Exhibit 10.1

GEOMET, INC.

2006 LONG-TERM INCENTIVE PLAN

(Amended and Restated Effective September 14, 2010)

ARTICLE I. ESTABLISHMENT AND PURPOSE

1.1 Establishment and Purpose. GeoMet, Inc. (“GeoMet” or the “Company”) hereby
establishes the GeoMet, Inc. 2006 Long-Term Incentive Plan, as set forth in this
document. The purposes of the Plan are to attract and retain highly qualified
key employees, officers and directors, to further align the interests of these
individuals with those of the stockholders of GeoMet, and more closely link
compensation with Company performance. GeoMet is committed to creating long-term
stockholder value. GeoMet’s compensation philosophy is based on a belief that
GeoMet can best create stockholder value if key employees, officers and
directors act and are rewarded as business owners. GeoMet believes that an
equity stake through equity compensation programs effectively aligns employee
and stockholder interests by motivating and rewarding performance that will
enhance stockholder value.

1.2 Effectiveness and Term. This Plan originally became effective on April 17,
2006 (the “Effective Date”). This amended and restated Plan was adopted by the
Board on September 14, 2010 and is effective as of that date (the “Restatement
Effective Date”). Unless terminated earlier by the Board pursuant to
Section 14.1, the Plan shall terminate on May 7, 2019.

ARTICLE II. DEFINITIONS

2.1 “Affiliate” means (a) with respect to Incentive Stock Options, a “parent
corporation” or a “subsidiary corporation” of GeoMet, as those terms are defined
in Sections 424(e) and (f) of the Code, respectively, and (b) with respect to
other Awards, (i) a “parent corporation” or a subsidiary corporation” of GeoMet
as defined in (a) above, or (ii) any other person with whom GeoMet would be
considered a single employer under Section 414(b) of the Code (controlled group
of corporations) or Section 414(c) of the Code (partnerships, proprietorships,
etc., under common control), provided that in applying Code Sections 1563(a)(1),
(2) and (3) for purposes of determining a controlled group of corporations under
Section 414(b) of the Code, the language “at least 50 percent” shall be used
instead of “at least 80 percent” each place it appears in Code Sections
1563(a)(1), (2) and (3), and in applying Treasury Regulation Section 1.414(c)-2
for purposes of determining trades or businesses (whether or not incorporated)
that are under common control for purposes of Section 414(c) of the Code, the
language “at least 50 percent” shall be used instead of “at least 80 percent”
each place it appears in Treasury Regulation Section 1.414(c)-2.

2.2 “Award” means an award granted to a Participant in the form of Options,
SARs, Restricted Stock, Restricted Stock Units, Performance Awards, Stock Awards
or Other Incentive Awards, whether granted singly or in combination.

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2.3 “Award Agreement” means a written agreement between GeoMet and a Participant
that sets forth the terms, conditions, restrictions and limitations applicable
to an Award.

2.4 “Board” means the Board of Directors of GeoMet.

2.5 “Cash Dividend Right” means a contingent right, granted in tandem with a
specific Restricted Stock Unit Award, to receive an amount in cash equal to the
cash distributions made by GeoMet with respect to a share of Common Stock during
the period such Award is outstanding.

2.6 “Cause” means a finding by the Committee of acts or omissions constituting,
in the Committee’s reasonable judgment, (a) a breach of duty by the Participant
in the course of his employment or service involving fraud, acts of dishonesty
(other than inadvertent acts or omissions), disloyalty to the Company, or moral
turpitude constituting criminal felony; (b) conduct by the Participant that is
materially detrimental to the Company, monetarily or otherwise, or reflects
unfavorably on the Company or the Participant to such an extent that the
Company’s best interests reasonably require the termination of the Participant’s
employment or service; (c) acts or omissions of the Participant materially in
violation of his obligations under any written employment or other agreement
between the Participant and the Company or at law; (d) the Participant’s failure
to comply with or enforce Company policies concerning equal employment
opportunity, including engaging in sexually or otherwise harassing conduct;
(e) the Participant’s repeated insubordination; (f) the Participant’s failure to
comply with or enforce, in any material respect, all other personnel policies of
the Company; (g) the Participant’s failure to devote his full (or other
required) working time and best efforts to the performance of his
responsibilities to the Company; or (h) the Participant’s conviction of, or
entry of a plea agreement or consent decree or similar arrangement with respect
to a felony or any violation of federal or state securities laws.

