outstanding Shares on the Grant Date on a non-diluted basis; and
 

	
             
 	
            (b)
 	
            to any one Optionee within a 12 month period shall not exceed 5% of the total number of issued and outstanding shares on the Grant Date on a non-diluted basis.
 

The number of Shares which may be issuable under the Plan and all of the Company's other previously established or proposed share compensation arrangements, within a one-year period:

	
             
 	
            (a)
 	
            to any one Optionee, shall not exceed 5% of the total number of issued and outstanding Shares on the Grant Date on a non-diluted basis;
 

	
             
 	
            (b)
 	
            to Insiders as a group shall not exceed 20% of the total number of issued and outstanding Shares on the Grant Date on a non-diluted basis; 
 

	
             
 	
            (c)
 	
            to any one Consultant shall not exceed 2% in the aggregate of the total number of issued and outstanding Shares on the Grant Date on a non-diluted basis; and
 

	
             
 	
            (d)
 	
            to all Eligible Persons who undertake Investor Relations Activities shall not exceed 2% in the aggregate of the total number of issued and outstanding Shares on the Grant Date on a non-diluted basis.
 

	
             
 	
            3.3
 	
            Option Agreements
 

Each Option shall be confirmed by the execution of an Option Agreement.  Each Optionee shall have the option to purchase from the Company the Option Shares at the time and in the manner set out in the Plan and in the Option Agreement applicable to that Optionee.  For stock options to Employees, Consultants, Consultant Companies or Management Company Employees, the Company is representing herein and in the applicable Stock Option Agreement that the Optionee is a bona fide Employee, Consultant, Consultant Company or Management Company Employee, as the case may be, of the Company or its subsidiary.  The execution of an Option Agreement shall constitute conclusive evidence that it has been completed in compliance with this Plan.

 

 

- 4 -

 

 

	
            4.
 	
            EXERCISE OF OPTION
 	
             

	
             
 	
            4.1
 	
            When Options May be Exercised
 
				

Subject to sections 4.3 and 4.4, an Option may be exercised to purchase any number of Shares up to the number of Vested Unissued Option Shares at any time after the Grant Date up to 4:00 p.m. local time on the Expiry Date and shall not be exercisable thereafter.  

	
             
 	
            4.2
 	
            Manner of Exercise
 

The Option shall be exercisable by delivering to the Company a notice specifying the number of Shares in respect of which the Option is exercised together with payment in full of the Option Price for each such Share.  Upon notice and payment there will be a binding contract for the issue of the Shares in respect of which the Option is exercised, upon and subject to the provisions of the Plan.  Delivery of the Optionee's cheque payable to the Company in the amount of the Option Price shall constitute payment of the Option Price unless the cheque is not honoured upon presentation in which case the Option shall not have been validly exercised.

	
             
 	
            4.3
 	
            Vesting of Option Shares
 

The Directors, subject to the policies of the Exchanges, may determine and impose terms upon which each Option shall become Vested in respect of Option Shares.  Current policies of the TSX Venture Exchange provide that minimum vesting requirements shall be 25% of the Option upon TSX Venture Exchange approval and 12 1/2% every quarter thereafter which is the vesting period hereby adopted by the directors of the Company.

	
             
 	
            4.4
 	
            Termination of Employment
 

If an Optionee ceases to be an Eligible Person, his or her Option shall be exercisable as follows:

	
             
 	
            (a)
 	
            Death or Disability
 

If the Optionee ceases to be an Eligible Person, due to his or her death or Disability or, in the case of an Optionee that is a company, the death or Disability of the person who provides management or consulting services to the Company or to any entity controlled by the Company, the Option then held by the Optionee shall be exercisable to acquire Vested Unissued Option Shares at any time up to but not after the earlier of:

	
             
 	
            (i)
 	
            365 days after the date of death or Disability; and 
 

	
             
 	
            (ii)
 	
            the Expiry Date;
 

	
             
 	
            (b)
 	
            Termination For Cause
 

If the Optionee, or in the case of a Management Company Employee or a Consultant Company, the Optionee's employer, ceases to be an Eligible Person as a result of termination for cause, as that term is interpreted by the courts of the jurisdiction in which the Optionee, or, in the case of a Management Company Employee or a Consultant Company, of the Optionee's employer, is employed or engaged; any outstanding Option held by such Optionee on the date of such termination, whether in respect of Option Shares that are Vested or not, shall be cancelled as of that date.

 

 

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            (c)
 	
            Early Retirement, Voluntary Resignation or Termination Other than For Cause
 

If the Optionee or, in the case of a Management Company Employee or a Consultant Company, the Optionee's employer, ceases to be an Eligible Person due to his or her retirement at the request of his or her employer earlier than the normal retirement date under the Company's retirement policy then in force, or due to his or her termination by the Company other than for cause, or due to his or her voluntary resignation, the Option then held by the Optionee shall be exercisable to acquire Vested Unissued Option Shares at any time up to but not after the earlier of the Expiry Date and the date which is 90 days (30 days if the Optionee was engaged in Investor Relations Activities) after the Optionee or, in the case of a Management Company Employee or a Consultant Company, the Optionee's employer, ceases to be an Eligible Person.

For greater certainty, an Option that had not become Vested in respect of certain Unissued Option Shares at the time that the relevant event referred to in this paragraph 4.4 occurred, shall not be or become vested or exercisable in respect of such Unissued Option Shares and shall be cancelled.

	
             
 	
            4.5
 	
            Effect of a Take-Over Bid
 

If a bona fide offer ( an "Offer") for Shares is made to the Optionee or to shareholders of the Company generally or to a class of shareholders which includes the Optionee, which Offer, if accepted in whole or in part, would result in the offeror becoming a control person of the Company, within the meaning of subsection 1(1) of the Securities Act, the Company shall, immediately upon receipt of notice of the Offer, notify each Optionee of full particulars of the Offer, whereupon all Option Shares subject to such Option will become Vested and the Option may be exercised in whole or in part by the Optionee so as to permit the Optionee to tender the Option Shares received upon such exercise, pursuant to the Offer.  However, if:

	
             
 	
            (a)
 	
            the Offer is not completed within the time specified therein; or 
 

	
             
 	
            (b)
 	
            all of the Option Shares tendered by the Optionee pursuant to the Offer are not taken up or paid for by the offeror in respect thereof,
 

then the Option Shares received upon such exercise, or in the case of clause (b) above, the Option Shares that are not taken up and paid for, may be returned by the Optionee to the Company and reinstated as authorized but unissued Shares and with respect to such returned Option Shares, the Option shall be reinstated as if it had not been exercised and the terms upon which such Option Shares were to become Vested pursuant to paragraph 4.3 shall be reinstated.  If any Option Shares are returned to the Company under this paragraph 4.5, the Company shall immediately refund the exercise price to the Optionee for such Option Shares.

	
             
 	
            4.6
 	
            Acceleration of Expiry Date
 

If at any time when an Option granted under the Plan remains unexercised with respect to any Unissued Option Shares, an Offer is made by an offeror, the Directors may, upon notifying each Optionee of full particulars of the Offer, declare all Option Shares issuable upon the exercise of Options granted under the Plan, Vested, and declare that the Expiry Date for the exercise of all unexercised Options granted under the Plan is accelerated so that all Options will either be exercised or will expire prior to the date upon which Shares must be tendered pursuant to the Offer.  The Directors shall give each Optionee as much notice as possible of the acceleration of the Options under this section, except that not less than 5 business days and not more than 35 days notice is required.

 

 

- 6 -

 

 

	
             
 	
            4.7
 	
            Effect of a Change of Control
 

If a Change of Control occurs, all Option Shares subject to each outstanding Option will become Vested, whereupon such Option may be exercised in whole or in part by the Optionee, subject to the approval of the Exchanges, if necessary.

	
             
 	
            4.8
 	
            Exclusion From Severance Allowance, Retirement Allowance or Termination Settlement
 

If the Optionee, or, in the case of a Management Company Employee or a Consultant Company, the Optionee's employer, retires, resigns or is terminated from employment or engagement with the Company or any subsidiary of the Company, the loss or limitation, if any, pursuant to the Option Agreement with respect to the right to purchase Option Shares which were not Vested at that time or which, if Vested, were cancelled, shall not give rise to any right to damages and shall not be included in the calculation of nor form any part of any severance allowance, retiring allowance or termination settlement of any kind whatsoever in respect of such Optionee.

