Document:

EXHIBIT 10.25

June 15, 2007

William F. Hayworth

President

PRB Energy, Inc.

1875 Lawrence Street, Suite 450

Denver, Colorado 80202

Re:          $15,000,000 Senior Secured Debentures
issued December 28, 2006 (the “Debentures”)

We understand that
PRB Energy, Inc. (the “Company”) has entered into a Settlement
Agreement, dated May 15, 2007, with Rocky Mountain Gas, Inc. (“RMG”)
that resolves certain disputes between the Company and RMG (the “Settlement
Agreement”).  A copy of the
Settlement Agreement has previously been supplied to us and is attached hereto
as Exhibit A.

Pursuant to the
Settlement Agreement, RMG has agreed, pursuant to the terms of a promissory
note bearing 10% interest to be issued in favor of the Company (the “Promissory
Note”), to pay the Company $3.25 million as follows:  (i) $500,000 on May 22, 2007; (ii) $500,000
on June 21, 2007; and (iii) $2.25 million, plus interest, on or before October
31, 2007.  In addition, RMG has agreed to
transfer, convey and assign to the Company all of its right, title and interest
in certain assets described in the Settlement Agreement (the “RMG Settlement
Assets”).  Pursuant to the Settlement
Agreement, the Company has agreed to transfer, convey and assign to RMG all of
its right, title and interest in certain assets described in the Settlement
Agreement (the “PRB Settlement Assets”). 
Pursuant to the Debentures and the Security Agreement (as such term is
defined in the Debentures), our consent is required in order for the Company
and its affiliates to transfer, convey and assign all of its right, title and
interest in the PRB Settlement Assets to RMG. 
In consideration of the agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, DKR Soundshore Oasis Holding Fund Ltd. (“DKR”) and West
Coast Opportunity Fund, LLC (“West Coast”) hereby consent to the
transfer, conveyance and assignment by the Company of all of its right, title
and interest in the PRB Settlement Assets to RMG.

In connection
therewith, the Company hereby agrees that upon receipt of the Promissory Note
from RMG, the Company will promptly deliver the original copy of the Promissory
Note to Rajni Narasi, Associate General Counsel of DKR, to be held as
collateral pursuant to the Security Agreement. 
Upon receipt of its interest in the RMG Settlement Assets, the Company
hereby further agrees to take any and all actions necessary to promptly cause a
first priority perfected lien in the RMG Settlement Assets to be created in
favor of DKR and West Coast.

With respect to
the $3.25 million to be paid by RMG to the Company pursuant to the Promissory
Note, the parties to this letter agreement hereby agree that the Company shall
be entitled to retain, in their entirety, each of the first two payments of
$500,000 described above.  With respect
to the remaining $2.25 million, plus interest thereon (the “Final Payment
Amount”), the parties to this letter agreement hereby agree that the
Company shall be entitled to retain 50% of the Final Payment Amount and that
DKR and West Coast shall be entitled to the remaining 50% of the Final Payment
Amount, on a pro rata basis (the “Lender Portion of the Final Payment Amount”).  The parties further agree that the Lender
Portion of the Final Payment Amount shall be applied by the Company to
partially redeem, on a pro rata basis, the principal amounts then outstanding
under the Debentures.  Such redemptions
shall include the payment of the 110% premium amount referenced in Section 5 of
the Debentures.

By copy of this letter,
the Company, DKR and West Coast authorize David G. Stolfa, Trustee of the
Mortgage, Deed of Trust, Assignment of Production, Security Agreement and
Financing Statement, dated as of 

February 1, 2007, to
take any and all actions, and to issue any and all releases, necessary to
transfer, convey and assign the Company’s interest in the PRB Settlement Assets
to RMG.

From time to time
on and after the date hereof and without further consideration, the parties to
this letter agreement shall each deliver or cause to be delivered to any other
party, at such times and places as shall reasonably be requested, such
additional instruments as any of the others may reasonably request for the
purpose of carrying out the transactions contemplated by this letter agreement.

Nothing contained
in this letter agreement shall be deemed to constitute a consent of any actions
by the Company other than those actions contemplated by the Settlement
Agreement or waiver of any breach or default pursuant to the Debentures or the
Security Agreement not related to the Settlement Agreement.

This letter
agreement may be signed in any number of counterparts with the same effect as
if all parties had signed the same document. 
All counterparts shall be construed together and shall constitute one
document.

	
   

  	
  Very truly yours,

  
	
   

  	
  DKR SOUNDSHORE
  OASIS

  
	
   

  	
  HOLDING FUND
  LTD.

  
	
   

  	
   

  
	
   

  	
  By

  	
         /s/Barbara
  Burger

  	
   

  
	
   

  	
  Name:

  	
   Barbara Burger

  	
   

  
	
   

  	
  Its:

  	
           Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEST COAST
  OPPORTUNITY

  
	
   

  	
  FUND, LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
         /s/Atticus
  Lowe

  	
   

  
	
   

  	
  Name:

  	
   Atticus Lowe

  	
   

  
	
   

  	
  Its:

  	
           CIO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND
  ACKNOWLEDGED BY:

  	
   

  
	
   

  	
   

  
	
  PRB ENERGY, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ William F.
  Hayworth

  	
   

  	
   

  
	
   

  	
  Name: William F.
  Hayworth

  	
   

  
	
   

  	
  Title: President

  	
   

  
	
   

  	
   

  
	
  cc:

  	
  David G. Stolfa,
  Esq.

  	
   

  
	
   

  	
  3300 S.
  Columbine Circle

  	
   

  
	
   

  	
  Englewood, CO
  80113

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Charles F.
  Savage, Esq.

  	
   

  
	
   

  	
  155 S. Madison
  St., Suite 326

  	
   

  
	
   

  	
  Denver, CO 80209EXHIBIT 10.1

SHEA
DEVELOPMENT CORP.

2007 STOCK OPTION AND PERFORMANCE AWARDS PLAN

1.             Purposes of this
Plan. The general purpose of this “2007 Shea Development Corp. Stock Option
and Performance Awards Plan” is to promote the interests of the Company and its
shareholders by (i) providing certain Employees, Directors, and Consultants of
and to the Company, and any Parent or Subsidiary of the Company with additional
incentives to continue and increase their efforts with respect to achieving
success in the business of the Company, its Affiliates and its Subsidiaries,
and (ii) attracting and retaining the best available personnel to participate
in the ongoing business operations of the Company and any Parent or Subsidiary
of the Company.

Options granted under this Plan may be either Incentive Stock Options,
Non-Statutory Stock Options, Restricted Stock, Stock Appreciation Rights,
Performance Units and Performance Awards, as determined at the discretion of
the Board and as reflected in the terms of the written option agreements.  The Board may also grant Stock Purchase Rights
hereunder.

2.             Definitions.
 As used in this Plan, the following
definitions shall apply:

“Affiliates” means any other entity directly or indirectly
controlling, controlled by, or under common control, with the Company.

