Exhibit 10.3

 

GOLDEN MINERALS COMPANY

2009 EQUITY INCENTIVE PLAN

 

1.             PURPOSES.

 

(a)           Background. On [DATE], the [Board] authorized the Company to
establish the Plan, subject to the Company’s receipt of approval of the Plan by
the United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”) on [March 24], 2009 (the “Effective Date”), as part of the
Company’s confirmed plan of reorganization under Chapter 11 of the U.S.
Bankruptcy Code.

 

(b)           Eligible Stock Award Recipients.  The persons eligible to receive
Stock Awards are the Employees, Directors, Officers and Consultants of the
Company and its Affiliates; provided that in no event shall a Stock Award be
granted unless, with respect to the proposed grantee, the Common Stock qualifies
as “service-recipient stock” for purposes of Section 409A of the Code.

 

(c)           Available Stock Awards.  The purpose of the Plan is to provide a
means by which eligible recipients may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of the following:
(i) Incentive Stock Options, (ii) Nonqualified Stock Options, (iii) restricted
Common Stock, (iv) unrestricted Common Stock and (v) stock appreciation rights.

 

(d)           General Purpose.  The Company, by means of the Plan, seeks to
retain the services of the group of persons eligible to receive Stock Awards, to
secure and retain the services of new members of this group and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.

 

2.             DEFINITIONS.

 

(a)           “Affiliate” means any entity that controls, is controlled by, or
is under common control with the Company.

 

(b)           “Board” means the Board of Directors of the Company.

 

(c)           “Code” means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.

 

(d)           “Committee” means a pre-existing or newly formed committee of
members of the Board appointed by the Board in accordance with subsection 3(c).

 

(e)           “Common Stock” means the Company’s common stock par value US$0.01
and other rights with respect to such stock.

 

(f)            “Company” means Golden Minerals Company, a Delaware corporation.

 

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(g)           “Consultant” means any person, including an advisor, (i) engaged
by the Company or an Affiliate to render consulting or advisory services and who
is compensated for such services or (ii) who is a member of the Board of
Directors of an Affiliate.

 

(h)           “Continuous Service” means that the Participant’s service with the
Company or an Affiliate, whether as an Employee, Director, Officer or
Consultant, is not interrupted or terminated.  Unless otherwise provided in a
Stock Award Agreement or Option Agreement, as applicable, the Participant’s
Continuous Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Employee, Director, Officer or Consultant or a change in
the entity for which the Participant renders such service, provided that there
is no interruption or termination of the Participant’s service to the Company or
an Affiliate as an Employee, Director, Officer or Consultant.  For example, a
change in status from an Employee of the Company to a Consultant of an Affiliate
may not constitute an interruption of Continuous Service.  The Board, in its
sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence, including sick leave, military
leave or any other personal leave.

 

(i)            “Covered Employee” means the Company’s chief executive officer
and the four (4) other highest compensated officers of the Company for whom
total compensation is required to be reported to stockholders under the Exchange
Act, as determined for purposes of Section 162(m) of the Code.

 

(j)            “Director” means a member of the Board of Directors of the
Company.

 

(k)           “Disability” means the Participant’s inability, due to illness,
accident, injury, physical or mental incapacity or other disability, to carry
out effectively the duties and obligations to the Company and its Affiliates
performed by such person immediately prior to such disability for a period of at
least six (6) months, as determined in the good faith judgment of the Board.

 

(l)            “Dollars” or “$” or “US$” means United States dollars.

 

(m)          “Employee” means any person employed by the Company or an
Affiliate.  Service as a Director or payment of a director’s fee by the Company
or an Affiliate alone shall not be sufficient to constitute “employment” by the
Company or an Affiliate.

 

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

 

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

 

(i)            If the Common Stock is listed on any established stock exchange
in the United States, or traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, the Fair Market Value of a share of Common Stock shall be the
closing sales price for such share (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in

 

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Common Stock if such shares are traded on more than one such exchange or market)
on the day of determination, as reported by such exchange or market or such
other source as the Board reasonably deems reliable.

 

(ii)           In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board using a reasonable
valuation method in accordance with Treas. Reg. Section 1.409A-1(a)(5)(iv)(B) or
any successor thereto.