2.7 “Code” means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations.

2.8 “Committee” means the Compensation Committee of the Board or such other
committee of the Board as may be designated by the Board to administer the Plan,
which committee shall consist of two or more members of the Board; provided,
however, that with respect to the application of the Plan to Awards made to
Outside Directors, the “Committee” shall be the Board. During such time as the
Common Stock is registered under Section 12 of the Exchange Act, each member of
the Committee shall be an Outside Director. To the extent that no Committee
exists that has the authority to administer the Plan, the functions of the
Committee shall be exercised by the Board.

2.9 “Common Stock” means the common stock of GeoMet, $0.001 par value per share,
or any stock or other securities of hereafter issued or issuable in substitution
or exchange for the Common Stock.

 

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2.10 “Company” means GeoMet and any Affiliate.

2.11 “Corporate Change” means (a) the dissolution or liquidation of GeoMet;
(b) a reorganization, merger or consolidation of GeoMet with one or more
corporations (other than a merger or consolidation effecting a reincorporation
of GeoMet in another state or any other merger or consolidation in which the
stockholders of the surviving corporation and their proportionate interests
therein immediately after the merger or consolidation are substantially
identical to the stockholders of GeoMet and their proportionate interests
therein immediately prior to the merger or consolidation) (collectively, a
“Corporate Change Merger”); (c) the sale of all or substantially all of the
assets of the Company; or (d) the occurrence of a Change in Control.
Notwithstanding the foregoing, “Corporate Change” shall not include the Equity
Refinancing, the Offering or any other public offering of equity of GeoMet
pursuant to a registration that is effective under the Securities Act or any
private offering of equity of GeoMet pursuant to an exemption from the
Securities Act. A “Change in Control” shall be deemed to have occurred if
(a) individuals who were directors of GeoMet immediately prior to a Control
Transaction shall cease, within two years of such Control Transaction to
constitute a majority of the Board (or of the Board of Directors of any
successor to GeoMet or to a company which has acquired all or substantially all
its assets) other than by reason of an increase in the size of the membership of
the applicable Board that is approved by at least a majority of the individuals
who were directors of GeoMet immediately prior to such Control Transaction or
(b) any entity, person or Group acquires shares of GeoMet in a transaction or
series of transactions that result in such entity, person or Group directly or
indirectly owning beneficially 50% or more of the outstanding shares of Common
Stock. As used herein, “Control Transaction” means (a) any tender offer for or
acquisition of capital stock of GeoMet pursuant to which any person, entity, or
Group directly or indirectly acquires beneficial ownership of 20% or more of the
outstanding shares of Common Stock; (b) any Corporate Change Merger of GeoMet;
(c) any contested election of directors of GeoMet; or (d) any combination of the
foregoing, any one of which results in a change in voting power sufficient to
elect a majority of the Board. As used herein, “Group” means persons who act “in
concert” as described in Sections 13(d)(3) and/or 14(d)(2) of the Exchange Act.

2.12 “Dividend Unit Right” means a contingent right, granted in tandem with a
specific Restricted Stock Unit Award, to have an additional number of Restricted
Stock Units credited to a Participant in respect of the Award equal to the
number of shares of Common Stock that could be purchased at Fair Market Value
with the amount of each cash distribution made by GeoMet with respect to a share
of Common Stock during the period such Award is outstanding.