“Affiliated SAR” means a SAR that is granted in connection with
a related Option, and which will be deemed to automatically be exercised
simultaneous with the exercise of the related Option.

“Award” means, individually or collectively, a grant under this
Plan, including any Nonqualified Stock Options, Incentive Stock Options, SARs,
Restricted Stock, Performance Units, or Performance Shares.

“Award Agreement” means an agreement entered into by each
Participant and the Company, setting forth the terms and provisions applicable
to Awards granted to Participants under the Plan.

“Board” shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.

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

   
 

“Cause” shall be deemed to exist upon (i) willful misconduct or
gross negligence of an Officer in the performance of his duties and services to
the Company, its Parent or any Subsidiary (herein referred to as the “Officer”);
(ii) the commission of a felony by the Officer, whether or not committed in the
course of performing services for the Company, its Parent or any Subsidiary;
(iii) Officer’s deliberate dishonesty or breach of fiduciary duty; (iv) the
commission by Officer in the course of performing any services for the Company,
its Parent or any Subsidiary of embezzlement, theft or any other fraudulent
act; (v) the unauthorized disclosure by Officer of any material trade secret or
material confidential information of the Company, its Parent or any Subsidiary;
(vi) the commission by the Officer of an act which constitutes unfair
competition with the Company, its Parent or any Subsidiary, including, without
limitation, inducing any employee or customer of the Company, its Parent or any
Subsidiary to breach a contract with the Company, its Parent or any Subsidiary;
(vii) the repeated refusal or failure by the Officer to comply with any
policies of the Company, its Parent or any Subsidiary by whom such Officer is
employed or any lawful directives of the Board of the Company, its Parent or
Subsidiary, as the case may be; or (viii) the material breach by the Officer of
any agreement to which the Company, its Parent and/or any Subsidiary and
Officer are parties, which material breach remains uncured by the Officer for a
period of 10 days after the Company, Parent or Subsidiary, as the case may be,
has given the Officer written notice thereof.

“Change of Control” shall be deemed to have occurred after (a)
the sale of all or substantially all of the assets of the Company, whether in a
single transaction or in a series of transactions occurring within any single
12 month period, (b) the sale by one or more shareholders of the Company, in a
single transaction or in a series of transactions occurring within any singe 12
month period, of more than 50% of the issued and outstanding capital stock of
the Company to any individual, corporation, trust or other entity; or (c) a
merger, reorganization, exchange of stock or other securities, or other
business combination between the Company and another individual, corporation,
trust or other entity comprised of a single transaction or a series of
transactions occurring within any single 12 month period, resulting in any
individual, corporation, trust or other entity owning more than 50% of the
issued and outstanding capital stock of the Company.

“Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute or statutes thereto. Reference to
any particular Code section shall include any successor section.

“Committee” shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of this Plan, if one is appointed, or
if no Committee is appointed, the Board of Directors.

“Common Stock” shall mean the Common Stock, par value 0.001 per
share of the Company.

 2
 

“Company” shall mean Shea Development Corp., a Nevada corporation.

“Consultant” shall mean any person who is engaged by the Company
or by its Parent or Subsidiary to render consulting services and is compensated
for such consulting services.

“Continuous Status as an Employee or Consultant” shall mean the
absence of any interruption or termination of service as an Employee or
Consultant, as applicable. Continuous Status as an Employee or Consultant shall
not be considered interrupted in the case of sick leave, military leave, or any
other leave of absence approved by the Board; provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.

“Director” shall mean a member of the Board of Directors of the Company
or its Parent or Subsidiary, whether such member is compensated for such
services or not.

“Disinterested Person” shall mean a member of the Board of
Directors of the Company: (i) who was not during the one year prior to service
as an administrator of this Plan granted or awarded equity securities pursuant
to this Plan, or any other plan of the Company or any of its affiliates entitling
the participants therein to acquire equity securities of the Company or any of
its affiliates except as permitted by Rule 16b-3(c)(2)(i) promulgated under the
Exchange Act (“Rule 16b-3(c)(2)(i)”); or (ii) who is otherwise considered to be
a “disinterested person” in accordance with Rule 16b-3(c)(2)(i), or any other
applicable rules, regulations or interpretations of the Securities and Exchange
Commission.

“Employee” shall mean any person, including officers, employed
by the Company or any Parent or Subsidiary of the Company as a common-law
employee, and any person who is a Leased Employee.

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

“Freestanding SAR” means a SAR that is granted independently of
any Options.

“Good Reason” means the Officer’s resignation as an employee of
the Company, its Parent or any Subsidiary as a result of (i) the Company, its
Parent or any Subsidiary  materially
violating any of its material obligations to the Officer under his written
employment agreement with the Company, its Parent or any Subsidiary, or any
other agreement with the Officer, (ii) a substantial change in the Officer’s
duties to which the Officer does not consent, (iii) a decrease in the Officer’s
salary or performance bonuses to which the Officer does not consent, or (iv)
the Company failing to enter into a new employment agreement with the Officer within
thirty (30) days prior to the expiration of 

 3
 

his
existing employment agreement, on terms equal to or greater than the existing
agreement; provided, however, that termination of the Officer for Good Reason
shall only be effective if the Officer gives the Company, its Parent or its
Subsidiary, as the case may be, a minimum of thirty (30) days’ advance written
notice, and provided that the occurrence of such violation shall have occurred
within the sixty (60) days preceding such notice and that the Company, its
Parent or Subsidiary, as the case may be, shall have failed to cure such
violation within thirty (30) days after receipt of such notice.

“Incentive Stock Option” shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

“Leased Employee” shall mean any person (other than a common law
employee of the Company, its Parent and/or  Subsidiary) who pursuant to an agreement
between the Company, its Parent and/or Subsidiary (sometimes referred to herein
individually and collectively as the “recipient”) and any other person
(sometimes called herein the “leasing organization”) has performed services for
such recipient which services are of the type historically performed by
employees in the business field of the recipient.

“Major Event” shall be deemed to have occurred if (i) there
shall be consummated any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company’s common stock would be converted into cash, securities
or other property, other than a merger of the Company in which the holders of the
Company’s common stock immediately prior to the merger generally have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger; (ii) there shall be consummated any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company; (iii)
proceedings or actions for the liquidation or dissolution of the Company are
initiated by the Company; or (iv) any “person” (as defined in Sections 13(d)
and 14(d) of the Exchange Act) (other than persons who beneficially own more
than 30% of the capital stock of the Company on a fully diluted and as
converted basis outstanding as of the date of adoption of this Plan by the
Board of Directors) becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 30% or more of the Company’s
outstanding capital stock on a fully diluted and as converted basis at such
time; provided, however, that a “Major Event” shall not be deemed to have
occurred solely by reason of the consummation of a public offering by the
Company of common stock registered under the Securities Act.

“Non-Statutory Stock Option” shall mean an Option which is not
intended to qualify as an Incentive Stock Option.

“Option” shall mean a stock option granted pursuant to this
Plan.