 

(p)           “Incentive Stock Option” means an Option designated as an
incentive stock option in an Option Agreement and that is granted in accordance
with the requirements of, and that conforms to the applicable provisions of,
Section 422 of the Code.  Notwithstanding anything herein to the contrary, no
Option shall be treated as an “incentive stock option” within the meaning of
Section 422 of the Code unless the Plan has been (i) approved by the
shareholders of the Company in a manner intended to comply with the shareholder
approval requirements of Section 422(b)(1) of the Code or (2) a determination
has been made by the Committee that the method of adoption and approval of the
Plan meets the shareholder approval requirements of Section 422 of the Code. 
Notwithstanding the foregoing, any Option intended to be an incentive stock
option shall not fail to be effective solely on account of a failure to obtain
such approval, but rather such Option shall be treated as a nonqualified stock
option unless and until such approval is obtained.

 

(q)           “Independent Director” means (i) a Director who satisfies the
definition of Independent Director or similar definition under the applicable
United States stock exchange or Nasdaq rules and regulations upon which the
Common Stock is traded from time to time;  (ii) a Director who either (A) is not
a current employee of the Company or an “affiliated corporation” (within the
meaning of Treasury Regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an “affiliated corporation” receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an “affiliated corporation”
at any time and is not currently receiving direct or indirect remuneration from
the Company or an “affiliated corporation” for services in any capacity other
than as a Director or (B) is otherwise considered an “outside director” for
purposes of Section 162(m) of the Code; and (iii) a “Non-Employee Director”, as
defined from time to time for purposes of Section 16 of the Exchange Act.

 

(r)           “Nonqualified Stock Option” means an Option that is not designated
in an Option Agreement as an Incentive Stock Option or was not granted in
accordance with the requirements of or does not otherwise conform to the
applicable provisions of, Section 422 of the Code.

 

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

 

(t)            “Option” means an Incentive Stock Option or a Nonqualified Stock
Option granted pursuant to the Plan.

 

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(u)           “Option Agreement” means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant.

 

(v)            “Optionholder” means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

 

(w)           “Participant” means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

 

(x)           “Plan” means this Golden Minerals Company 2009 Equity Incentive
Plan.

 

(y)           “Retirement” means an Employee’s retirement from the Company or an
Affilitate, (i) on or after attaining age 55 and completing at least ten
(10) years of service; or (ii) on or after attaining age 62.

 

(z)           “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.

 

(aa)         “Securities Act” means the Securities Act of 1933, as amended.

 

(bb)         “Stock Award” means any right granted under the Plan in the form of
an Option, restricted Common Stock, unrestricted Common Stock, or a stock
appreciation right.

 

(cc)         “Stock Award Agreement” means a written agreement between the
Company and a holder of a Stock Award (other than an Option) evidencing the
terms and conditions of an individual Stock Award grant.

 

(dd)         “Ten Percent Stockholder” means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any parent corporation or any subsidiary corporation, both as defined
in Section 424 of the Code.

 

3.             ADMINISTRATION.

 

(a)           Administration by Board.  The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as provided
in subsection 3(c).  The Board may, at any time and for any reason in its sole
discretion, rescind some or all of such delegation.

 

(b)           Powers of Board.  The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

 

(i)            To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

 

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(ii)           To construe and interpret the Plan, Stock Awards granted under
it, Option Agreements and Stock Award Agreements, and to establish, amend and
revoke rules and regulations for their administration.  The Board, in the
exercise of this power, may correct any defect, omission or inconsistency in the
Plan or in any Option Agreement or Stock Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.

 

(iii)         To amend the Plan, a Stock Award, a Stock Award Agreement or an
Option Agreement as provided in Section 12.

 

(iv)          Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company
which are not in conflict with the provisions of the Plan.

 

(c)           Delegation to Committee.

 

(i)            General.  The Board may delegate administration of the Plan and
its powers and duties thereunder, or any portion thereof, to a Committee or
Committees, and the term “Committee” shall apply to any person or persons to
whom such authority has been delegated.  Upon such delegation, the Committee
shall have the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be deemed to include the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board.  In its absolute discretion,
the Board may at any time and from time to time exercise any and all rights and
duties of the Committee under this Plan, except respecting matters under
Rule 16b-3 of the Exchange Act or Section 162(m) of the Code, or any rules or
regulations issued thereunder, which are required to be determined in the sole
discretion of the Committee.