2.13 “Effective Date” means the date this Plan originally became effective as
provided in Section 1.2. “Restatement Effective Date” is defined in Section 1.2.

2.14 “Employee” means an employee of the Company; provided, however, that the
term “Employee” does not include an Outside Director of the Company.

 

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2.15 “Equity Refinancing” means the offering, sale and issuance by GeoMet of
Series A Convertible Redeemable Preferred Stock as contemplated in that certain
Investment Agreement dated June 2, 2010 by and between GeoMet and Sherwood
Energy, LLC, including the issuance of Common Stock upon conversion of such
Series A Convertible Redeemable Preferred Stock.

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

2.17 “Fair Market Value” means (a) for so long as the Common Stock is listed on
The NASDAQ Global Market or other exchange or association on which the Common
Stock is traded, the closing price for such stock as quoted on such exchange for
the date the Award is granted (or if there are no sales for such date of grant,
then for the last preceding business day on which there were sales), (b) if the
Common Stock is traded in the over-the-counter market, the closing price as
reported by NASDAQ on for the date the Award is granted (or if there was no
quoted price for such date of grant, then for the last preceding business day on
which there was a quoted price), or (c) if the Common Stock is not reported or
quoted by any such organization, fair market value of the Common Stock as
determined in good faith by the Committee using a “reasonable application of a
reasonable valuation method” within the meaning Section 409A of the Code and the
regulations thereunder. Notwithstanding the foregoing, “Fair Market Value” with
respect to an Incentive Stock Option shall mean fair market value as determined
in good faith by the Committee within the meaning of Section 422 of the Code.

2.18 “GeoMet” means GeoMet, Inc., a Delaware corporation, or any successor
thereto.

2.19 “Good Reason” means any of the following actions if taken without the
Participant’s prior written consent: (a) any material failure by the Company to
comply with its obligations under the terms of a written employment agreement;
(b) any demotion of the Participant as evidenced by a material reduction in the
Participant’s responsibilities, duties, compensation, or benefits; or (c) any
permanent relocation of the Participant’s place of business to a location 50
miles or more from the then-current location. Neither a transfer of employment
among GeoMet and any of its Affiliates, a change in any co-employment
relationship, nor a mere change in job title or reporting structure constitutes
“Good Reason.”

2.20 “Grant Date” means the date an Award is determined to be effective by the
Committee upon the grant of such Award.

2.21 “Inability to Perform” means and shall be deemed to have occurred if the
Participant has been determined under the Company’s or any co-employer’s
long-term disability plan to be eligible for long-term disability benefits. In
the absence of the Participant’s participation in, application for benefits
under, or existence of such a plan, “Inability to Perform” means a finding by
the Committee in its sole judgment that the Participant is, despite any
reasonable accommodation required by law, unable to perform

 

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the essential functions of his position because of an illness or injury for
(a) 60% or more of the normal working days during six consecutive calendar
months or (b) 40% or more of the normal working days during twelve consecutive
calendar months.

2.22 “Incentive Stock Option” means an Option that is intended to meet the
requirements of Section 422(b) of the Code.

2.23 “NASDAQ” means The NASDAQ Global Market.

2.24 “Nonqualified Stock Option” means an Option that is not an Incentive Stock
Option.

2.25 “Offering” means the offering, sale and issuance by GeoMet of Common Stock
as set forth in that certain offering memorandum dated January 24, 2006.

2.26 “Option” means an option to purchase shares of Common Stock granted to a
Participant pursuant to Article VII. An Option may be either an Incentive Stock
Option or a Nonqualified Stock Option, as determined by the Committee.

2.27 “Other Incentive Award” means an incentive award granted to a Participant
pursuant to Article XII.