 4
 

“Optioned Stock” shall mean the Common Stock subject to an
Option.

“Optionee” shall mean an Employee or Consultant who receives an
Option.

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

“Participant” means an Employee of the Company who has
outstanding an Award granted under the Plan.

“Performance Unit” means an Award granted to an Employee
pursuant to Section 12.

“Performance Share” means an Award granted to an Employee,
pursuant to Section 12 herein.

“Period of Restriction” means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on the passage
of time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, in its discretion), and the Shares are
subject to a substantial risk of forfeiture, as provided in Section 11.

“Plan” shall mean this 2007 Shea Development Corp. Stock Option
and Performance Awards Plan.

“Purchaser” shall mean an Employee or Consultant who exercises a
Stock Purchase Right.

“Restricted Stock” means an Award granted to a Participant
pursuant to Section 11.

“Securities Act” shall mean the Securities Act of 1933, as
amended.

“Share” shall mean a share of Common Stock, as adjusted in
accordance with Section 14 of this Plan.

“Stock Appreciation Right” or “SAR” means an Award, granted
alone or in connection with a related Option, designated as a SAR, pursuant to
the terms of Section 10.

“Stock Purchase Right” shall mean a right to purchase Common
Stock pursuant to this Plan or the right to receive a bonus of Common Stock for
past services.

 5
 

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

“Tandem SAR” means a SAR that is granted in connection with a
related Option, the exercise of which shall require forfeiture of the right to
purchase a Share under the related Option (and when a Share is purchased under
the Option, a SAR shall similarly be cancelled).

3.             Stock Subject to
this Plan. Subject to the provisions of Section 14 of this Plan, the
maximum aggregate number of Shares under this Plan is 9,500,000.  The Shares may be authorized but unissued, or
reacquired Common Stock, or both. If an Option or Stock Purchase Right should
expire, terminate, be cancelled or become unexercisable for any reason without
having been exercised in full, then the unpurchased Shares which were subject
thereto shall, unless this Plan shall have been terminated, become available
for future grant or sale under this Plan. 
In addition, Shares issued under this Plan and later repurchased or
otherwise reacquired by the Company shall, unless this Plan shall have been
terminated, become available for future grant or sale under this Plan.

4.             Administration of this Plan.

(a)
Procedure.  This Plan shall be administered by the Board
of Directors of the Company unless and until the Board of Directors delegates
administration to a Committee, as provided in this Section 4(a).

(a)(i) Subject to Section 4(a)(ii), the Board of Directors may appoint
a Committee consisting of not less than two persons (who need not be members of
the Board of Directors) to administer this Plan on behalf of the Board of
Directors, subject to such terms and conditions not inconsistent with this Plan
as the Board of Directors may prescribe. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board of Directors. Members
of the Board who are either eligible for Options and/or Stock Purchase Rights
or have been granted Options and/or Stock Purchase Rights may vote on any
matters affecting the administration of this Plan or the grant of any Options
and/or Stock Purchase Rights pursuant to this Plan, except that no such member
shall act upon the granting of an option to such member, but any such member
may be counted in determining the existence of a quorum at any meeting of the
Board during which action is taken with respect to the granting of Options
and/or Stock Purchase Rights to such member.

(a)(ii) Notwithstanding the foregoing Section 4(a)(i), if the Company
registers any class of any equity security pursuant to Section 12 of the Exchange
Act, from the effective date of such registration until six months after the
termination of such registration, any grants of Options and/or Stock Purchase
Rights to directors or officers who are subject to Section 16 of the Exchange
Act shall be made only by a Committee 

 6
 

consisting
of two or more persons, each of whom shall be a Disinterested Person (if
necessary to meet the requirements of Rule 16b-3 promulgated under the Exchange
Act).  The Board shall otherwise comply
with the requirements of Rule 16b-3 promulgated under the Exchange Act, as from
time to time in effect, unless the Board expressly declares that any such
requirement shall not apply.

Subject to the foregoing Sections 4(a)(i) and 4(a)(ii), from time to
time the Board of Directors may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee and thereafter directly administer this Plan. Once
appointed, the Committee shall continue to serve until otherwise directed by
the Board of Directors.

(b) Powers of the Board. Subject to the provisions of this Plan, the Board shall have plenary
authority, in its discretion and without limitation, to do the following:
(i) to grant Incentive Stock Options, Nonstatutory Stock Options or Stock
Purchase Rights; (ii) to determine, upon review of relevant information
and in accordance with Section 7 of this Plan, the fair market value of
the Common Stock; (iii) to determine the exercise price per share of
Options or Stock Purchase Rights to be granted, which exercise price shall be
determined in accordance with Section 7 hereof; (iv) to determine the
Employees or Consultants to whom, and the time or times at which, Options or
Stock Purchase Rights shall be granted and the number of Shares to be
represented by each Option or Stock Purchase Right; (v) to interpret this
Plan; (vi) to prescribe, amend and rescind rules and regulations relating
to this Plan, and in the exercise of this power, to correct any defect,
omission or inconsistency in this Plan or in any agreement relating to an
Option or Stock Purchase Right, in a manner and to the extent the Board shall
deem necessary or expedient to make this Plan fully effective; (vii) to
determine the terms and provisions of each Option or Stock Purchase Right
granted (which need not be identical) and, with the consent of the holder
thereof, modify or amend each Option or Stock Purchase Right; (viii) to
authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option or Stock Purchase Right
previously granted by the Board; and (ix) to make all other determinations
deemed necessary or advisable for the administration of this Plan.

(c) Board Determinations. In making determinations under this Plan, the Board may take into
account the nature of the services rendered by the respective Employees and
Consultants, their present and potential contributions to the success of the
Company, or its Subsidiaries, as the case may be, and such other factors as the
Board in its discretion shall deem relevant.  All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees, Purchasers
and any other holders of any Options and/or Stock Purchase Rights granted under
this Plan.

 7
 

5.             Eligibility.

(a) Options and Stock
Purchase Rights may be granted to Employees and Consultants, provided that
Incentive Stock Options may only be granted to common law employees.  An Employee or Consultant who has been granted
an Option or Stock Purchase Right may, if such Employee or Consultant is
otherwise eligible, be granted additional Option(s) or Stock Purchase Right(s).

(b) No Incentive Stock Option may be granted to a common-law employee which,
when aggregated with all other Incentive Stock Options granted to such common-law
employee by the Company, would result in Shares having an aggregate fair market
value (determined for each Share as of the date of grant of the Option covering
such Share) in excess of $100,000 (or such different amount as provided for
under the Code requirements for Incentive Stock Options) becoming first
available for purchase upon exercise of one or more incentive stock options
during any calendar year.

(c) Section 5(b) of this Plan shall apply only to an Incentive Stock
Option evidenced by a stock option agreement which sets forth the intention of
the Company and the Optionee that such Option shall qualify as an Incentive Stock
Option. Section 5(b) of this Plan shall not apply to any Option evidenced by a
stock option agreement which sets forth the intention of the Company and the
Optionee that such Option shall be a Non-Statutory Stock Option.