 

(ii)           Committee Composition.  A Committee shall consist solely of two
or more Independent Directors.  Within the scope of its authority, the Board or
the Committee may (1) delegate to a committee of one or more members of the
Board who are not Independent Directors, the authority to grant Stock Awards to
eligible persons who are either (a) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of income resulting
from such Stock Award or (b) not persons with respect to whom the Company wishes
to comply with Section 162(m) of the Code, and/or (2) delegate to a committee of
one or more members of the Board who are not Independent Directors or to the
Company’s Chief Executive Officer the authority to grant Stock Awards to
eligible persons who are not then subject to Section 16 of the Exchange Act.

 

(d)           Effect of Board’s Decision; No Liability.   All determinations,
interpretations and constructions relating to this Plan made by the Board in
good faith shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.  No member of the Board or any Committee
or any person to whom duties hereunder have been delegated, including any member
of any committee or subcommittee, shall be liable for any action, interpretation
or determination made in good faith, and such persons shall be entitled to full

 

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indemnification and reimbursement consistent with applicable law and in the
manner provided in the Company’s Memorandum and Articles of Association, as the
same may be amended from time to time, or as otherwise provided in any agreement
between any such member and the Company.

 

4.             STOCK SUBJECT TO THE PLAN.

 

(a)           Stock Reserve.  Subject to the provisions of Section 11 relating
to adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate ten percent (10%) of
the Company’s outstanding shares of Common Stock, as of the grant date,
including without limitation, Common Stock issuable upon exercise of conversion
of outstanding warrants, rights, or other exercisable or convertible securities
(other than Stock Awards).  Stock appreciation rights provided for in
Section 7(b) hereof that are payable only in cash will not reduce the number of
Common Stock available for Stock Awards granted under the Plan.  The Common
Stock that may be issued pursuant to Incentive Stock Options shall not exceed in
the aggregate ten percent (10%) of the Company’s outstanding Common Stock, as of
the Effective Date, including without limitation, Common Stock issuable upon
exercise of conversion of outstanding warrants, rights, or other exercisable or
convertible securities (other than Stock Awards).

 

(b)           Reversion of Stock to the Stock Reserve.  If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the Common Stock not acquired under such Stock
Award shall revert to and again become available for issuance under the Plan.   
If any Common Stock is withheld to satisfy any tax withholding requirement in
connection with any Stock Award, only the shares issued (if any), net of the
shares withheld, will be deemed delivered for purposes of determining the amount
of Common Stock available for issuance under the Plan.

 

(c)           Source of Stock.  The Common Stock subject to the Plan may be
either authorized and unissued stock or reacquired stock, bought on the market
or otherwise, in the discretion of the Board.

 

5.             ELIGIBILITY.

 

(a)           Eligibility for Specific Stock Awards.  Incentive Stock Options
may be granted only to Employees.  Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors, Officers and Consultants.

 

(b)           Ten Percent Stockholders.  A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.

 

(c)           Limitations on Stock Awards.  No Participant shall be eligible to
be granted Stock Awards covering more than 150,000 shares of Common Stock during
any calendar year.

 

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(d)           Consultants.

 

(i)            A Consultant shall not be eligible for the grant of a Stock Award
if, at the time of grant, a Form S-8 Registration Statement under the Securities
Act (“Form S-8”) is not available to register a resale of the Company’s
securities issued to such Consultant because of the nature of the services that
the Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by the rules governing the use of
Form S-8, unless the Board determines both (i) that such grant (A) shall be
registered in another manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions.

 

(ii)           Form S-8 generally is available to consultants and advisors only
if (i) they are natural persons; (ii) they provide bona fide services to the
issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer’s parent; and (iii) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer’s securities.

 

6.             OPTION PROVISIONS.

 

Each Option Agreement shall be subject to the terms and conditions of this
Plan.  Each Option and Option Agreement shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate.  All Options
shall be separately designated Incentive Stock Options or Nonqualified Stock
Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for Common Stock purchased on
exercise of each type of Option.  The provisions of separate Options need not be
identical.