	
             
 	
            4.9
 	
            Shares Not Acquired
 

Any Unissued Option Shares not acquired by an Optionee under an Option which has expired may be made the subject of a further Option pursuant to the provisions of the Plan.

	
            5.
 	
            ADJUSTMENT OF OPTION PRICE AND NUMBER OF OPTION SHARES
 
	
             
 	
            5.1
 	
            Share Reorganization
 	
             

Whenever the Company issues Shares to all or substantially all holders of Shares by way of a stock dividend or other distribution, or subdivides all outstanding Shares into a greater number of Shares, or combines or consolidates all outstanding Shares into a lesser number of Shares (each of such events being herein called a "Share Reorganization") then effective immediately after the record date for such dividend or other distribution or the effective date of such subdivision, combination or consolidation, for each Option:

	
             
 	
            (a)
 	
            the Option Price will be adjusted to a price per Share which is the product of:
 

	
             
 	
            (i)
 	
            the Option Price in effect immediately before that effective date or record date; and
 

	
             
 	
            (ii)
 	
            a fraction, the numerator of which is the total number of Shares outstanding on that effective date or record date before giving effect to the Share Reorganization, and the denominator of which is the total number of Shares that are or would be outstanding immediately after such effective date or record date after giving effect to the Share Reorganization; and 
 

	
             
 	
            (b)
 	
            the number of Unissued Option Shares will be adjusted by multiplying (i) the number of Unissued Option Shares immediately before such effective date or record date by (ii) a fraction which is the reciprocal of the fraction described in subsection (a)(ii).
 

 

 

- 7 -

 

 

	
             
 	
            5.2
 	
            Special Distribution
 

Subject to the prior approval of the Exchanges, whenever the Company issues by way of a dividend or otherwise distributes to all or substantially all holders of Shares;

	
             
 	
            (a)
 	
            shares of the Company, other than the Shares;
 

	
             
 	
            (b)
 	
            evidences of indebtedness;
 

	
             
 	
            (c)
 	
            any cash or other assets, excluding cash dividends (other than cash dividends which the Board of Directors of the Company has determined to be outside the normal course); or
 

	
             
 	
            (d)
 	
            rights, options or warrants;
 

then to the extent that such dividend or distribution does not constitute a Share Reorganization (any of such non-excluded events being herein called a "Special Distribution"), and effective immediately after the record date at which holders of Shares are determined for purposes of the Special Distribution, for each Option the Option Price will be reduced, and the number of Unissued Option Shares will be correspondingly increased, by such amount, if any, as is determined by the Board in its sole and unfettered discretion to be appropriate in order to properly reflect any diminution in value of the Option Shares as a result of such Special Distribution.

	
             
 	
            5.3
 	
            Corporate Organization
 

Whenever there is:

	
             
 	
            (a)
 	
            a reclassification of outstanding Shares, a change of Shares into other shares or securities, or any other capital reorganization of the Company, other than as described in sections 5.1 or 5.2;
 

	
             
 	
            (b)
 	
            a consolidation, merger or amalgamation of the Company with or into another corporation resulting in a reclassification of outstanding Shares into other shares or securities or a change of Shares into other shares or securities; or
 

	
             
 	
            (c)
 	
            a transaction whereby all or substantially all of the Company's undertaking and assets become the property of another corporation;
 

(any such event being herein called a "Corporate Reorganization") the Optionee will have an option to purchase (at the times, for the consideration, and subject to the terms and conditions set out in the Plan) and will accept on the exercise of such option, in lieu of the Unissued Option Shares which he would otherwise have been entitled to purchase, the kind and amount of shares or other securities or property that he would have been entitled to receive as a result of the Corporate Reorganization if, on the effective date thereof, he had been the holder of all Unissued Option Shares or if appropriate, as otherwise determined by the Directors.

	
             
 	
            5.4
 	
            Determination of Option Price and Number of Unissued Option Shares
 

If any questions arise at any time with respect to the Option Price or number of Unissued Option Shares deliverable upon exercise of an Option following a Share Reorganization, Special Distribution or Corporate Reorganization, such questions shall be conclusively determined by the Company's auditor, or, if they decline to so act, any other firm of Chartered Accountants in Vancouver, British Columbia, that the Directors may designate and who will have access to all appropriate records and such determination will be binding upon the Company and all Optionees. 

 

 

- 8 -

 

 

	
             
 	
            5.5
 	
            Regulatory Approval
 

Any adjustment to the Option Price or the number of Unissued Option Shares purchasable under the Plan pursuant to the operation of any one of paragraphs 5.1, 5.2 or 5.3 is subject to the approval of the Exchanges and any other governmental authority having jurisdiction.

	
            6.
 	
            MISCELLANEOUS
 

	
             
 	
            6.1
 	
            Eligibility
 

Options which may qualify as "incentive stock options" ("ISOs") under Section 422A of the United States Revenue Code of 1986 as amended or non-qualified stock options (collectively "Options") may be granted under the Plan to such directors, officers and employees, including part time and shared employees, of the Corporation and of its subsidiaries as the Board of Directors may from time to time designate as participants under the Plan.  Subject to the provisions of this Plan, the number of Option Shares to be made available to each Participant, the time or times and price or prices at which options shall be granted, the time or times at which such options are exercisable, and any conditions or restrictions on the exercise of options, shall, subject to the terms of this agreement, be in the full and final discretion of the Board of Directors.

	
             
 	
            6.2
 	
            Right to Employment
 

Neither this Plan nor any of the provisions hereof shall confer upon any Optionee any right with respect to employment or continued employment with the Company or any subsidiary of the Company or interfere in any way with the right of the Company or any subsidiary of the Company to terminate such employment.

	
             
 	
            6.3
 	
            Necessary Approvals
 

The Plan shall be effective only upon the approval of the shareholders of the Company given by way of an ordinary resolution.  Any Options granted under this Plan prior to such approval shall only be exercised upon the receipt of such approval.  Disinterested shareholder approval (as required by the Exchanges) will be obtained for any reduction in the exercise price of any Option granted under this Plan if the Optionee is an Insider of the Company at the time of the proposed amendment.  The obligation of the Company to sell and deliver Shares in accordance with the Plan is subject to the approval of the Exchanges and any governmental authority having jurisdiction.  If any Shares cannot be issued to any Optionee for any reason, including, without limitation, the failure to obtain such approval, then the obligation of the Company to issue such Shares shall terminate and any Option Price paid
by an Optionee to the Company shall be immediately refunded to the Optionee by the Company. 

	
             
 	
            6.4
 	
            Administration of the Plan
 

The Directors shall, without limitation, have full and final authority in their discretion, but subject to the express provisions of the Plan, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan and to make all other determinations deemed necessary or advisable in respect of the Plan.  Except as set forth in section 5.4, the interpretation and construction of any provision of the Plan by the Directors shall be final and conclusive.  Administration of the Plan shall be the responsibility of the appropriate officers of the Company and all costs in respect thereof shall be paid by the Company.

 

 

- 9 -

 

	
             
 	
            6.5
 	
            Income Taxes
 

As a condition of and prior to participation in the Plan any Optionee shall on request authorize the Company in writing to withhold from any remuneration otherwise payable to him or her any amounts required by any taxing authority to be withheld for taxes of any kind as a consequence of his or her participation in the Plan. 

	
             
 	
            6.6
 	
            Amendments to the Plan
 

The Directors may from time to time, subject to applicable law and to the prior approval, if required, of the Exchanges or any other regulatory body having authority over the Company or the Plan, suspend, terminate or discontinue the Plan at any time, or amend or revise the terms of the Plan or of any Option granted under the Plan and the Option Agreement relating thereto, provided that no such amendment, revision, suspension, termination or discontinuance shall in any manner adversely affect any Option previously granted to an Optionee under the Plan without the consent of that Optionee.  Any amendments to the Plan or options granted thereunder will be subject to the approval of the shareholders.