2.28 “Outside Director” means a member of the Board who: (a) meets the
independence requirements of the principal exchange or quotation system upon
which the shares of Common Stock are listed or quoted, (b) from and after the
date on which the remuneration paid pursuant to the Plan becomes subject to the
deduction limitation under Section 162(m) of the Code, qualifies as an “outside
director” under Section 162(m) of the Code, (c) qualifies as a “non-employee
director” of GeoMet under Rule 16b-3, and (d) satisfies independence criteria
under any other applicable laws or regulations relating to the issuance of
shares of Common Stock to Employees.

2.29 “Participant” means an Employee or Outside Director that has been granted
an Award; provided, however, that no Award that may be settled in Common Stock
may be issued to a Participant that is not a natural person.

2.30 “Performance Award” means an Award granted to a Participant pursuant to
Article XI to receive cash or Common Stock conditioned in whole or in part upon
the satisfaction of specified performance criteria.

2.31 “Permitted Transferee” shall have the meaning given such term in
Section 15.4.

2.32 “Plan” means the GeoMet, Inc. 2006 Long-Term Incentive Plan, as in effect
from time to time.

 

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2.33 “Restricted Period” means the period established by the Committee with
respect to an Award of Restricted Stock or Restricted Stock Units during which
the Award remains subject to forfeiture.

2.34 “Restricted Stock” means a share of Common Stock granted to a Participant
pursuant to Article IX that is subject to such terms, conditions, and
restrictions as may be determined by the Committee.

2.35 “Restricted Stock Unit” means a fictional share of Common Stock granted to
a Participant pursuant to Article X that is subject to such terms, conditions,
and restrictions as may be determined by the Committee.

2.36 “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation that may be in effect from time to
time.

2.37 “SEC” means the United States Securities and Exchange Commission, or any
successor agency or organization.

2.38 “Securities Act” means the Securities Act of 1933, as amended.

2.39 “Stock Appreciation Right” or “SAR” means a right granted to a Participant
pursuant to Article VIII with respect to a share of Common Stock to receive upon
exercise cash, Common Stock or a combination of cash and Common Stock, equal to
the appreciation in value of a share of Common Stock.

ARTICLE III. PLAN ADMINISTRATION

3.1 Plan Administrator and Discretionary Authority. The Plan shall be
administered by the Committee. The Committee shall have total and exclusive
responsibility to control, operate, manage and administer the Plan in accordance
with its terms. The Committee shall have all the authority that may be necessary
or helpful to enable it to discharge its responsibilities with respect to the
Plan. Without limiting the generality of the preceding sentence, the Committee
shall have the exclusive right to: (a) interpret the Plan and the Award
Agreements executed hereunder; (b) decide all questions concerning eligibility
for, and the amount of, Awards granted under the Plan; (c) construe any
ambiguous provision of the Plan or any Award Agreement; (d) prescribe the form
of Award Agreements; (e) correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award Agreement; (f) issue administrative
guidelines as an aid to administering the Plan and make changes in such
guidelines as the Committee from time to time deems proper; (g) make regulations
for carrying out the Plan and make changes in such regulations as the Committee
from time to time deems proper; (h) determine whether Awards should be granted
singly or in combination; (i) to the extent permitted under the Plan, grant
waivers of Plan terms, conditions, restrictions and limitations; (j) accelerate
the exercise, vesting or payment of an Award when such action or actions would
be in the best interests of the Company; (k) require Participants to hold a
stated number or percentage of shares of Common Stock acquired pursuant to an
Award

 

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for a stated period; and (l) take any and all other actions the Committee deems
necessary or advisable for the proper operation or administration of the Plan.
The Committee shall have authority in its sole discretion with respect to all
matters related to the discharge of its responsibilities and the exercise of its
authority under the Plan, including without limitation its construction of the
terms of the Plan and its determination of eligibility for participation in, and
the terms of Awards granted under, the Plan. The decisions of the Committee and
its actions with respect to the Plan shall be final, conclusive and binding on
all persons having or claiming to have any right or interest in or under the
Plan, including without limitation Participants and their respective Permitted
Transferees, estates, beneficiaries and legal representatives.