 

(a)           Provisions Applicable to All Options.

 

(i)            Exercise Price.  Subject to the provisions of
Section 5(b) regarding Ten Percent Shareholders, the exercise price of each
Option shall be not less than one hundred percent (100%) of the Fair Market
Value of the Common Stock subject to the Option on the date the Option is
granted.

 

(ii)           Exercise.  The exercise price of Common Stock acquired pursuant
to an Option shall be paid in by such methods and procedures as the Board
determines from time to time, including without limitation through net physical
settlement or other method of cashless exercise.

 

(iii)         Vesting Generally.  In the discretion of the Board, the total
number of shares of Common Stock subject to an Option may (A) vest, and
therefore become exercisable, in periodic installments that may, but need not,
be equal, or (B) be fully vested at the time of grant.  The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate.  The vesting provisions, if any, of individual Options may
vary and shall be

 

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set forth in the applicable Option Agreement.  The provisions of this subsection
6(a)(iii) are subject to any Option Agreement provisions governing the minimum
number of Common Stock as to which an Option may be exercised.

 

(iv)          Termination of Continuous Service.  Unless otherwise provided in
the Option Agreement, in the event an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death, Disability, Retirement or
as a result of a Change of Control), all Options held by the Optionholder shall
immediately terminate; provided, however, if an Optionholder’s Continuous
Service is terminated for reasons other than for cause, as determined by the
Board in its discretion, all vested Options held by such person shall continue
to be exercisable until the earlier of the expiration date of such Option or
180 days after the date of such termination.  All such vested Options not
exercised within the period described in the preceding sentence shall
terminate.  Notwithstanding anything herein to the contrary, in the event an
Incentive Stock Option is exercised after the date which is three months
following the date the Optionholder’s employment with the Company is terminated,
other than as a result of Disability or death, such Incentive Stock Option shall
be treated as a Nonqualified Stock Option, but all other terms and provisions of
such Option shall remain the same.

 

(v)            Disability or Death of Optionholder.  Unless otherwise provided
in the Option Agreement, in the event that an Optionholder’s Disability or
death, all unvested Options shall immediately terminate, and all vested Options
held by such person shall continue to be exercisable until the earlier of
12 months after the date of such Disability or death or the expiration date of
such Options.  All such vested Options not exercised within such 12-month period
shall terminate.

 

(vi)          Retirement.  Unless otherwise provided in the Option Agreement, in
the event of the Optionholder’s Retirement, all unvested Options shall
automatically vest on the date of such Retirement and all Options shall be
exercisable until the earlier of 24 months after such Retirement date or the
expiration date of such Options.  All such Options not exercised within the
period described in the preceding sentence shall terminate.  Notwithstanding
anything herein to the contrary, in the event an Incentive Stock Option is
exercised after the date which is three months following the date the
Optionholder’s employment with the Company is terminated, other than as a result
of Disability or death, such Incentive Stock Option shall be treated as a
Nonqualified Stock Option, but all other terms and provisions of such Option
shall remain the same.

 

(b)           Provisions Applicable to Incentive Stock Options.

 

(i)            Term.  Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.  Further, no grant of
an Incentive Stock Option shall be made under this Plan more than ten (10) years
after the date of the satisfaction of the stockholder approval provisions of
Section 422(b)(1) of the Code.

 

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(ii)                                Transferability of an Incentive Stock
Option.  An Incentive Stock Option shall not be transferable except by will or
by the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder.

 

(iii)                            Incentive Stock Option $100,000 Limitation. 
Notwithstanding any other provision of the Plan or an Option Agreement, the
aggregate Fair Market Value of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an Optionholder in any
calendar year, under the Plan or any other option plan of the Company or its
Affiliates, shall not exceed $100,000.  For this purpose, the Fair Market Value
of the Common Stock shall be determined as of the time an Option is granted. 
The Options or portions thereof which exceed such limit (according to the order
in which they were granted) shall be treated as Nonqualified Stock Options but
all other terms and provisions of such Options shall remain the same.

 

(iv)                               Disposition During the Holding Period.  Any
participant who disposes of Common Stock acquired upon the exercise of an
Incentive Stock Option either (i) within two years after the date of grant of
such Incentive Stock Option, or (ii) within one year after the transfer of such
shares to the Participant, shall notify the Company of such disposition and of
the amount realized upon such disposition.