(d) On and after the effective date of the registration of any class of
equity security of the Company pursuant to Section 12 of the Exchange Act,
a member of the Board of Directors who is not an Employee shall not be eligible
for the benefits of this Plan unless at the time an Option or Stock Purchase
Right is granted to such member, the Board expressly declares that such
exclusion will not apply.

6.             Term of Plan.
This Plan shall become effective upon the earlier to occur of its adoption by
the Board of Directors or its approval by vote of the holders of a majority of
the outstanding shares of the Company entitled to vote on the adoption of this
Plan.  It shall continue in effect for a
term of ten (10) years unless sooner terminated under Section 16 of this
Plan.

7.             Exercise Price
and Consideration.

(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option or Stock Purchase Right shall be such price as is
determined by the Board, but shall be subject to the following provisions:

(i) In the case of an Incentive Stock Option:

 8
 

(A) granted to an Employee
who, at the time of the grant of such Incentive Stock Option, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per share exercise price
shall be no less than 110% of the fair market value per share on the date of
grant.

(B) granted to any Employee
other than an Employee described in Section 7(a)(i)(A), the per share exercise
price shall be no less than 100% of the fair market value per Share on the date
of grant.

(ii) In the case of a Non-Statutory Stock Option:

(A) granted to an Employee
or Consultant who, at the time of the grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per share exercise price
shall be no less than 110% of the fair market value per share on the date of
the grant.

(B) granted to any Employee
or Consultant, other than an Employee or Consultant described in Section
7(a)(ii)(A), the per share exercise price shall be no less than 100% of the
fair market value per share on the date of grant.

(b) In the case of a Stock Purchase Right granted to any person, the
per share exercise price shall be no less than 85% of the fair market value per
share on the date of grant; provided, however, that if such person at the time
of the grant of such Stock Purchase Right, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per share exercise price shall be no less than
100% of the fair market value per share on the date of the grant.

(c) Fair market value shall be determined by the Board in its
discretion; provided, however, that where there is an active public market for
the Common Stock, the fair market value per share shall be determined as
follows:

If the Company’s Common
Stock is traded on an exchange or is quoted on the National Association of
Securities Dealers, Inc. Automated Quotation (“NASDAQ”) National Market System,
then the closing price on the date of grant, as reported by the NASDAQ on its
website at www.nasdaq.com or such other source 
of quotes (the OTCBB, NYSE, AMEX, WSJ Online, Yahoo, Google, etc.) that
may be available for the exchange that trades the stock. If such closing price
is later adjusted by the reporting service, then the option exercise price
shall be adjusted accordingly.

 9
 

If the Company’s Common
Stock is not traded on an exchange or on the NASDAQ National Market System but
is traded in the over-the-counter market, then the mean of the closing bid and
asked prices on the date of grant as reported in the Wall Street Journal (or,
if not so reported, as otherwise reported by the NASDAQ System).

(d) The consideration to be paid for the Shares to be issued upon
exercise of an Option or Stock Purchase Right, including the method of payment,
shall be determined by the Board and may consist entirely of cash, check,
promissory note or other deferred payment arrangement, other Shares of Common
Stock (including instruments providing for 
“cashless exercise) having a fair market value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option or
Stock Purchase Right shall be exercised, or any combination of such methods of
payment, or such other consideration and method of payment for the issuance of
Shares to the extent permitted under applicable law. In making its
determination as to the type of consideration to accept, the Board shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

8.             Options.

(a) Term of Option.  The term of each Option shall
be ten (10) years from the date of grant thereof or such shorter term as may be
provided in the stock option agreement relating to such Option. However, in the
case of an Option granted to an Employee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Option shall be five (5) years from the date of grant thereof or
such shorter time as may be provided in the stock option agreement relating to
such Option.

(b) Exercise of Option.

(i) Procedure for Exercise; Rights as a Shareholder.  Any
Option granted under this Plan shall be exercisable at such times and under
such conditions as determined by the Board and as fully described in the Option
Agreement, , such as vesting conditions and/or performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of this Plan.

An Option may, but need not, include a provision whereby at any time
prior to termination of the Optionee’s Continuous Status as an Employee or
Consultant, the Optionee may elect to exercise the Option as to all or any part
of the Shares subject to the Option prior to the stated vesting date of the
Option or of any vesting installment or installments specified in the Option.  Any shares so purchased from any unvested
installment or Option may be subject to a repurchase right in favor of the
Company or to any restriction the Board determines to be appropriate.

 10
 

An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company.  An Option may not be exercised
for a fraction of a Share. Full payment may, as authorized by the Board,
consist of any consideration and method of payment allowable under
Section 7 of this Plan. Anything herein notwithstanding, any such deemed
exercise of an Option shall at all times be subject to the insider trading
restrictions of the Exchange Act and any rules and regulations issued thereunder.

The Company shall issue (or cause to be issued) such stock certificate
promptly upon exercise of the Option but shall not be held liable for delays in
issuing the stock certificates by the transfer agent or delays caused by
inaccurate information provided by the Optionee.

Exercise of an Option in any manner shall result in a decrease in the
number of Shares available for issuance under the Plan, both for purposes of
this Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.

(ii) Termination of Status as an Employee or Director.  In
the event of termination of an Optionee’s Continuous Status as an Employee or Director
(as the case may be), such Optionee may, but only within ninety (90) days after
the date of such termination (but in no event later than the date of expiration
of the term of such vested Option(s) as set forth in the Option Agreement),
exercise the Option(s) to the extent that such Employee or Director was
entitled to exercise it at the date of such termination.  To the extent that such Employee or Director was
not entitled to exercise the vested Option(s) at the date of such termination,
or if such Employee or Director does not exercise such vested Option(s)  (which such Employee or Director was entitled
to exercise) within such ninety (90) day time period, the Option(s) shall
terminate. Any unvested Option(s) shall be forfeited upon the date of
termination of service of the Employee or Director

(iii) Disability of Optionee.  Notwithstanding the provisions
of Section 8(b)(ii) above, in the event of termination of an Optionee’s
Continuous Status as an Employee or Director as a result of such Employee’s or Director’s
 disability, such Employee or Director may,
but only within six (6) months from the date of such termination (but in no
event later than the date of expiration of the term of such option as set forth
in the Option Agreement), exercise the vested portion of the Option to the
extent such Employee or Director was entitled to exercise it at the date of
such termination; provided  however, that if the vested portion of
the Option is an Incentive Stock Option and the disability is not a total and
permanent disability (as defined in Section 422(c)(6) of the Code), then if the
Optionee does not exercise the Option within ninety (90) days after such
termination, such vested portion of the Option shall automatically convert into
a Non-Statutory Stock 

 11
 

Option;
and provided, further, that if the termination is as a result of
a total and permanent disability (as defined in Section 422(c)(6) of the Code),
such Employee or Director may within one (1) year from the date of such termination,
but in no event later than the date of expiration of the term of such option as
set forth in the Option Agreement), exercise the vested portion of the Option
to the extent such Employee or Consultant was entitled to exercise it at the
date of such termination.  To the extent
that such Employee or Director was not entitled to exercise the vested portion
of the Option at the date of termination, or if such Employee or Director does
not exercise the vested portion of such Option (which such Employee or Director
was entitled to exercise) within the time periods specified above, as the case
may be, the vested and unvested portions of the Option shall expire unexercised
and shall be terminated and forfeited.