	
             
 	
            6.7
 	
            Form of Notice
 

A notice given to the Company shall be in writing, signed by the Optionee and delivered to the head business office of the Company.

	
             
 	
            6.8
 	
            No Representation or Warranty
 

The Company makes no representation or warranty as to the future market value of any Shares issued in accordance with the provisions of the Plan.

	
             
 	
            6.9
 	
            Compliance with Applicable Law
 

If any provision of the Plan or any Option Agreement contravenes any law or any order, policy, by-law or regulation of any regulatory body or Exchange having authority over the Company or the Plan, then such provision shall be deemed to be amended to the extent required to bring such provision into compliance therewith.

	
             
 	
            6.10
 	
            No Assignment
 

No Optionee may assign any of his or her rights under the Plan or any option granted thereunder.

	
             
 	
            6.11
 	
            Rights of Optionees
 

An Optionee shall have no rights whatsoever as a shareholder of the Company in respect of any of the Unissued Option Shares (including, without limitation, voting rights or any right to receive dividends, warrants or rights under any rights offering).

	
             
 	
            6.12
 	
            Conflict
 

In the event of any conflict between the provisions of this Plan and an Option Agreement, the provisions of this Plan shall govern.

	
             
 	
            6.13
 	
            Governing Law
 

The Plan and each Option Agreement issued pursuant to the Plan shall be governed by the laws of the province of British Columbia.

 

 

- 10 -

 

	
             
 	
            6.14
 	
            Time of Essence
 

Time is of the essence of this Plan and of each Option Agreement.  No extension of time will be deemed to be or to operate as a waiver of the essentiality of time.

	
             
 	
            6.15
 	
            Entire Agreement
 

This Plan and the Option Agreement sets out the entire agreement between the Company and the Optionees relative to the subject matter hereof and supersedes all prior agreements, undertakings and understandings, whether oral or written.

 

Approved by the Board of Directors on June 15, 2007.

 

 

SCHEDULE "A"

BRAZAURO RESOURCES CORPORATION

STOCK OPTION PLAN

OPTION AGREEMENT

Without prior written approval of the TSX Venture Exchange  and compliance with all applicable securities legislation, the securities represented by this agreement and any securities issued upon exercise thereof may not be sold, transferred, hypothecated or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until [four months + one day], 200____.

This Option Agreement is entered into between Brazauro Resources Corporation ("the Company") and the Optionee named below pursuant to the Company Stock Option Plan (the "Plan"), a copy of which is attached hereto, and confirms that:

	
            1.
 	
            on ______________________________, 200___ (the "Grant Date");
 

	
            2.
 	
            ___________________ (the "Optionee") of __________________________________________;
 

	
            3.
 	
            was granted the option (the "Option") to purchase __________ Common Shares (the "Option Shares") of the Company;
 

	
            4.
 	
            for the price (the "Option Price") of $________ per share;
 

	
            5.
 	
            which shall be exercisable ("Vested") as to 25% upon TSX Venture Exchange approval and 12 1/2% every quarter thereafter;
 

	
            6.
 	
            terminating on the _________________________, 200____ (the "Expiry Date");
 

all on the terms and subject to the conditions set out in the Plan.  For greater certainty, once Option Shares have become Vested, they continue to be exercisable until the termination or cancellation thereof as provided in this Option Agreement and the Plan.

[Additional paragraphs for U.S. Option Holders:  

The Optionee acknowledges that any Option Shares received by him upon exercise of the Option have not been registered under the United States Securities Act of 1933, as amended, or the Blue Sky laws of any state (collectively, the “Securities Acts”).  The Optionee acknowledges and understands that the Company is under no obligation to register, under the Securities Acts, the Option Shares received by him or to assist him in complying with any exemption from such registration if he should at a later date wish to dispose of the Option Shares.  The Optionee acknowledges that the Option Shares shall bear a legend restricting the transferability thereof, such legend to be substantially in the following form:

“The shares represented by this certificate have not been registered or qualified under the United States Securities Act of 1933, as amended or state securities laws.  The shares may not be offered for sale, sold, pledged or otherwise disposed of unless so registered or qualified, unless an exemption exists or unless such disposition is not subject to U.S. federal or state securities laws, and the Company may require that the availability of any exemption or the inapplicability of such securities laws be established by an opinion of counsel, which opinion of counsel shall be reasonably  satisfactory to the Company.”]

 

 

	
             
 	
            - 12 -
 

 

 

By signing this Option Agreement, the Optionee acknowledges that the Optionee has read and understands the Plan and agrees to the terms and conditions of the Plan and this Option Agreement.

IN WITNESS WHEREOF the parties hereto have executed this Option Agreement as of the ______ day of _____________________, 200____.

	
            BRAZAURO RESOURCES CORPORATION

 

Per:      
             
              
               
 Authorized Signatory
 	
             

 

                   
                         
 [Insert Name of Optionee]EXHIBIT 10.1

                              AGREEMENT AND RELEASE
                              ---------------------

      CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS AGREEMENT AND RELEASE.

      BY SIGNING THIS AGREEMENT AND RELEASE, YOU GIVE UP AND WAIVE IMPORTANT
LEGAL RIGHTS.

      This agreement ("Agreement"), made as of this 15th day of November, 2007,
by and among The Bear Stearns Companies Inc. ("TBSCI"), Bear, Stearns & Co. Inc.
("BSC"), and each of their subsidiaries, affiliates, divisions and stockholders,
and each of their respective past and present officers, directors, employees and
agents, whether as individuals or in their official capacity, and each of their
respective successors and assigns (hereinafter collectively referred to as "Bear
Stearns" or the "Firm"), with its principal place of business at 383 Madison
Avenue, New York, New York 10179, and Warren Spector ("Employee"), his heirs,
executors, administrators, agents, successors, assigns and dependents.

      WHEREAS, Employee is an employee and Senior Managing Director of Bear
Stearns; and

      WHEREAS, Bear Stearns and Employee (the "Parties") each desire an amicable
cessation of the employee relationship; and

      WHEREAS, the Parties desire to set forth understandings and arrangements
regarding Employee's work duties, obligations and rights during the period from
the date of August 5, 2007 to close of business Friday, December 28, 2007 (the
"Transition Period"), and to set forth certain understandings and arrangements
thereafter;

      NOW, THEREFORE, in consideration of the covenants and promises contained
herein and for other good and valuable consideration, receipt of which is hereby
acknowledged, Employee and Bear Stearns hereby agree as follows:

      1. The Parties acknowledge that Employee shall and did resign all his
positions of officership, directorship and committee memberships from all Bear
Stearns entities effective Sunday, August 5, 2007, including as a member of the
Executive Committee of TBSCI and as a member of the Management and Compensation
Committee of TBSCI, and, inter alia, from the Boards of Directors of TBSCI and
BSC, remaining however as an employee and a Senior Managing Director through the
latest date of close of business December 28, 2007. During the Transition
Period, Employee's employment status remains as an employee-at-will, meaning
that Employee or the Firm may end employment prior to

<PAGE>

December 28, 2007 with or without Cause. During the Transition Period, Employee
is and was bound by all laws, rules, regulations and policies applicable to the
Firm including the Code of Conduct, and represents now that he has acted in
accordance with said laws, rules, regulations, Code and policies. The Firm
agrees, however, that it waives its rights to terminate Employee during the
Transition Period unless it is discovered that Employee has violated in the
past, or violates in the future, a material law or a material rule, regulation
or policy of the Firm, including the Code of Conduct, or a material term of this
Agreement, including but not limited to the duty to cooperate and the covenants
of confidentiality, non-disparagement, and non solicitation; in the unlikely
event of such an act, then the Firm will have the right to terminate Employee
during the Transition Period and this termination shall be for Cause; if
Employee is terminated for Cause, he will be treated in that respect for all
plans. The Firm is not currently aware of facts that constitute grounds to
terminate Employee for Cause pursuant to this paragraph.

      2. August 5, 2007 may be referred to as the "End Date"; close of business
Friday, December 28, 2007 shall be referred to as the "Last Date," unless
Employee resigns on an earlier date per paragraph 1 above, in which case there
may be an earlier "Resignation Date," or if Employee is terminated employment
for Cause, in which case the last date of employment will be a "Termination
Date". The date ten days after Bear Stearns' receipt back of this Agreement and
Release, fully executed by Employee (provided that there has been no revocation
in the statutory seven (7) day period post execution by Employee), shall be the
"Effective Date."