 

(c)                                  Provisions Applicable to Nonqualified Stock
Options.

 

(i)                                    Transferability of a Nonqualified Stock
Option. A Nonqualified Stock Option shall be transferable, if at all, to the
extent provided in the Option Agreement.  If the Option Agreement does not
provide for transferability, then the Nonqualified Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.

 

7.                                      PROVISIONS OF STOCK AWARDS OTHER THAN
OPTIONS.

 

(a)                                  Restricted and Unrestricted Common Stock
Awards.  Each Stock Award Agreement evidencing a grant of restricted or
unrestricted Common Stock shall be in such form and shall contain such
restrictions, terms and conditions, if any, as the Board shall deem appropriate
and shall be subject to the terms and conditions of this Plan.  The terms and
conditions of restricted Common Stock may change from time to time, and the
terms and conditions of separate restricted Common Stock awards need not be
identical, but each Stock Award Agreement evidencing a grant of restricted or
unrestricted Common Stock shall include (through incorporation of provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:

 

(i)                                    Consideration.  A restricted or
unrestricted Common Stock award may be awarded in consideration for past
services actually rendered, or for future services to be rendered, to the
Company or an Affiliate for its benefit.

 

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(ii)                                Vesting.  Common Stock awarded under the
Stock Award Agreement may (A) be subject to a vesting schedule to be determined
by the Board (i.e. restricted Common Stock), or (B) be fully vested at the time
of grant (i.e. unrestricted Common Stock).

 

(iii)                            Termination of Participant’s Continuous
Service.  Unless otherwise provided in the Stock Award Agreement, in the event a
Participant’s Continuous Service terminates prior to a vesting date set forth in
the Stock Award Agreement, any unvested restricted Common Stock shall be
forfeited and automatically transferred to and reacquired by the Company at no
cost to the Company, and neither the Participant nor his or her heirs,
executors, administrators or successors shall have any right or interest in such
restricted Common Stock.  Notwithstanding the foregoing, unless otherwise
provided in the Stock Award Agreement, in the event a Participant’s Continuous
Service terminates as a result of (A) being terminated by the Company for
reasons other than for cause, (B) death, (C) Disability, (D) Retirement, or
(E) a Change of Control (subject to the provisions of Section 11(c) hereof),
then any unvested restricted Common Stock shall vest immediately upon such date.

 

(iv)                               Transferability.  Rights to acquire Common
Stock under the Stock Award Agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the Stock Award
Agreement, as the Board shall determine in its discretion, so long as Common
Stock awarded under the Stock Award Agreement remains subject to the terms of
the Stock Award Agreement.

 

(b)                                  Grant of Stock Appreciation Rights.  Stock
appreciation rights to receive in cash (or its equivalent in Common Stock) the
excess of the Fair Market Value of Common Stock on the date the rights are
surrendered over the Fair Market Value of Common Stock on the date of grant may
be granted to any Employee, Director, Officer or Consultant selected by the
Board.  A stock appreciation right may be granted (i) in connection and
simultaneously with the grant of another Stock Award, (ii) with respect to a
previously granted Stock Award, or (iii) independent of another Stock Award.  A
stock appreciation right shall be subject to such terms and conditions not
inconsistent with this Plan as the Board shall impose and shall be evidenced by
a written Stock Award Agreement, which shall be executed by the Participant and
an authorized officer of the Company.  The Board, in its discretion, may
determine whether a stock appreciation right is to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code and Stock Award
Agreements evidencing stock appreciation rights intended to so qualify shall
contain such terms and conditions as may be necessary to meet the applicable
provisions of Section 162(m) of the Code.  The Board may, in its discretion and
on such terms as it deems appropriate, require as a condition of the grant of a
stock appreciation right that the Participant surrender for cancellation some or
all of the Stock Awards previously granted to such person under this Plan or
otherwise, provided that such action does not result in a violation of
Section 409A of the Code.  A stock appreciation right, the grant of which is
conditioned upon such surrender, may have an exercise price lower (or higher)
than the exercise price of the surrendered Stock Award, may contain such other
terms as the Board deems appropriate, and shall be exercisable in accordance
with its terms, without regard to the number of shares, price, exercise period
or any other term or condition of such surrendered Stock Award.