(iv) Death of Optionee.  In the event of the death of
an Optionee: (A) while the Optionee is an Employee or Director,
(B) during the ninety (90) day period described in Section 8(b)(ii), or
(C) during the one (1) year period described in Section 8(b)(iii), the vested
portion of the Option may be exercised, at any time within one (1) year
following the date of death (but, in the case of an Incentive Stock Option, in
no event later than the date of expiration of the term of such Incentive Stock
Option as set forth in the Option Agreement), by the Optionee’s estate or by a
person who acquired the right to exercise the vested portion of the Option by
bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the time of death of the Optionee. To the extent that such
Employee or Director was not entitled to exercise the vested portion of the Option
at the date of death, or if such Employee, Director, estate or other person
does not exercise such vested portion of the Option (which such Employee, Director,
estate or person was entitled to exercise) within the one (1) year time period
specified in this Plan, the vested and unvested portions of the Option shall expire
unexercised and shall be terminated and forfeited.

9.             (a)  Stock Purchase Rights.

(i) Rights to Purchase.  After the Board determines
that it will offer an Employee or Consultant a Stock Purchase Right, it shall
deliver to the offeree a stock purchase agreement or stock bonus agreement, as
the case may be, setting forth the terms, conditions and restrictions relating
to the offer, including the number of Shares which such person shall be
entitled to purchase, and the time within which such person must accept such
offer, which shall in no event exceed five (5) days from the date upon which
the Board made the determination to grant the Stock Purchase Right. The offer
shall be accepted by execution of a stock purchase agreement or stock bonus
agreement in the form approved by the Board.

(ii) Issuance of Shares.  Forthwith after payment
therefor, the Shares purchased shall be duly issued; provided, however, that
the Board may require that the Purchaser 

 12
 

make
adequate provision for any federal and state withholding obligations of the
Company as a condition to the Purchaser purchasing such Shares.

(iii) Other Provisions.  The stock purchase agreement
or stock bonus agreement shall contain such other terms, provisions and
conditions not inconsistent with this Plan as may be determined by the Board,
including rights of first refusal as set forth in Section 20 hereof.

10.             Stock Appreciation
Rights.

(a) Grants of SARs.  Tandem SARs may be awarded by
the Committee in connection with any Option granted under the Plan, either on
the Date of Grant of the Option or thereafter at any time prior to the
exercise, termination or expiration of the Option Nontandem SARs may also be
granted by the Committee at any time.  On
the Date of Grant of a Nontandem SAR, the Committee shall specify the number of
shares of Common Stock covered by such right and the base price of shares of
Common Stock to be used in connection with the calculation described in Section
10(c) below. SARs shall be subject to such terms and conditions not
inconsistent with the other provisions of this Plan as the Committee shall
determine.

(b) Exercise of Tandem SARs.  A Tandem SAR shall be
exercisable only to the extent that the related Option is exercisable and shall
be exercisable only for such period as the Committee may determine (which
period may expire prior to the expiration date of the related Option).  Upon the exercise of all or a portion of a
Tandem SAR, the related Option shall be canceled with respect to an equal
number of shares of Common Stock.  A
Tandem SAR shall entitle the Grantee to surrender to the Corporation
unexercised the related Option, or any portion thereof, and to receive from the
Corporation in exchange therefor that number of shares of Common Stock having
an aggregate fair market value equal to (A) the excess of (i) the fair market
value of one (1) share of Common Stock as of the date the Tandem SAR is exercised
over (ii) the Option price per share specified in such Option, multiplied by
(B) the number of shares of Common Stock subject to the Option, or portion
thereof, which is surrendered.  Cash
shall be delivered in lieu of any fractional shares.

(c) Exercise of Nontandem SARs.  A Nontandem SAR shall be
exercisable during such period as the Committee shall determine prior to the
Date of Grant. The exercise of a Nontandem SAR shall entitle the Grantee to
receive from the Corporation that number of shares of Common Stock having an
aggregate fair market value equal to (A) the excess of (i) the fair market
value of one (1) share of Common Stock as of the date on which the Nontandem
SAR is exercised over (ii) the base price of the shares covered by the Nontandem
SAR, multiplied by (B) the number of shares of Common Stock covered by the
Nontandem SAR, or the portion thereof being exercised. Cash shall be delivered
in lieu of any fractional shares.

 13
 

(d) Settlement of SARs.  As soon as is reasonably
practicable after the exercise of a SAR, the Corporation shall (i) issue,
in the name of the Grantee, stock certificates representing the total number of
full shares of Common Stock to which the Grantee is entitled pursuant to
Section 10(b) or 10(c) hereof and cash in an amount equal to the fair market
value, as of the date of exercise, of any resulting fractional shares, and
(ii) if the Committee causes the Corporation to elect to settle all or
part of its obligations arising out of the exercise of the SAR in cash pursuant
to Section 10(e), deliver to the Grantee an amount in cash equal to the fair
market value, as of the date of exercise, of the shares of Common Stock it
would otherwise be obligated to deliver.

(e) Cash Settlement.  The Committee, in its
discretion, may cause the Corporation to settle all or any part of its
obligation arising out of the exercise of a SAR by the payment of cash in lieu
of all or part of the shares of Common Stock it would otherwise be obligated to
deliver in an amount equal to the fair market value of such shares on the date
of exercise.

11.           Restricted Shares.

(a) Grant of Restricted Shares.  The Committee may from time to
time cause the Corporation to issue Restricted Shares under the Plan, subject
to such restrictions, conditions and other terms as the Committee may determine
in addition to those set forth herein.

(b) Restrictions.
 At the time a grant of Restricted Shares
is made, the Committee shall establish a period of time (the “Restricted Period”)
applicable to such Restricted Shares. Each grant of Restricted Shares may be
subject to a different Restricted Period.  The Committee may, in its sole discretion, at
the time a grant is made, prescribe restrictions in addition to or other than
the expiration of the Restricted Period, including the satisfaction of
corporate or individual performance objectives, which shall be applicable to
all or any portion of the Restricted Shares.  Except with respect to grants of Restricted
Shares intended to qualify as performance based compensation for purposes of
Section 162(m) of the Code, the Committee may also, in its sole discretion,
shorten or terminate the Restricted Period or waive any other restrictions
applicable to all or a portion of such Restricted Shares.  None of the Restricted Shares may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of prior to
the date on which such Restricted Shares vest in accordance with Section 11(c).