      In consideration for Employee's execution of this agreement, which
includes the annexed general release (collectively, the "Agreement"), and in
consideration of the Employee's release of any claims against Bear Stearns,
provided that there is no revocation of this Agreement by Employee within the
seven (7) day period immediately post execution (said revocation required to be
in a writing and delivered within said seven (7) day period to Bear Stearns,
Attn.: Michael Solender), and in full and complete consideration for Employee's
promises, covenants and agreements set forth herein, the Firm agrees to the
following:

      3. Bear Stearns shall continue to make regular payroll payments to
Employee in the usual bi-weekly "SMD" amounts through the earlier of Last Date,
Resignation Date or Termination Date as applicable.

      4. Options

      For purposes of the Option Plans as defined herein, the Compensation
Committee is authorizing "termination without Cause" treatment for Employee, who
was a member of Executive Committee,

                                        2
<PAGE>

provided this Agreement is executed and not revoked. Employee will continue to
be treated in accordance with, and be subject to, the applicable Stock Award
Plans and the applicable "Terms and Conditions of Stock Option Awards Granted to
Employee (the "Participant") under The Bear Stearns Companies Inc. Stock Award
Plans," as Amended and Restated, under which each option grant was awarded.
Thus, Employee's 2004 Options will vest on December 28, 2007 if Employee is an
employee in Good Standing on that date as that term is defined in the plan
documents. Accordingly, it is required that Employee will execute and not revoke
and will adhere to this Agreement in order to get the treatment as set forth in
this paragraph. Any of Employee's Options not exercised by Employee within the
applicable exercise period shall be cancelled. Notwithstanding the foregoing, if
during the applicable exercise period, Employee fails to comply with Sections
6(a)(ii) (Confidentiality Requirement) 6(a)(iii) (Non-Disparagement
Requirement), 6(a)(iv) (Cooperation Requirement) or 6(a)(v)(B) (Employee
Non-Solicitation Requirement, as amended by this Agreement to refer to employees
except Sandra Collins, certain consultants, independent contractors and certain
recruits of the Firm only) of the Terms and Conditions Documents, Employee's
right to exercise Employee's Options shall be cancelled as of the initial date
of any such failure.

      5. For purposes of the Capital Accumulation Plan ("CAP"), the Compensation
Committee is authorizing "termination without Cause" treatment. To the extent
Employee was granted any awards of Capital Accumulation Plan ("CAP") Units under
The Bear Stearns Companies Inc. Capital Accumulation Plan for Senior Managing
Directors, as Amended and Restated (the "CAP Plan"), Employee's CAP Units
grant(s) will continue to be treated in accordance with, and be subject to, the
CAP Plan and the applicable "Terms and Conditions of CAP Unit Award Granted to
Employee (The `Participant') under The Bear Stearns Companies Capital
Accumulation Plan for Senior Managing Directors," under which any such grants
were awarded (the applicable "CAP Terms and Conditions Document") except as
modified in this paragraph. Accordingly, if Employee executes and does not
revoke and complies with this Agreement, Employee will be treated as if he was
terminated without Cause under the Plan and therefore, in that event of
compliance, all outstanding CAP and Earning Units with respect to which the
Vesting Date has not occurred as of the date of the Resignation Date or Last
Date (whichever is applicable) shall become fully vested 180 days after said
Last or Resignation Date and then, in that event of compliance, all such vested
units will be distributed in accordance with the regular CAP distribution
schedules, such that distribution will occur each year through 2011
(distribution occurs for each tranche on or about the five year mark measured
from the original award date). Employee will be credited with Earnings for
Fiscal Year 2007 only through the last full month of employment. Similarly if
Employee stays to Last Date, he will receive

                                        3
<PAGE>

earnings for the full fiscal year 2007 and start to receive dividend treatment
for the FY 2008 commencing December 1, 2007. The non-solicitation provision of
the CAP Plan will be enforced but it will not be considered a violation of the
terms of the CAP Plan (or Option Plans) for Employee to hire his executive
secretary Sandra Collins.

      6. Employee made investments in the Firm's private equity "Employee
Funds": Bear Stearns Health Innoventures Employee Fund and BSC Employee Funds I,
IV, V, VII and VIII, which shall be treated as follows:

            Generally, the Employee Funds treat a departing employee as a
retiree if the employee leaves as of a date as to which he then qualifies for
retirement treatment; it is not an elective process.

            Employee remains subject to all the conditions of each Fund's
limited partnership agreement and each Fund's subscription agreement as executed
by the employee.

            Notwithstanding the foregoing, Bear Stearns hereby agrees that with
respect to the non-competitive clauses of the Employee Funds during the period
of retirement, the Firm agrees, that provided all other provisions are adhered
to, the Firm will enforce non-competition only with regard to a position with a
direct competitor, meaning that Employee cannot take a position as employee,
partner, officer, director, consultant, contractor to or advisor for, a
broker-dealer, a bank which provides investment advice or an investment bank;
the Firm will waive its rights and allow competitive activity during the
retirement period with a hedge fund.

      7. In the event there is a TBSCI 2007 PERFORMANCE COMPENSATION PLAN
EXECUTIVE COMMITTEE POOL bonus paid to participants in the Executive Committee
pool, Employee is eligible to receive a pro rata bonus for fiscal year 2007 ("FY
2007"), such pro rata fraction being 248/365 of the points allocation and
formula agreed to by the Compensation Committee in February 2007, but also
reflecting further any Executive Committee group negative discretion, noting
that the Firm agrees not to exercise any negative discretion toward Employee
solely. The Firm agrees to pay the bonus all in cash, without any component
being payable in non-cash compensation. The bonus, if any, will be payable to
Employee on FY 2007 bonus payday, anticipated to be January 2008, but in any
event no later than February 15, 2008.

      8. Bear Stearns will deliver to Employee's attorneys who represented him
in this employment matter, including but not limited to Jeffrey Liddle, Esq., of
Liddle & Robinson, LLP, 800 Third Avenue, New York, New York 10022, a total
amount capped at $38,000, subject to a filing of IRS

                                        4
<PAGE>

Form 1099s reporting the income for the law firm(s) and Employee. Bear Stearns
makes no representations or guarantees as to the tax consequences of the payment
of the attorneys' fees amount. If it is determined by a taxing authority that
these payments should have been considered wages, then Employee will be
responsible for paying all amounts including but not limited to interest,
penalties or costs, assessed against Bear Stearns and/or Employee as a result of
such a determination. To the extent any such payment shall be made by Bear
Stearns by check, the Firm must receive a written instruction from Employee
regarding the payments with applicable bills from the relevant attorneys. Any
billing attorney must provide an EIN number prior to payment with the attorney's
bill. To the extent the employee directs payment to Liddle & Robinson, LLP, the
Firm will use EIN #13-3226440. Any such payment will occur no sooner than two
weeks after the Firm's receipt back of this Agreement, executed by the Employee
(provided there is no revocation, as set forth above), and the Firm's receipt of
all accompanying documentation for payment as noted herein.

      9. Employee will maintain those brokerage accounts at the Firm as required
by law, rule, regulation or policy as long as he is an employee of the Firm, and
Employee will maintain one or more brokerage accounts, at an appropriate
commission rate, at Bear Stearns after Last Date or Resignation Date (whichever
is applicable) through the last CAP distribution date in 2011 in order to
facilitate the distribution of stock from the CAP Plans, with that one account
being in Employee's sole name, with a signed customer agreement. It is agreed
and understood that Employee may "ACAT" to another broker-dealer one or more
managed account over which neither he nor a Bear Stearns employee exercises
trading discretion, and that such transfer may have occurred prior to the
execution date of this Agreement in which event Employee will take all necessary
steps to ensure that Bear Stearns receives duplicate confirmations and account
statements for all transactions, in compliance with Firm policy and industry
rules applicable to employee accounts held away from the Firm, for as long as is
required by law, rule, regulation or policy.