3.2 Liability; Indemnification. No member of the Committee, nor any person to
whom it has delegated authority, shall be personally liable for any action,
interpretation or determination made in good faith with respect to the Plan or
Awards granted hereunder, and each member of the Committee (or delegatee of the
Committee) shall be fully indemnified and protected by GeoMet with respect to
any liability he may incur with respect to any such action, interpretation or
determination, to the maximum extent permitted by applicable law.

ARTICLE IV. SHARES SUBJECT TO THE PLAN

4.1 Available Shares.

(a) Subject to adjustment as provided in Section 4.2, the maximum number of
shares of Common Stock that shall be available for grant of Awards under the
Plan shall be 4,000,000 shares of Common Stock.

(b) The maximum aggregate number of shares of Common Stock that may be issued
under the Plan through Incentive Stock Options is 4,000,000. The maximum number
of shares of Common Stock that may be subject to all Awards granted under the
Plan to any one Participant (i) during the fiscal year of GeoMet in which the
Participant is first hired by the Company is 500,000 shares and (ii) during each
subsequent fiscal year is 400,000 shares. The limitations provided in this
Section 4.1(b) shall be subject to adjustment as provided in Section 4.2.

(c) Shares of Common Stock issued pursuant to the Plan may be original issue or
treasury shares or a combination of the foregoing, as the Committee, in its sole
discretion, shall from time to time determine. During the term of this Plan,
GeoMet will at all times reserve and keep available such number of shares of
Common Stock as shall be sufficient to satisfy the requirements of the Plan.

(d) Notwithstanding any provision of this Plan to the contrary, the Board or the
Committee shall have the right to substitute or assume awards in connection with
mergers, reorganizations, separations or other transactions to which
Section 424(a) of the Code applies, provided such substitutions or assumptions
are permitted by Section 424 of the Code (or, if applicable, Section 409A of the
Code) and the regulations promulgated thereunder.

 

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4.2 Adjustments for Recapitalizations and Reorganizations. Subject to Article
XIII, if there is any change in the number or kind of shares of Common Stock
outstanding (a) by reason of a stock dividend, spin-off, recapitalization, stock
split, or combination or exchange of shares, (b) by reason of a merger,
reorganization, or consolidation, (c) by reason of a reclassification or change
in par value, or (d) by reason of any other extraordinary or unusual event
affecting the outstanding Common Stock as a class without GeoMet’s receipt of
consideration, or if the value of outstanding shares of Common Stock is reduced
as a result of a spin-off or GeoMet’s payment of an extraordinary cash dividend,
or distribution or dividend or distribution consisting of any assets of GeoMet
other than cash, the maximum number and kind of shares of Common Stock available
for issuance under the Plan, the maximum number and kind of shares of Common
Stock for which any individual may receive Awards in any fiscal year or under
the Plan, the number and kind of shares of Common Stock covered by outstanding
Awards, and the price per share or the applicable market value or performance
target of such Awards may be appropriately adjusted by the Committee to reflect
any increase or decrease in the number of, or change in the kind or value of,
issued shares of Common Stock to preclude, to the extent practicable, the
enlargement or dilution of rights under such Awards; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated; provided,
further, that the number and kind of shares of Common Stock available for
issuance as Incentive Stock Options under the Plan shall be adjusted only in
accordance with Sections 422 and 424 of the Code and the regulations thereunder.
Notwithstanding the provisions of this Section 4.2, outstanding Awards and Award
Agreements shall be adjusted in accordance with (a) Sections 422 and 424 of the
Code and the regulations thereunder with respect to Incentive Stock Options and
(b) Section 409A of the Code and the regulations thereunder with respect to
Nonqualified Stock Options, SARs and, to the extent applicable, other Awards.