(c) Restricted Stock Certificates.  The
Corporation shall issue, in the name of each Grantee, stock certificates with
proper legends representing the total number of Restricted Shares granted to
the Grantee, as soon as reasonably practicable after the Date of Grant. The
Secretary of the Corporation shall hold such certificates, properly endorsed
for transfer, after the Grantee’s benefit until such time as the Restricted
Shares are forfeited

 14
 

to
the Corporation or until the Restricted Shares vest.  In lieu of the foregoing, Restricted Shares
awarded to a Grantee may be held under the Grantee’s name in a book entry
account maintained by or on behalf of the Corporation.

(d) Rights of Holders of Restricted Shares.  Except
as otherwise determined by the Committee either at the time Restricted Shares
are awarded or at any time thereafter prior to the lapse of the restrictions,
holders of Restricted Shares shall not have the right to vote such shares or
the right to receive any dividends with respect to such shares.  All distributions, if any, received by an
employee or consultant with respect to Restricted Shares as a result of any
stock split-up, stock distribution, combination of shares, or other similar
transaction shall be subject to the restrictions of this Section 11.

(e) Termination of Employment.  Any Restricted Shares granted
pursuant to the Plan shall be forfeited if the Grantee employment with the Company,
its Parent or Subsidiary terminates for reasons other than death or disability
prior to the expiration or termination of the Restricted Period and the
satisfaction of any other conditions applicable to such Restricted Shares.  Upon such forfeiture, the Secretary of the Company
shall either cancel or retain in its treasury the Restricted Shares that are
forfeited to the Company. Upon the death of a Grantee prior to his termination
of employment , or upon a Grantee’s termination of employment as a result of
disability, all Restricted Shares previously awarded to such Grantee which have
not previously vested shall be forfeited unless the Committee in its sole
discretion shall determine otherwise.

(f) Termination of Directorship.  Any
Restricted Shares granted pursuant to the Plan shall be forfeited if the
Grantee’s directorship with the Company, its Parent or Subsidiary terminates for
reasons other than death or disability prior to the expiration or termination
of the Restricted Period and the satisfaction of any other conditions
applicable to such Restricted Shares. 
Upon such forfeiture, the Secretary of the Company shall either cancel
or retain in its treasury the Restricted Shares that are forfeited to the Company.  Upon the death of a Grantee prior to his
termination of service as a Director, or upon a Grantee’s termination of service
as a Director as a result of disability, all Restricted Shares previously
awarded to such Grantee which have not previously vested shall be forfeited
unless the Committee in its sole discretion shall determine otherwise.

(g) Delivery of Restricted Shares.  Subject to the provisions of this Section, at
such time as the Grantee shall become vested in his Restricted Shares, the
restrictions applicable to the Restricted Shares shall lapse and a stock
certificate for the number of Restricted Shares with respect to which the
restrictions have lapsed shall be delivered, free of all such restrictions, to
the Grantee or the Grantee’s beneficiary or estate, as the case may be.

 15

12.           Performance Units
and Performance Shares.

(a) Grant of Performance Units/Shares.  Subject
to the terms of the Plan, Performance Units and Performance Shares may be
granted to eligible Employees and Consultants at any time and from time to
time, as shall be determined by the Committee, in its sole discretion. The
Committee shall have complete discretion in determining the number of
Performance Units and Performance Shares granted to each Participant.

(b) Value of Performance Units/Shares.  Each
Performance Unit shall have an initial value that is established by the
Committee at the time of the grant.  Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Units/Shares that will be paid out to
the Participants.  The time period during
which the performance goals must be met shall be called a “Performance Period.”
Performance Periods of Awards granted to Insiders shall, in all cases, exceed
six (6) months in length.

(c) Earning of Performance Units/Shares.  After
the applicable Performance Period has ended, the holder of Performance Units/Shares
shall be entitled to receive a payout of the number of Performance Unit/Shares
earned by the Participant over the Performance Period, to be determined as a
function of the extent to which the corresponding performance goals have been
achieved. Notwithstanding the preceding sentence, after the grant of a
Performance Unit/Share, the Committee, in its sole discretion, may waive the
achievement of any performance goals for such Performance Unit/Share.

(d) Form and Timing of Payment of Performance Units/Shares.  Payment
of earned Performance Units/Shares shall be made in a single lump sum, within
forty-five (45) calendar days following the close of the applicable Performance
Period.  The Committee, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in combination thereof.

Prior to the beginning of each Performance Period, Participants may, in
the discretion of the Committee, elect to defer the receipt of any Performance
Unit/Share payout upon such terms as the Committee shall determine.

(e) Cancellation of Performance Units/Shares.  Subject
to the applicable Award Agreement, upon the earlier of (a) the Participant’s
termination of employment, or (b) the date set forth in the Award
Agreement, all remaining Performance Units/Shares shall be 

 16
 

forfeited
by the Participant to the Company, the Shares subject thereto shall again be
available for grant under the Plan.

(f) Nontransferability.  Performance Units/Shares may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.  Further a Participant’s rights under the Plan
shall be exercisable during the Participant’s lifetime only by the Participant
or the Participant’s legal representative.

13.           Non-Transferability
of Options and Stock Purchase Rights.  Options and Stock Purchase Rights may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee or Purchaser, only by the
Optionee or Purchaser.

14.           Adjustments Upon
Changes in Capitalization, Merger or Other Events. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option, Stock Purchase Right, Restricted Share, and
the number of shares of Common Stock which have been authorized for issuance
under this Plan but as to which no Options, Stock Purchase Rights and
Restricted Shares have yet been granted, or which have been returned to this
Plan upon cancellation or expiration of an Option, Stock Purchase Right, Restricted
Share or repurchase of Shares from a Purchaser or Optionee upon termination of
employment or otherwise, as well as the price per share of Common Stock covered
by each such outstanding Option, Stock Purchase Right and Restricted Share,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock of
the Company or the payment of a stock dividend with respect to the Common Stock.  Such adjustment shall be made by the Board
whose determination in that respect shall be final, binding and conclusive.  Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option, Stock Purchase Right or Restricted Share.

In the event of the dissolution or liquidation of the Company, all
Options and Stock Purchase Rights will terminate immediately prior to the
consummation of such proposed action if not previously exercised.

As to an Officer of the Company, its Parent or any Subsidiary, all
Options, Stock Purchase Rights and Restricted Shares outstanding, to the extent
not vested, shall immediately become fully vested on the earliest to occur
of (i) a Major Event, (ii) a Change of Control, (iii) early termination of the
Officer’s employment without Cause or 

 17
 

(iv)
early termination of the Officer’s employment for Good Reason.  As to Directors, Consultants and Employees (other
than Officers) of the Company, its Parent and any Subsidiary, all Options, Stock
Purchase Rights and Restricted Shares outstanding to the extent not vested,
shall immediately become fully vested.