 

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8.                                      AVAILABILITY OF STOCK.  During the terms
of the Stock Awards, the Company shall keep available at all times the number of
Common Stock required to satisfy such Stock Awards.

 

9.                                      USE OF PROCEEDS FROM STOCK.

 

Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute
general funds of the Company.

 

10.                               MISCELLANEOUS.

 

(a)                                  Exercise of Awards.  Stock Awards shall be
exercisable at such times, or upon the occurrence of such event or events as the
Board shall determine at or subsequent to grant.  Stock Awards may be exercised
in whole or in part.  Common Stock purchased upon the exercise of a Stock Award
shall be paid for in full at the time of such purchase.

 

(b)                                  Acceleration of Exercisability and
Vesting.  The Board shall have the power to accelerate the time at which a Stock
Award may first be exercised or the time during which a Stock Award or any part
thereof will vest in accordance with the Plan, notwithstanding the provisions in
the Stock Award stating the time at which it may first be exercised or the time
during which it will vest.

 

(c)                                  Stockholder Rights.

 

(i)                                    Options.  Unless otherwise provided in
and upon the terms and conditions in the Option Agreement, no Participant shall
be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any Common Stock subject to an Option unless and until such
Participant has satisfied all requirements for exercise of, and has exercised,
the Option pursuant to its terms.

 

(ii)                                Restricted Common Stock.  Unless otherwise
provided in and upon the terms and conditions in the Stock Award Agreement, a
Participant shall have the right to receive all dividends and other
distributions paid or made respecting such restricted Common Stock, provided,
however, no unvested restricted Common Stock shall have any voting rights of a
stockholder respecting such unvested restricted Common Stock unless and until
such unvested restricted Common Stock become vested.

 

(d)                                  No Employment or other Service Rights. 
Nothing in the Plan or any instrument executed or Stock Award granted pursuant
thereto shall confer upon any Participant any right to continue to serve the
Company or an Affiliate in the capacity in effect at the time the Stock Award
was granted, or any other capacity, or shall affect the right of the Company or
an Affiliate to terminate with or without notice and with or without cause
(i) the employment of an Employee, (ii) the service of a Consultant to the
Company or an Affiliate or (iii) the service of a Director of the Company or an
Affiliate.

 

(e)                                  Withholding Obligations.  If the Company
has or will have a legal obligation to withhold the taxes related to the grant,
vesting or exercise of the Stock Award, such Award may

 

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not be granted, vested or exercised in whole or in part, unless such tax
obligation is first satisfied in a manner satisfactory to the Company.  To the
extent provided by the terms of a Stock Award Agreement or Option Agreement, the
Participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise or acquisition of Common Stock under a Stock Award by
any of the following means (in addition to the Company’s right to withhold from
any compensation paid to the Participant by the Company) or by a combination of
such means:  (i) tendering a cash payment in Dollars; (ii) authorizing the
Company to withhold Common Stock from the Common Stock otherwise issuable to the
Participant as a result of the exercise or acquisition of Common Stock under the
Stock Award, provided, however, that no Common Stock is withheld with a value
exceeding the minimum amount of tax required to be withheld by law; or
(iii) delivering to the Company owned and unencumbered Common Stock.

 

(f)                                    Substitutions and Repricings.  The Board
may, in its discretion, issue new Stock Awards in substitution for outstanding
Stock Awards previously granted to Participants, or approve a repricing (within
the meaning of U.S. generally accepted accounting practices or any applicable
stock exchange rule) of Stock Awards issued under this Plan, in each case
without the stockholders of the Company expressly approving such substitution or
repricing.

 

(g)                                 Listing and Qualification of Stock.  This
Plan and grant and exercise of Stock Awards hereunder, and the obligation of the
Company to sell and deliver Common Stock under such Stock Awards, shall be
subject to all applicable United States federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may
be required. The Company, in its discretion, may postpone the issuance or
delivery of Common Stock upon any exercise of a Stock Award until completion of
any stock exchange listing, or other qualification of such Common Stock under
any United States federal or state law rule or regulation as the Company may
consider appropriate, and may require any individual to whom a Stock Award is
granted, such individual’s beneficiary or legal representative, as applicable,
to make such representations and furnish such information as the Board may
consider necessary, desirable or advisable in connection with the issuance or
delivery of the Common Stock in compliance with applicable laws, rules and
regulations.