4.3 Adjustments for Awards. The Committee shall have sole discretion to
determine the manner in which shares of Common Stock available for grant of
Awards under the Plan are counted. Without limiting the discretion of the
Committee under this Section 4.3, unless otherwise determined by the Committee,
the following rules shall apply for the purpose of determining the number of
shares of Common Stock available for grant of Awards under the Plan:

(a) Options, Restricted Stock and Stock Awards. The grant of Options, Restricted
Stock or Stock Awards shall reduce the number of shares of Common Stock
available for grant of Awards under the Plan by the number of shares of Common
Stock subject to such an Award.

(b) SARs. The grant of SARs that may be paid or settled (i) only in Common Stock
or (ii) in either cash or Common Stock shall reduce the number of shares
available for grant of Awards under the Plan by the number of shares subject to
such an Award; provided, however, that upon the exercise of SARs, the

 

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excess of the number of shares of Common Stock with respect to which the Award
is exercised over the number of shares of Common Stock issued upon exercise of
the Award shall again be available for grant of Awards under the Plan. The grant
of SARs that may be paid or settled only for cash shall not affect the number of
shares available for grant of Awards under the Plan.

(c) Restricted Stock Units. The grant of Restricted Stock Units (including those
credited to a Participant in respect of a Dividend Unit Right) that may be paid
or settled (i) only in Common Stock or (ii) in either cash or Common Stock shall
reduce the number of shares available for grant of Awards under the Plan by the
number of shares subject to such an Award; provided, however, that upon
settlement of the Award, the excess, if any, of the number of shares of Common
Stock that had been subject to such Award over the number of shares of Common
Stock issued upon its settlement shall again be available for grant of Awards
under the Plan. The grant of Restricted Stock Units that may be paid or settled
only for cash shall not affect the number of shares available for grant of
Awards under the Plan.

(d) Performance Awards and Other Incentive Awards. The grant of a Performance
Award or Other Incentive Award in the form of Common Stock or that may be paid
or settled (i) only in Common Stock or (ii) in either Common Stock or cash shall
reduce the number of shares available for grant of Awards under the Plan by the
number of shares subject to such an Award; provided, however, that upon
settlement of the Award, the excess, if any, of the number of shares of Common
Stock that had been subject to such Award over the number of shares of Common
Stock issued upon its settlement shall again be available for grant of Awards
under the Plan. The grant of a Performance Award or Other Incentive Award that
may be paid or settled only for cash shall not affect the number of shares
available for grant of Awards under the Plan.

(e) Cancellation, Forfeiture and Termination. If any Award referred to in
Sections 4.3(a), (b), (c), or (d) (other than an Award that may be paid or
settled only for cash) is canceled or forfeited, or terminates, expires or
lapses, for any reason, the shares then subject to such Award shall again be
available for grant of Awards under the Plan.

(f) Payment of Exercise Price and Withholding Taxes. If previously acquired
shares of Common Stock are used to pay the exercise price of an Award, the
number of shares available for grant of Awards under the Plan shall be increased
by the number of shares delivered as payment of such exercise price. If
previously acquired shares of Common Stock are used to pay withholding taxes
payable upon exercise, vesting or payment of an Award, or shares of Common Stock
that would be acquired upon exercise, vesting or payment of an Award are
withheld to pay withholding taxes payable upon exercise, vesting or payment of
such Award, the number of shares available for grant of Awards under the Plan
shall be increased by the number of shares delivered or withheld as payment of
such withholding taxes.

 

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ARTICLE V. ELIGIBILITY

The Committee shall select Participants from those Employees and Outside
Directors that, in the opinion of the Committee, are in a position to make a
significant contribution to the success of the Company. Once a Participant has
been selected for an Award by the Committee, the Committee shall determine the
type and size of Award to be granted to the Participant and shall establish in
the related Award Agreement the terms, conditions, restrictions and limitations
applicable to the Award, in addition to those set forth in the Plan and the
administrative guidelines and regulations, if any, established by the Committee.
Notwithstanding the foregoing, Employees and Outside Directors that provide
services to Affiliates that are not considered a single employer with GeoMet
under Code Section 414(b) or Code Section 414(c) shall not be eligible to
receive Awards which are subject to Code Section 409A until the Affiliate adopts
this Plan as a participating employer in accordance with Section 15.19.