Except as otherwise provided herein, in additition, in the event of a Major
Event, unless otherwise deemed to be impractical by the Board, then no later
than (i) two (2) business days prior to any Major Event referenced in
clauses (i), (ii) or (iii) in the definition thereof nor (ii) ten (10) business
days after any Major Event  referenced in clause (iv) of the definition
thereof, the Board, acting in its sole discretion without the consent or
approval of any Optionee, shall act to effect one or more of the following
alternatives with respect to outstanding Options, which acts may vary among
individual Optionees and, with respect to acts taken pursuant to clause (i) of
the definition of Major Event, such acts may be made contingent upon
effectuation of the Major Event:

(A)
accelerate the time at which Options and Stock Purchase Rights then outstanding
may be exercised so that such Options and Stock Purchase Rights may be
exercised in full for a limited period of time on or before a specified date
(before or after such Major Event) fixed by the Board, after which specified
date all unexercised Options and Stock Purchase Rights and all rights of
Optionees thereunder shall terminate;

(B) require the mandatory
surrender to the Company by selected Optionees of some or all of the
outstanding Options and/or Stock Purchase Rights held by such Optionees
(irrespective of whether such Options and/or Stock Purchase Rights are then
exercisable under the provisions of the Plan) as of a date (before or after
such Major Event) specified by the Board, in which event the Board shall
thereupon cancel such Options and /or Stock Purchase Rights and pay to each
Optionee an amount of cash per share equal to the excess, if any, of the
“Change of Control Value,” as defined below, of the shares subject to such
Option and/or Stock Purchase Rights over the exercise price(s) under such Options
and/or Stock Purchase Rights for such shares;

(C) make such adjustments
to Options and Stock Purchase Rights then outstanding as the Board deems
appropriate to reflect such Major Event (provided, however, that the Board may
determine in its sole discretion that no adjustment is necessary to Options
then outstanding);

(D)
provide that thereafter upon any exercise of an Option and/or Stock Purchase
Right  theretofore granted the Optionee
shall be entitled to purchase under such Option and/or Stock Purchase Right, in
lieu of the number of shares of Common Stock as to which such Option and/or
Stock Purchase Right shall then be exercisable, the number and class of shares
of stock or other securities or property (including, without limitation, cash)
to which the Optionee would have been entitled pursuant to the terms of the
agreement of merger, consolidation or sale of assets or plan of liquidation and
dissolution 

 18
 

if,
immediately prior to such merger, consolidation or sale of assets or any
distribution in liquidation and dissolution of the Company, the Optionee had
been the holder of record of the number of shares of Common Stock then covered
by such Option and/or Stock Purchase Right;

(E) cancel the Option
and/or Stock Purchase Rights granted if the Fair Market Value of the Common
Stock underlying the Option and/or Stock Purchase Right is below the
Option  or Stock Purchase Rights exercise
price, as the case may be;

(F) all Options
and Stock Purchase Rights will terminate if not exercised prior to the consummation
of the transaction.

For purposes of this Section 14, “Change of Control Value” shall mean
the amount determined in clause (i), (ii) or (iii) that follows, whichever is
applicable: (i) the per share price offered to shareholders of the Company in
any merger, consolidation, sale or assets or dissolution transaction, (ii) the
price per share offered to shareholders of the Corporation in any tender offer
or exchange offer whereby a Major Event takes place or (iii) if a Major Event occurs
other than as described in clause (i) or clause (ii), the fair market value per
share determined by the Board as of the date determined by the Board to be the
date of cancellation and surrender of an Option and/or Stock Purchase Right, as
the case may be. If the consideration offered to shareholders of the Company in
any transaction described in this paragraph consists of anything other than
cash, the Board shall determine the fair cash equivalent of the portion of the
consideration offered which is other than cash.

Except as hereinbefore expressly provided, issuance by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warranty to subscribe therefore, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Common Stock subject to Options and/or Stock Purchase Rights theretofore
granted, or the purchase price per share of Common Stock subject to Options
and/or Stock Purchase Rights.

The foregoing adjustments, and any other adjustments that the Board
deems necessary or desirable,  shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive; provided, however, that no adjustment shall be made that
is less favorable to any Director, Employee, Officer or Consultant than any
provision in any written agreement between the Company, its Parent or any
Subsidiary and such Director, Officer, Employee or Consultant.

 19
 

Anything in the foregoing notwithstanding, the grant of an Option, Stock
Purchase Right or Restricted Share pursuant to this Plan shall not affect in
any way the right or power of the Board or its shareholders to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.

15.           Time of Grant.
The date of grant of an Option or Stock Purchase Right shall, for all purposes,
be the date on which the Board makes the determination granting such Option or
Stock Purchase Right. Notice of the determination shall be given to each
Employee or Consultant to whom an Option or Stock Purchase Right is so granted
within a reasonable time after the date of such grant.

16.           Amendment and Termination.

a.             Amendment. The Board may amend this Plan from
time to time in such respects as the Board may deem advisable; provided that
the shareholders of the Company must approve the following amendments or
revisions within 12 months before or after the adoption of such revision or
amendment:

(i)            any increase in the number of Shares subject to this
Plan, other than in connection with an adjustment under Section 14 of this
Plan;

(ii)           any change in the designation of the class of persons
eligible to be granted Options (to the extent such modification requires
shareholder approval in order for the Plan to satisfy the requirements of
Section 422(b) of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Exchange Act); or

(iii)          any other revision or amendment if such revision or
amendment requires shareholder approval in order for this Plan to satisfy the
requirements of Section 422(b) of the Code or to comply with the requirements
of Rule 16b-3 promulgated under the Exchange Act if applicable to the Company.

b.             Shareholder Approval.  If any amendment requiring shareholder
approval under Section 16(a) of this Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 20 of this Plan.

 20
 

c.             Suspension and Termination.  The Board may suspend or terminate this Plan
at any time. No Options or Stock Purchase Rights may be granted while this Plan
is suspended or after it is terminated.

d.             Effect of Amendment; Termination or Suspension.  Any such amendment, termination or suspension
of this Plan shall not affect Options or Stock Purchase Rights already granted
and such Options or Stock Purchase Rights shall remain in full force and effect
as if this Plan had not been amended, terminated or suspended, unless mutually
agreed otherwise between the Optionee or Purchaser (as the case may be) and the
Company, which agreement must be in writing and signed by the Optionee or Purchaser
(as the case may be) and the Company.

17.           Conditions Upon
Issuance of Shares.  Shares shall not
be issued pursuant to the exercise of an Option or Stock Purchase Right unless
the exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act, the Exchange Act, the
rules and regulations promulgated thereunder, and the requirements of any stock
exchange or other stock trading system upon which the Shares may then be
listed.

As a condition to the exercise of an Option or Stock Purchase Right,
the Company may require the person exercising such Option or Stock Purchase
Right to make such representations and warranties at the time of any such
exercise as the Company may at that time determine, including without
limitation, representations and warranties that (i) the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares in violation of applicable federal or state securities
laws, and (ii) such person is knowledgeable and experienced in financial and
business matters and is capable of evaluating the merits and the risks
associated with purchasing the Shares.