 

(h)                                 Non-Uniform Determinations.  The Board’s
determinations under this Plan (including, without limitation, determinations of
the persons to receive Stock Awards, the form, term, provisions, amount and
timing of the grant of such Stock Awards and of the agreements evidencing the
same) need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, Stock Awards under this Plan, whether or
not such persons are similarly situated.

 

11.                               ADJUSTMENTS UPON CHANGES IN STOCK.

 

(a)                                  Capitalization Adjustments.  If any change
is made in the Common Stock subject to the Plan, or subject to any Stock Award,
without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan

 

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pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards. 
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive.  (The conversion of any convertible securities of the
Company shall not be treated as a transaction “without receipt of consideration”
by the Company.)

 

(b)                                  Asset Sale, Merger, Consolidation or
Reverse Merger.  In the event of (i) a sale, lease or other disposition of all
or substantially all of the assets of the Company, (ii) a merger or
consolidation of the Company with or into any other corporation or entity or
person, or any other corporate reorganization, in which the stockholders of the
Company immediately prior to such consolidation, merger or reorganization, own
less than 50% of the Company’s outstanding voting power of the surviving entity
(or its parent) following the consolidation, merger, or reorganization or
(iii) any transaction (or series of related transactions involving a person or
entity, or a group of affiliated persons or entities) in which in excess of
fifty percent (50%) of the Company’s outstanding voting power is transferred
(individually, a “Change of Control”), then any unvested Stock Awards shall vest
immediately prior to the closing of the Change of Control, and the Board shall
have the power and discretion to provide for the Participant’s election
alternatives regarding the terms and conditions for the exercise of, or
modification of, any outstanding Stock Awards granted hereunder, provided,
however, such alternatives shall not affect the then current exercise provisions
without such Participant’s consent.  The Board may provide that Stock Awards
granted hereunder must be exercised in connection with the closing of such
transaction, and that if not so exercised such Stock Awards will expire.  Any
such determinations by the Board may be made generally with respect to all
Participants, or may be made on a case-by-case basis with respect to particular
Participants.  The provisions of this Section 11(c) shall not apply to any
transaction undertaken for the purpose of reincorporating the Company under the
laws of another jurisdiction, if such transaction does not materially affect the
beneficial ownership of the Company’s capital stock.

 

12.                               AMENDMENT OF THE PLAN AND STOCK AWARDS.

 

(a)                                  Amendment of Plan.  The Board at any time,
and from time to time, may amend the Plan, provided that such amendment does not
result in a violation of Section 409A of the Code.  However, except as provided
in Section 11 relating to adjustments upon changes in Common Stock, no amendment
shall be effective unless approved by the stockholders of the Company to the
extent stockholder approval is necessary to satisfy the requirements of
applicable law (including, without limitation, Section 422 of the Code or
Rule 16b-3) or any applicable Nasdaq or securities exchange listing
requirements.

 

(b)                                  Stockholder Approval.  The Board may, in
its sole discretion, submit any other amendment to the Plan for stockholder
approval, including, but not limited to, amendments to the Plan intended to
satisfy the requirements of Section 162(m) of the Code and the regulations
thereunder regarding the exclusion of performance-based compensation from the
limit on corporate deductibility of compensation paid to certain executive
officers.

 

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(c)                                  Contemplated Amendments.  It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the
Plan and/or Incentive Stock Options granted under it into compliance therewith.

 

(d)                                  No Impairment of Rights.  Rights under any
Stock Award granted before amendment of the Plan shall not be impaired by any
amendment of the Plan unless the Participant consents in writing.

 

(e)                                  Amendment of Stock Awards.  The Board at
any time, and from time to time, may amend the terms of any one or more Stock
Awards; provided, however, that the rights under any Stock Award shall not be
impaired by any such amendment unless the applicable Participant consents in
writing and provided further that such amendment does not result in a violation
of Section 409A of the Code.