      10. A Form U-5 for Employee will be filed no later than thirty (30) days
after the Last Date or Resignation Date and will select as choice "Other," and
give the reason as "Mutual Agreement." Bear Stearns will provide Employee's
counsel with a copy of the draft U-5 to review, in or about early December 2007.
Should Bear Stearns become aware of facts that will affect this U-5 language,
Bear Stearns will notify appropriate counsel for Employee and will endeavor to
show draft U-5 language before filing, understanding that ultimately U-5
language is Firm drafted.

      11. During the Transition Period and after the Last Date or Resignation
Date (as applicable), Bear Stearns will indemnify Employee as set forth under
the terms of the Firm's

                                        5
<PAGE>

indemnification policy or policies, its certificate of incorporation and its
by-laws, including but not limited to Article VIII of the Certificate of
Incorporation, the Executive Committee resolution of 2002 and the Minutes of the
TBSCI Executive Committee of 2002. Further, the Firm will provide Employee with
the standard "Advancement Agreement" for Employee to use in accordance with the
terms of the Advancement Agreement if and when the Employee requires separate
counsel from the Firm in connection with any investigation, arbitration,
regulatory matters or litigation as it relates to Employee's activities and
services provided as a Bear Stearns employee who was acting within the scope of
his employment to the extent such Advancement Agreement would be available to
him, per his role and activities at the Firm. Employee acknowledges and agrees
that the indemnification and any advancement of funds by Bear Stearns to counsel
selected at the appropriate time is conditioned upon Employee's cooperation with
Bear Stearns (subject to reasonable business commitments) in such investigatory,
regulatory, arbitration and/or litigation matters and with any and all
regulatory authorities in connection with any investigation and proceeding.
Indemnification shall be provided in accordance with applicable law. Employee's
truthful testimony will not be construed as being in bad faith.

      12. Benefits. In the event Employee duly executes this Agreement, the Firm
will provide Employee with the following:

            (a) Employee's group health benefits will continue pursuant to the
terms of Bear Stearns plans, until the end of the month of Employee's last date
of employment on the same terms and conditions as exist as of date of execution
of this Agreement.

            (b) Thereafter, a COBRA notice will be issued to Employee.

            (c) Except as otherwise expressly provided in this Agreement,
Employee will not be entitled to receive any benefits after the Resignation Date
or Last Date (whichever is applicable). Bear Stearns will distribute or cause to
be distributed at the earliest appropriate time to Employee, the accumulated
benefits in such plans as Employee participated in, including ESOP, profit
sharing, PAYSOP, 401-K and pension plans, each as may be applicable due to
Employee's participation through the Last Date or Resignation Date, as
applicable; any such distribution will be in accordance with each plan's
customary method of distribution.

            (d) To the extent that Employee participated in the Officers Group
Life Insurance Plan, the Firm will, to the extent permissible, continue
participation through Resignation Date or Last Date, as applicable, and after
Employee's participation ends, Employee will have the opportunity to

                                        6
<PAGE>

convert group life insurance coverage to an individual life insurance plan. Bear
Stearns will forward notices to Employee as required with respect to
continuation of life insurance coverage.

            (e) To the extent that Employee already has the Excess Umbrella
Liability coverage offered to Senior Managing Directors (at their expense), the
Firm agrees to arrange for Employee to be offered directly by the insurance
provider the opportunity to continue such coverage after Resignation Date or
Last Date, as applicable, at his expense at the rate then applicable for
individuals not employed by the Firm.

      13. Notwithstanding any other provision of this Agreement, to the extent
Employee has any outstanding financial obligations to the Firm, those
obligations must still be met; such obligations may, by way of example, include
unreimbursable AMEX usage, personal AirPass usage or outstanding loans. Any
outstanding obligations can be satisfied by deduction, prior to payment, from
the bonus payment detailed in paragraph 7 above, if not previously satisfied. In
no event shall Employee be obligated to seek other employment by way of
mitigation of the amounts payable to Employee under any of the provisions of
this Agreement, and such amounts shall not be reduced whether or not Employee
obtains other employment.

      14. To the extent Employee has unreimbursed business expenses, incurred
through the Last Date or Resignation Date, whichever is applicable. Employee
must immediately submit the expenses with all appropriate documentation; those
expenses which meet the guidelines of the Firm will be reimbursed.

      15. Employee may purchase at a fair market value established by the Firm
his moveable office furniture (not fixtures). Employee is responsible for taxes,
if any, associated with his purchase.

      16.   (a) During and after the Transition Period, Employee agrees to
cooperate as reasonably requested by the Firm with reasonable notice. Employee
will prepare and deliver all such letters, notices and documents as may be
reasonably requested by the Firm in order to timely accomplish the resignation
of officer positions and directorships and transition of exchange memberships
and seat ownerships. Since Employee was a director and executive officer of The
Bear Stearns Companies Inc. for a portion of FY2007, Employee agrees that as a
part of his cooperation, he must provide information as requested by the Firm of
its representatives for the preparation of proxies and Employee will complete
execution of such documents as are necessary for corporate records including
Waiver of Notice of Executive Committee meetings of July 23 and August 2, 2007
and execute Minutes of Executive Committee Meetings of June 15 and June 29,
2007. Subject to his reasonable business commitments,

                                        7
<PAGE>

Employee agrees to the extent that the Firm requires his reasonable cooperation
in connection with matters he worked on while employed with Bear Stearns,
Employee shall cooperate with the Firm in said matters, including but not
limited to internal investigations, the preparation and prosecution and/or
defense, as case may be, of any and all litigation and arbitration actions,
governmental inquiries and/or other legal and/or regulatory proceedings,
provided that such cooperation is not illegal or unethical. Following Firm
guidelines, Bear Stearns will pay all reasonable (non-legal) expenses (such as
reimbursable travel and lodging expenses) incurred by Employee to the extent
Employee travels within the Firm guidelines, including first class airfare. The
Firm will not pay consulting, per diem, or professional fees for cooperation in
such matters including for the period post Transition Period. The Firm
understands that Employee may be out of town and traveling during the Transition
Period, but both the Firm and Employee endeavor to cooperate with each other. In
order to be IRS Section 409A compliant, an annual allowance may be set at a
level which will reimburse the business expense and the six month deferral may
apply.

            (b) To the extent Employee has records or other items either at or
belonging to the Firm, whether hard copy or computer, he acknowledges that there
may be outstanding subpoenas, and that no Firm document or other item may leave
the Firm unless the Firm has an opportunity to review items. If the Firm elects
to inventory such items, it may make such inventory of the items so that
appropriate affidavits can be prepared indicating that all business records
remained at the Firm, subject to its control. Arrangements with respect to this
item can be made with Michael Solender or Barbara Bishop at 272-7850 or
272-2545, respectively. Employee will inform his assistants and secretaries of
this clause so that they too retain business records at the Firm. In the event
that Employee is a target or subject of a regulatory or other governmental
proceeding relating to his employment at the Firm, or is a defendant in any
civil litigation, arbitration or other proceeding, the Firm will make available
to Employee and Employee's counsel in said matter, those documents of Employee
which shall aid his defense and which are not covered by the work product
doctrine or privilege including attorney-client privilege. The Firm will in good
faith cooperate with Employee to assist his defense or response to any
regulatory or other governmental, civil or criminal proceeding to the extent it
is appropriate and ethical under the circumstances.

            (c) To the extent Employee may be formally deposed with respect to
any Bear Stearns business matter, he will be prepared by the Firm or in
accordance with his Advancement Agreement (if applicable) and he will be given
the opportunity to review certain of his records and email which shall remain at
the Firm or within its control, except he may not be given any material which is
deemed by the Firm to be privileged or work product.

                                        8
<PAGE>

            (d) Employee will preserve any and all business records which he has
possession or control over and will instruct his assistants and secretaries to
do the same.

            (e) If Employee is compelled to testify pursuant to a validly served
subpoena (or its equivalent or like process) in any legal proceeding or by
regulatory authority with respect to Bear Stearns business, Employee shall
notify the Firm as soon as reasonably practical, but in no event later than five
(5) days before any response or testimony is due from Employee (or on Employee's
behalf), of all subpoenas or requests for information and will advise the Firm
of Employee's response thereto, if any.