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

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

19.           Option, Stock
Purchase and Stock Bonus Agreements.  Options shall be evidenced by written stock
option agreements in such form as the Board shall approve. 

 21
 

Upon
the exercise of Stock Purchase Rights, the Purchaser shall sign a stock
purchase agreement or stock bonus agreement in such form as the Board shall
approve.

20.           Shareholder
Approval.

The
shareholders of the Company shall have approved this Plan within 12 months before
or after this Plan is adopted.  Any
shares purchased before shareholder approval is obtained shall be rescinded if
shareholder approval is not obtained within 12 months before or after this Plan
is adopted. Such shares shall not be counted in determining whether such
approval is obtained.

If the Company registers any class of equity securities pursuant to
Section 12 of the Exchange Act, any required approval of the shareholders
of the Company obtained after such registration shall be solicited substantially
in accordance with Section 14(a) of the Exchange Act and the rules and
regulations promulgated thereunder.

If the Company registers any class of equity securities pursuant to
Section 12 of the Exchange Act and if prior to such time either (x) the shareholders
of the Company did not approve this Plan or (y) the Company did not solicit
shareholder approval substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder, then the
Company shall take all necessary actions to qualify the Plan under Rule
16(b)(3) promulgated under the Exchange Act at or prior to the later of (A) the
first annual meeting of shareholders held subsequent to the first registration
of any class of equity securities of the Company under Section 12 of the
Exchange Act or (B) the granting of an Option hereunder to an officer or
director after such registration.

21.           Information to
Optionees and Purchasers.  The
Company shall provide annually to each Optionee and Purchaser, during the
period that such Optionee or Purchaser has one or more Options or Stock
Purchase Rights outstanding, copies of the annual financial statements of the
Company.

22.           Right of Company
to Terminate Employment or Consulting Services.  This Plan shall not confer upon any Optionee
or holder of a Stock Purchase Right any right with respect to continuation of
employment by or the rendition of consulting services to the Company, any of
its Subsidiaries or its Parent, nor shall it interfere in any way with his or her
right or the Company’s, any of its Subsidiaries’ or its Parent’s right to
terminate his or her employment or services at any time, with or without cause.

23.           Rights of First
Refusal and Repurchase.

The written agreements evidencing Options or Stock Purchase Rights may
contain such provisions as the Board shall determine (or pursuant to a separate
agreement) to the 

 22
 

effect
that if an Optionee or Purchaser elects to sell all or any Shares that the
Optionee or Purchaser acquired upon the exercise of an Option or Stock Purchase
Right, then any proposed sale of such Shares by such Optionee or Purchaser
shall be subject to a right of first refusal in favor of the Company.

The Board may require, at its option, that a stock purchase agreement,
stock option agreement, stock bonus agreement, or other agreement pursuant to
this Plan grant the Company a repurchase option exercisable upon the voluntary
or involuntary termination of the Purchaser’s employment with the Company for
any reason (including death or disability).  The repurchase price shall be at the higher of
the original purchase price or fair value of the Shares on the date of
termination of employment.  If the Board
so determines, the purchase price for shares repurchased may be paid by
cancellation of any indebtedness of the Purchaser to the Company.  The repurchase option must be exercised by the
Company within 90 days of termination of employment for cash or cancellation of
money indebtedness for the Shares and the right shall terminate when the
Company’s Common Stock becomes publicly traded.  The Board may require such a repurchase right
in other events.

Certificates representing shares issued upon exercise of Options or
Stock Purchase Rights shall bear a restrictive legend to the effect that the
transferability of such shares is subject to the restrictions contained in this
Plan and the applicable written agreement between the Optionee or Purchaser and
the Company.

24.           Withholding.  The Company’s obligation to deliver shares of
Common Stock under this Plan shall be subject to applicable federal, state and
local tax withholding requirements.  To
the extent provided by the terms of the stock option agreement relating to an
Option, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any or a combination of
the following means: (i) cash payment or wage withholding; (ii) authorizing the
Company to withhold from the Shares otherwise issuable to the Optionee upon
exercise of the Option the number of Shares having a fair market value less
than or equal to the amount of the withholding tax obligation; or (iii)
delivering to the Company unencumbered shares of Common Stock owned by the
Optionee having a fair market value less than or equal to the amount of the
withholding tax obligation; provided, however, that with respect to clauses
(ii) and (iii) above the Board in its sole discretion may disapprove such
payment and require that such taxes be paid in cash. 

25.           Separability.
 At a time when the Company has a class
of equity securities registered pursuant to Section 12 of the Exchange Act, if
any of the terms or provisions of this Plan conflict with the requirements of
Rule 16b-3 promulgated under the Exchange Act and/or Section 422 of the Code, then
such terms or provisions shall be deemed inoperative to the extent they so
conflict with the requirements of Rule 16b-3 promulgated under the Exchange
Act, and/or with respect to Incentive Stock Options, 

 23
 

Section
422 of the Code.  The foregoing sentence
shall not apply with respect to the requirements of Rule 16b-3 promulgated
under the Exchange Act if the Board has expressly declared that such
requirements shall not apply.  With
respect to Incentive Stock Options, if this Plan does not contain any provision
required to be included herein under Section 422 of the Code, such provision
shall be deemed to be incorporated herein with the same force and effect as if
such provision had been set out at length herein.  To the extent any Option that is intended to
qualify as an Incentive Stock Option cannot so qualify, such Option, to that
extent, shall be deemed to be a Nonstatutory Stock Option for all purposes of
this Plan.

26.           Non-Exclusivity
of this Plan.  The adoption of this
Plan by the Board shall not be construed as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.

27.           Governing Law.
 This Plan shall be governed by, and
construed in accordance with the laws of the State of Nevada, without regard to
its conflict of laws principles. 
Jurisdiction for any dispute hereunder shall be solely in a State or
Federal Court located in Las Vegas, Nevada.

28.           Cancellation of
and Substitution for Non-Statutory Options.  The Company shall have the right to cancel any
Non-Statutory Stock Option at any time before it otherwise would have expired
by its terms and to grant to the same Optionee in substitution therefor a new
Non-Statutory Stock Option stating an option price which is lower (but not
higher) than the option price stated in the cancelled Option. Any such
substituted option shall contain all the terms and conditions of the cancelled
Option; provided, however, that such substituted Option shall not be
exercisable after the expiration of ten (10) years and one day from the date of
grant of the cancelled Option.

29.           Market Standoff.  Unless the Board determines otherwise, each
Optionee or Purchaser shall not sell or otherwise transfer any Shares or other
securities of the Company during the 180-day period following the effective
date of a registration statement of the Company filed under the Securities Act;
provided, however, that such restriction shall apply only to the first two
registration statements of the Company to become effective under the Securities
Act which includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act.  The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period.

 24
 

 

	
   

  	
  SHEA DEVELOPMENT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Adopted by
  Shareholders

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                          ,
  2007,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Effective                                   ,
  2007

  

 

 25
 

Exhibit 1

[Form of Stock Option and Performance Awards Agreement]

THE
SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.

 26

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