 

13.                               TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)                                  Plan Term.  The Board may suspend or
terminate the Plan at any time.  Unless sooner terminated, the Plan shall
terminate on the tenth anniversary of the Effective Date, after which no grants
of Incentive Awards may be made; provided, that administration of the Plan shall
continue in effect until all matters relating to Stock Awards previously granted
have been settled.

 

(b)                                  No Impairment of Rights.  Suspension or
termination of the Plan shall not impair rights and obligations under any Stock
Award granted while the Plan is in effect except with the written consent of the
Participant.

 

(c)                                  Savings Clause.  This Plan is intended to
comply in all aspects with applicable laws and regulations. In case any one more
of the provisions of this Plan shall be held invalid, illegal or unenforceable
in any respect under applicable law or regulation, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the invalid, illegal or unenforceable provision shall be
deemed null and void; however, to the extent permissible by law, any provision
which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Plan to be construed in compliance with all
applicable laws so as to foster the intent of this Plan.

 

14.                               CHOICE OF LAW.

 

The law of the Delaware shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s
conflict of laws rules.

 

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15.                               PERFORMANCE-BASED COMPENSATION UNDER
SECTION 162(M).

 

Notwithstanding anything herein to the contrary, the performance criteria for
any Stock Award that is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code shall be
established by the Committee based on one or more Qualifying Performance
Criteria selected by the Committee and specified in writing in accordance with
the regulations pursuant to Section 162(m).

 

(a)                                  Qualifying Performance Criteria.  For
purposes of this Plan, the term “Qualifying Performance Criteria” shall mean any
one or more of the following performance criteria, applied to either the Company
as a whole or to a business segment, subsidiary or Affiliate, and measured
either annually or cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years’ results or to a
designated comparison group, in each case as specified by the Committee in the
applicable Option Agreement or Stock Award Agreement: revenue; revenue growth;
operating income (before or after taxes); pre- or after-tax income (before or
after allocation of corporate overhead and bonus); earnings per share; return on
equity; total stockholder return; return on assets or net assets; appreciation
in and/or maintenance of the price of the Common Stock or any other
publicly-traded securities of the Company; gross profits; earnings (including
earnings before taxes, earnings before interest and taxes or earnings before
interest, taxes, depreciation and amortization); economic value-added models or
equivalent metrics; comparisons with various stock market indices; reductions in
costs; cash flow, cash flow per share or cash flow from operations; return on
capital; improvement in or attainment of expense levels or working capital
levels; operating margins, gross margins or cash margin; year-end cash; debt
reductions; stockholder equity; regulatory achievements (including submitting or
filing applications or other documents with regulatory authorities or receiving
approval of any such applications or other documents); financing and other
capital raising transactions (including sales of the Company’s equity or debt
securities); implementation, completion or attainment of objectives with respect
to exploration, development, production or costs, acquisitions and divestitures,
operational objectives, including those relating to environmental, health and
safety requirements, recruiting and maintaining personnel, and joint venture or
similar arrangements.

 

(b)                                  Certification.  Before payment of any
compensation under a Stock Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee shall certify, in
writing, the extent to which any Qualifying Performance Criteria and any other
material terms under such Stock Award have been satisfied (other than in cases
where such relate solely to the price of Common Stock).

 

(c)                                  Discretionary Adjustments Pursuant to
Section 162(m).   Notwithstanding satisfaction or completion of any Qualifying
Performance Criteria, to the extent specified at the time of grant of a Stock
Award to Covered Employees, the number of shares of Common Stock or other
benefits granted, issued, retained, or vested under a Stock Award on account of
satisfaction of such Qualifying Performance Criteria may be reduced by the
Committee on the basis of such further considerations as the Committee in its
sole discretion shall determine.  In addition, in the event that the
requirements of Section 162(m) of the Code and the regulations

 

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thereunder change to permit the Committee discretion to alter the Qualifying
Performance Criteria obtaining shareholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
shareholder approval.  Furthermore, in the event that the Committee determines
that it is advisable to grant Stock Awards that shall not qualify as
performance-based compensation and/or to amend previously granted Stock Awards
in a way that would disqualify them as performance-based compensation, the
Committee may make such grants without satisfying the requirements of
Section 162(m) of the Code and may base vesting on performance measures other
than those set forth above and/or make such amendments.

 

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