            (f)   (i) Given Employee's pledge of cooperation, it is agreed that
the Firm will continue to employ Sandra Collins as an employee of the Firm
through December 31, 2007 in order to assist Employee.

                  (ii) Employee will advise Collins of his confidentiality,
non-disparagement, non-solicitation and cooperation obligations all as set forth
herein so that she can be of assistance.

      17. To the extent that Employee maintained a Monterey Account, Employee
may continue to make contributions to the account as long as he is an employee,
but as of Last Date or Resignation Date, whichever is applicable, Employee may
not withdraw funds from the Monterey Account but may continue to direct
contributions from his Monterey Account to 501(c)3 public charities.

      18. Employee and the Firm each understand that neither this Agreement (or
anything contained herein) nor the making of this Agreement is intended, and
shall not be construed, as an admission that the Firm or the Employee, as
applicable, has violated any federal, state or local law (statutory, decisional
or common law), or any ordinance or regulation, or has committed any wrong
whatsoever with respect to Employee or the Firm, as applicable, (including, but
not limited to, breach of any contract, actual or implied). Both the Firm and
the Employee deny that they have committed any such violation or wrongdoing
whatsoever.

      19.   (a) Employee acknowledges that the payments and other consideration
provided in this Agreement exceed that to which Employee would otherwise be
entitled under the normal operation of any benefit plan, policy or procedure of
the Firm or under any previous agreement (written or oral) between Employee and
the Firm. Employee further acknowledges that the agreement by Bear Stearns to
provide the payments and other consideration pursuant to this Agreement beyond
Employee's entitlement is conditioned upon Employee's release of all claims
against Bear Stearns and Employee's compliance with all the terms and conditions
of this Agreement. Furthermore, except as provided in

                                        9
<PAGE>

this Agreement, Employee gives up Employee's right to individual damages in
connection with any administrative or court proceeding with respect to any claim
that has been waived herein, arising out of Employee's employment or separation
from employment from the Firm and if Employee is awarded or accepts money
damages, employee will assign to the Firm any right and interest to such money
damages. This paragraph is subject to the provisions of paragraph 27 below.

            (b) The Firm represents that, as a further assurance, all approvals
necessary to provide consideration in excess of entitlements have been
appropriately approved, and where required, approved by the individuals, or by
the Board of Directors, or by an appropriate committee, and, where required,
those approvals are in writing in conformity with requirements of Firm and/or
the necessary governing entities, and that any such writings required but not
yet actually entered into shall, if appropriate, be executed "as of" the
required date of approval.

      20. The Parties agree that, except as provided for herein, there shall be
no other payments or benefits payable to Employee, including, but not limited
to, salary, bonuses, commissions, finder's fees and/or other payments.

      21. Employee agrees as follows (the following provisions hereinafter
collectively the "Confidentiality Covenant"):

            (a) Employee acknowledges and agrees that any non-public and/or
proprietary information of the Firm and/or its clients disclosed to or prepared
by Employee during Employee's employment remains confidential and may not be
used and/or disclosed by Employee hereafter without the prior written consent of
Bear Stearns, except as may be required by applicable law or legal process.

            (b) Employee agrees that in the event Employee is contacted by, or
communicates with, the media in any form, including, but not limited to, any
wire service, newspaper, magazine or web-based news service, with respect to
Bear Stearns, its clients and/or customers, and/or Employee's conduct and/or
employment at Bear Stearns, or with respect to any regulatory, litigation or
arbitration matter with respect to Bear Stearns, its clients and/or customers,
and/or Employee's conduct and/or employment at Bear Stearns. Employee, to the
best of his ability, shall promptly contact Michael Solender of Bear Stearns
Legal Department 212-272-7850 to provide the particulars of the contact, to the
best of his ability in advance of commenting and/or responding to press inquiry.
Employee agrees not to make any statements to the press on behalf of Bear
Stearns.

                                       10
<PAGE>

      22. Non Solicitation. In addition to any restrictive covenant Employee is
subject to, pursuant to the terms and conditions of any Fund documents, plan or
agreement (which covenants shall remain in full force and effect), Employee also
agrees that in consideration for the payments and other consideration provided
in this Agreement, Employee will not for a period of one (1) year after the
Resignation Date or Last Date (whichever is applicable), either, directly or
indirectly, (a) solicit any person who is employed by Bear Stearns (or who was
employed by Bear Stearns within thirty (30) days of Employee's departure), or
any person who consulted or was an independent contractor to Bear Stearns for a
majority of his/her time, or a person known to employee to be under a
significant recruitment effort to: (i) terminate his or her employment,
consultancy, independent contractor relationship or interviewing with Bear
Stearns; (ii) accept employment with anyone other than Bear Stearns or (iii) in
any manner interfere with the employee's, consultant's, independent contractor's
or candidate's business with Bear Stearns, or (b) hire away any such person as
described in (a). (This paragraph is referred to hereinafter as the
"Non-Solicitation Covenant.")

      23. For a period one (1) year from Last Date, Employee agrees not to
disparage or encourage or induce others to disparage Bear Stearns (and any of
its affiliates, officers and/or employees, or any of its transactions,
methodologies, products, equipment or services) in any way, including but not
limited to making any negative or derogatory statements in verbal, written,
electronic or any other form about Bear Stearns, including, but not limited to,
a negative or derogatory statement made in, or in connection with, any
interview, article or book, on a website, in a chat room or via the Internet. It
is also intended by this paragraph that Employee will not engage in conduct that
is disparaging and therefore damaging or detrimental to Bear Stearns' on-going
client relationships. Nothing stated herein however shall be construed to
prohibit Employee from giving truthful responses and/or testimony in any legal
or regulatory proceeding or inquiry. (This paragraph is referred to hereinafter
as the "Non-Disparagement Covenant.")

            Bear Stearns will advise the current members of the Executive
Committee (James Cayne, Alan Schwartz, Alan Greenberg, Sam Molinaro and Jeffrey
Mayer), the current members of the Management and Compensation Committee (James
Cayne, Alan Schwartz, Michel Peretie, David Glaser, Jeff Urwin, Thomas Marano,
Craig Overlander, Peter Cherasia, Michael Alix, Jeff Mayer, Sam Molinaro, Steve
Begleiter, Bruce Lisman, Steve Meyer and Robert Steinberg), Wendy de Monchaux,
Eli Wachtell, Elizabeth Ventura, Russell Sherman, Michael Solender and Jeff
Farber not to disparage Employee nor to induce others to disparage Employee in
any way, including but not limited to making any negative or derogatory
statements in verbal, written, electronic or any other form about Bear Stearns,
including, but not limited to, a negative or derogatory statement made in, or in
connection

                                       11
<PAGE>

with, any article or book, on a website, in a chat room or via the Internet for
one (1) year from Last Date (or Resignation Date, if earlier). Nothing stated
herein however shall be construed to ever prohibit Bear Stearns persons from
giving truthful responses and/or testimony in any legal or regulatory proceeding
or inquiry.

      24. Employee is bound by a garden leave provision which requires a written
notice of 90 days which the Firm hereby elects to waive. Employee agrees,
however, to give the Firm five (5) business days notice of intention to resign
if before Last Date.

      25. Arbitration.

            (a) The Parties specifically and knowingly and voluntarily agree to
an arbitration clause so that with respect to any controversy, dispute or claim
which has arisen or should arise in connection with Employee's employment, the
cessation of Employee's employment or in any way related to the terms of this
Agreement, the Parties agree to arbitrate any and all such controversies,
disputes and claims before a neutral panel of the Financial Industry Regulatory
Authority ("FINRA") (pursuant to its rules, including those related to
discovery), at a hearing site located in New York, New York. In the event FINRA
declines jurisdiction in connection with any such matter, the Parties agree
instead to arbitration to be administered by JAMS pursuant to its Employment
Arbitration Rules & Procedures and subject to JAMS Policy on Employment
Arbitration Minimum Standards of Procedural Fairness at a JAMS hearing site in
New York, New York. In the course of any arbitration pursuant to this Agreement,
Employee and the Firm agree (i) to request that a written award be issued by the
panel and (ii) that each side is entitled to receive any and all relief it would
be entitled to receive in a court proceeding. The Parties knowingly and
voluntarily agree to enter into this arbitration clause and to waive any rights
that might otherwise exist to request a jury trial or other court proceeding,
except that Employee and Bear Stearns each agrees that each Employee and Bear
Stearns has the right to seek injunctive or other equitable relief from a court
to enforce the Confidentiality, Non-Solicitation and Non-Disparagement Covenants
herein. This is intended to be both a post-dispute and pre-dispute arbitration
clause.

            (b) The Parties' agreement to arbitrate disputes includes, but is
not limited to, any claims of unlawful discrimination and/or unlawful harassment
under Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act of 1967, as amended, the Americans with
Disabilities Act, and any other federal, state or local law relating to
discrimination in

                                       12
<PAGE>

employment and any claims relating to wage and hour claims and any other
statutory or common law claims.

      26. Reference checks will be directed to Alan Schwartz.

      27. Employee realizes there are many laws and regulations prohibiting
employment discrimination, or otherwise regulating employment or claims related
to employment pursuant to which Employee may have rights or claims. By this
Agreement, Employee intends to release the Firm and the other persons and
entities covered by the General Release, and to waive Employee's right to assert
against any of them, all such claims and all claims for discrimination or
harassment based on race, color, national origin, ancestry, religion, marital
status, sex, sexual orientation, citizenship status, pregnancy, leave of
absence, medical condition, disability or handicap (as defined by the Americans
with Disabilities Act, or any other state or local law), age or any other
unlawful discrimination under any federal, state or local statute or ordinance,
including, without limitation, Title VII of the Civil Rights Act of 1964, as
amended; the Americans with Disabilities Act of 1990; the Pregnancy
Discrimination Act; the National Labor Relations Act, as amended; 42 U.S.C. ss.
1981; the Employee Retirement Income Security Act of 1974, as amended; the Age
Discrimination in Employment Act of 1967, as amended; the Civil Rights Act of
1991; the Worker Adjustment and Retraining Notification Act; the New York State
and City Human Rights Laws; the New York Labor Law; and other federal, state and
local human rights, fair employment and other laws. Employee further intends to
release the Firm and the other persons and entities covered by the General
Release, and to waive Employee's right to assert against any of them, all claims
for other wrongful or tortious conduct, including but not limited to breach of
implied or express contract; breach of promise; misrepresentation; negligence;
fraud; estoppel; defamation; intentional or negligent infliction of emotional
distress; loss of consortium; violation of public policy; wrongful or
constructive discharge; any other employment-related tort or any claim under any
federal, state, territorial or local statute or ordinance relating to
employment, including any law relating to "whistleblowers," or any claim similar
to any of the foregoing. Employee further intends to release the Firm and waive
any claims or damages of any nature or kind arising in connection with any of
the foregoing or otherwise, including without limitation, all actual, special,
liquidated, compensatory, punitive and all other kinds of damages recognized at
law or in equity, and any claim for attorneys' fees, expenses or costs, based
upon any conduct, acts or omissions, that Employee now has, ever had or may
hereafter have, whether known or unknown, suspected or unsuspected, from the
beginning of time up to and including the date Employee signs this Agreement.
Employee, however, does not intend to, nor is Employee waiving any rights or
claims that may arise after the date that this Agreement is signed by Employee.
Notwithstanding the foregoing, Employee's waiver and release shall not extend to
(i) any rights, remedies or claims Employee may have in enforcing the

                                       13
<PAGE>

terms of the Agreement; (ii) any rights Employee may have to receive vested
amounts under Bear Stearns' ESOP, profit sharing, PAYSOP, 401-K, and/or pension
plans; (iii) Employee's rights to medical benefit continuation coverage, on a
self-pay basis, pursuant to federal law (COBRA); (iv) any rights Employee may
have by law to initiate or participate in an investigation or proceeding
conducted by the EEOC or a comparable state or local agency, although no damages
may be obtained that are not assigned over to the Firm per paragraph 19 of this
Agreement; (v) Employee's eligibility for indemnification in accordance with
applicable laws, the certificate of incorporation and/or by-laws of Bear
Stearns, under this Agreement or under any other agreement, policy or otherwise;
(vi) any right Employee may have to obtain contribution as permitted by law in
the event of entry of judgment against Employee as a result of any act or
failure to act for which Employee and Bear Stearns are jointly liable; and (vii)
any rights or claims that may not be lawfully released and/or waived.

      28. This Agreement shall be deemed to have been made within the County of
New York, State of New York, and shall be interpreted and construed and enforced
in accordance with the laws of the State of New York without regard to its
conflict of laws provision.

      29.   (a) Employee acknowledges that he has been advised to consult with
the attorneys of his choice prior to executing this Settlement and Release.
Employee also acknowledges that he has had the opportunity to consult with said
counsel in connection with this Settlement and Release, and that Employee and
his counsel have had an adequate opportunity to review this Settlement and
Release before its execution, and was given a period of twenty-one (21) days to
consider the Agreement. Employee is permitted, at Employee's discretion, to
return the Agreement prior to the expiration of this 21-day period. Employee
acknowledges that in signing this Agreement, Employee has relied only on the
promises written in this Agreement, and not on any other promise made by the
Firm or any other entity or person. Employee has seven (7) days after signing
this Agreement to revoke this Agreement. Employee may revoke this Agreement by
delivering written notice of such revocation within the requisite seven (7) day
period to Bear Stearns in care of Michael Solender at the following address:
Bear, Stearns & Co. Inc., 383 Madison Avenue, New York, New York 10179. In the
event Employee does not accept this Agreement as set forth above, this
Agreement, and all of the obligations contained herein, shall be deemed
automatically and immediately null and void.

            (b) Any notices given, or required to be given under this Agreement
shall be made by overnight mail and email to:

                                       14
<PAGE>

      If to Bear Stearns:

            Michael Solender
            General Counsel
            Bear, Stearns & Co. Inc.
            383 Madison Avenue
            New York, NY 10179
            Email: msolender@bear.com and

      If to Employee:

            Warren Spector, at the most recent address on file at the Firm
      With copies to:

            Jeremy L. Goldstein
            Wachtell, Lipton, Rosen & Katz
            51 West 52nd Street
            New York, NY 10019-6150
            Email: jlgoldstein@wlrk.com

      30. Employee represents that Employee has not filed any complaints,
charges, or claims against Bear Stearns with any local, state or federal agency
or court, or with any other forum.

      31. On or before Resignation Date or Last Date, Employee agrees to return
any Bear Stearns property no matter where located including, but not limited to,
Bear Stearns I.D. card, corporate credit card, "Secure I.D." computer card,
keys, laptop computer, computer disks, all other computer equipment/accessories
and any and all written and/or electronic material prepared in the course of
employment at Bear Stearns. With respect to desk top computers located in New
York, Martha's Vineyard and Florida, Employee will allow Bear Stearns to remove
Bear Stearns (i.e. work related) material and applications, but the actual
desktop equipment need not be returned to the Firm. Employee will cooperate with
the Firm in the conversion of billing for services if applicable, from the Firm
to the Employee's personal account.

      32. If any provision of this Agreement, or any part thereof, is held to be
invalid or unenforceable because of the scope or duration of or the area covered
by such provision, Employee and Bear Stearns agree that the court or other
appropriate decision-making authority making such determination shall reduce the
scope, duration and/or area of such provision (and shall substitute appropriate
provisions for any such invalid or unenforceable provisions) in order to make
such provision enforceable to the fullest extent permitted by law and/or shall
delete specific words and phrases, and such modified provision shall then be
enforceable and shall be enforced. In the event that any court or other
appropriate decision-making authority determines that the time period or the
area,

                                       15
<PAGE>

or both, are unreasonable and that any of the covenants are to that extent
invalid or unenforceable, the parties hereto agree that such covenants will
remain in full force and effect, first, for the greatest time period, and
second, in the greatest geographical area that would not render them
unenforceable. If any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions of this Agreement shall nonetheless
survive and be enforced to the fullest extent permitted by law.

      33. Except as otherwise expressly provided herein, this Agreement and
Release, together with the General Release, constitutes the entire agreement
between the Parties as to the subject matter hereof and supersedes any and all
prior agreements, whether written or oral, on said matters. This Agreement may
not be modified or changed, except in a written agreement signed by both
Parties.

      34. This Agreement shall be binding upon each of the Parties and their
successors, heirs and representatives.

      35. The unenforceability or invalidity of any provision or provisions of
this Settlement and Release shall not render any other provision or provisions
hereof unenforceable or invalid.

      36. The Agreement may be executed in multiple counterparts, each of which
shall be considered an original but all of which shall constitute one agreement.

      37. Employee is responsible for his own tax payments and takes
responsibility for his aspect of this Agreement's compliance with Internal
Revenue Service Code section 409A. Neither the Firm nor its employees or
representatives shall have liability to the Employee with respect to any
additional taxes that the Employee may be subject to in the event that any
amounts under this Agreement are determined to violate the Code including
Section 409A.

      Employee has read this Agreement, and understands all of its terms.
Employee enters into and signs this Agreement knowingly and voluntarily with
full knowledge of what it means. Employee understands that Employee has
twenty-one (21) days to consider this Agreement and return it to Michael
Solender, Bear, Stearns & Co. Inc., 383 Madison Avenue, New York, New York
10179. Employee also understands that Employee has seven (7) days to revoke this
Agreement in writing after Employee signs it. Employee understands that a
revocation will become effective only if Employee furnishes Bear Stearns with
written notice to Michael Solender, Bear, Stearns & Co. Inc., 383 Madison
Avenue, New York, New York 10179, within such seven (7) day period.

                                       16
<PAGE>

      This Agreement will not become effective or enforceable until Bear
Stearns' receipt back of Employee's executed Agreement and the expiration of the
seven (7) day revocation period provided Employee has not validly revoked this
Agreement.

/s/ Warren Spector                       November 15, 2007
------------------------------           ------------------------------
Employee Signature                       Date

Warren Spector
------------------------------
Employee Name (Print)

BEAR, STEARNS & CO. INC.

By: /s/ Alan Schwartz                    November 15, 2007
   ---------------------------           ------------------------------
   Alan Schwartz                         Date

                                       17
<PAGE>

CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS GENERAL RELEASE. BY SIGNING THIS
GENERAL RELEASE, YOU GIVE UP AND WAIVE IMPORTANT LEGAL RIGHTS.
                                 GENERAL RELEASE
                                 ---------------

      Warren Spector ("Employee") understands and, of Employee's own free will,
enters into this General Release.

      In consideration of the payments, benefits, agreements and other
consideration to be provided by Bear Stearns as described in the agreement of
which this General Release is a part (such agreement and this General Release,
together, the "Agreement"), Employee, for Employee's self and for Employee's
heirs, executors, administrators and their respective successors and assigns,
HEREBY RELEASES AND FOREVER DISCHARGES, to the maximum extent permitted by law,
Bear, Stearns & Co. Inc., its parent corporations, stockholders, subsidiaries,
affiliates, divisions, successors and assigns, their respective current and
former officers, directors, employees, agents, employee benefit plans and plan
administrators, whether as individuals or in their official capacity, and each
of their respective successors and assigns of and from all or any manner of
actions, causes and causes of action, suits, debts, obligations, damages,
complaints, liabilities, losses, covenants, contracts, controversies,
agreements, promises, variances, trespasses, judgments and expenses (including
attorneys' fees and costs), extents, executions, claims and demands whatsoever
at law or in equity ("claims"), specifically including by way of example but not
limitation, any and all claims for discrimination or harassment based on race,
color, national origin, ancestry, religion, marital status, sex, sexual
orientation, citizenship status, pregnancy, leave of absence, medical condition,
disability or handicap (as defined by the Americans with Disabilities Act, or
any other state or local law), age or any other unlawful discrimination under
any federal, state or local statute or ordinance, including, without limitation,
Title VII of the Civil Rights Act of 1964, as amended; the Americans with
Disabilities Act of 1990; the Pregnancy Discrimination Act; the National Labor
Relations Act, as amended; 42 U.S.C. ss. 1981; the Employee Retirement Income
Security Act of 1974, as amended; the Age Discrimination in Employment Act of
1967, as amended; the Civil Rights Act of 1991; the Worker Adjustment and
Retraining Notification Act; the New York State and City Human Rights Laws; the
New York Labor Law; and other federal, state and local human rights, fair
employment and other laws; and any and all claims for other wrongful or tortious
conduct, including but not limited to breach of implied or express contract;
breach of promise; misrepresentation; negligence; fraud; estoppel; defamation;
intentional or negligent infliction of emotional distress; loss of consortium;
violation of public policy; wrongful or constructive discharge; any other
employment-related tort or any claim under any federal, state, territorial or
local statute or ordinance relating to employment, including any law relating to
"whistleblowers," or any claim similar to any of the foregoing; and any and all
claims for damages of any nature or kind arising in connection with any of the
foregoing or otherwise, including without limitation, all actual, special,
liquidated, compensatory, punitive and all other kinds of damages recognized at
law or in equity, and any claim for attorneys' fees, expenses or costs, based
upon any conduct, acts or omissions, that Employee now

<PAGE>

has, ever had or may hereafter have, whether known or unknown, suspected or
unsuspected, from the beginning of time up to and including the date Employee
signs this Agreement. Employee, however, does not intend to, nor is Employee
waiving any rights or claims that may arise after the date that this Agreement
is signed by Employee. Notwithstanding the foregoing, Employee's waiver and
release shall not extend to (a) any rights, remedies, or claims Employee may
have in enforcing the terms of the Agreement; (b) any rights Employee may have
to receive vested amounts under Bear Stearns' ESOP, profit sharing, PAYSOP,
401-K and/or pension plans; (c) Employee's rights to medical benefit
continuation coverage, on a self-pay basis, pursuant to federal law (COBRA); (d)
any rights Employee may have by law to initiate or participate in an
investigation or proceeding conducted by the EEOC or a comparable state or local
agency, although no damages may be obtained that are not assigned over to the
Firm per paragraph 19 of this Agreement; (e) Employee's eligibility for
indemnification in accordance with applicable laws, the certificate of
incorporation and/or by-laws of Bear Stearns, under this Agreement or under any
other agreement, policy or otherwise; (f) any right Employee may have to obtain
contribution as permitted by law in the event of entry of judgment against
Employee as a result of any act or failure to act for which Employee and Bear
Stearns are jointly liable; and (g) any rights or claims that may not be
lawfully released and/or waived. Employee takes this action fully aware of
Employee's rights arising under the laws of the United States (and any state or
local governmental entity thereof) and voluntarily waives and releases all such
rights or claims under these or other laws, but does not intend to, nor is
Employee waiving any rights or claims that may arise after the date that this
Agreement is signed by Employee. The provisions of any laws providing in
substance that releases shall not extend to claims which are at the time unknown
to or unsuspected by the person executing such release, are hereby waived.

      Employee represents that Employee has been advised to and has had an
opportunity to consult with an attorney of Employee's choosing (at Employee's
expense) before signing this Agreement, and was given a period of twenty-one
(21) days to consider this Agreement. Employee is permitted, at Employee's
discretion, to return the Agreement prior to the expiration of this 21-day
period. Employee has relied only on the promises written in the Agreement, and
not on any other promise made by Bear Stearns or any other entity or person.
Employee has seven (7) days after signing this Agreement to revoke this
Agreement. Employee may revoke this Agreement by delivering written notice of
such revocation within the requisite seven (7) day period to Bear Stearns in
care of Michael Solender at the following address: Bear, Stearns & Co. Inc., 383
Madison Avenue, New York, New York 10179.

      Employee has read this Agreement, understands it, and enters into it
knowingly and voluntarily.

                                        2
<PAGE>

      The Agreement will not become effective or enforceable until Bear Stearns'
receipt of Employee's executed Agreement and the expiration of the seven (7)-day
revocation period provided Employee has not validly revoked this Agreement.

      /s/ Warren Spector                       November 15, 2007
      ------------------------------           ------------------------------
      Employee Signature                       Date

      Warren Spector
      ------------------------------
      Employee Name (Print)

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