ARTICLE VI. FORM OF AWARDS

6.1 Form of Awards. Awards may be granted under the Plan, in the Committee’s
sole discretion, in the form of Options pursuant to Article VII, SARs pursuant
to Article VIII, Restricted Stock pursuant to Article IX, Restricted Stock Units
pursuant to Article X, Performance Awards pursuant to Article XI, and Stock
Awards and Other Incentive Awards pursuant to Article XII, or a combination
thereof. All Awards shall be subject to the terms, conditions, restrictions and
limitations of the Plan. The Committee may, in its sole discretion, subject any
Award to such other terms, conditions, restrictions and/or limitations
(including without limitation the time and conditions of exercise, vesting or
payment of an Award and restrictions on transferability of any shares of Common
Stock issued or delivered pursuant to an Award), provided they are not
inconsistent with the terms of the Plan. The Committee may, but is not required
to, subject an Award to such conditions as it determines are necessary or
appropriate to ensure that an Award constitutes “qualified performance based
compensation” within the meaning of Section 162(m) of the Code and the
regulations thereunder. Awards under a particular Article of the Plan need not
be uniform, and Awards under more than one Article of the Plan may be combined
in a single Award Agreement. Any combination of Awards may be granted at one
time and on more than one occasion to the same Participant. Subject to
compliance with applicable tax law, an Award Agreement may provide that a
Participant may elect to defer receipt of income attributable to the exercise or
vesting of an Award.

6.2 No Repricing or Reload Rights. Except for adjustments made pursuant to
Section 4.2, no Award may be repriced, replaced, regranted through cancellation
or otherwise modified without stockholder approval, if the effect would be to
reduce the exercise price for the shares underlying such Award. The Committee
may not cancel an outstanding Option that is under water for the purpose of
granting a replacement Award of a different type.

 

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6.3 Loans. The Committee may, in its sole discretion, approve the extension of a
loan by the Company to a Participant who is an Employee to assist the
Participant in paying the exercise price or purchase price of an Award;
provided, however, that no loan shall be permitted if the extension of such loan
would violate any provision of applicable law. Any loan will be made upon such
terms and conditions as the Committee shall determine.

ARTICLE VII. OPTIONS

7.1 General. Awards may be granted in the form of Options that may be Incentive
Stock Options or Nonqualified Stock Options, or a combination of both. Incentive
Stock Options may be granted only to Employees of GeoMet or a “parent
corporation” or a “subsidiary corporation” of GeoMet, as those terms are defined
in Sections 424(e) and (f) of the Code, respectively. Nonqualified Stock Options
may be granted only to Employees and Outside Directors performing services for
GeoMet or a corporation or other type of entity in a chain of corporations or
other entities in which each corporation or other entity has a “controlling
interest” in another corporation or entity in the chain, starting with GeoMet
and ending with the corporation or other entity for which the Employee or
Outside Director performs services. For purposes of this Section, “controlling
interest” means (i) in the case of a corporation, ownership of stock possessing
at least 50% of total combined voting power of all classes of stock entitled to
vote of such corporation or at least 50% of the total value of shares of all
classes of stock of such corporation; (ii) in the case of a partnership,
ownership of at least 50% of the profits interest or capital interest of such
partnership; (iii) in the case of a sole proprietorship, ownership of the sole
proprietorship; or (iv) in the case of a trust or estate, ownership of an
actuarial interest (as defined in Treasury Regulation
Section 1.414(c)-2(b)(2)(ii)) of at least 50% of such trust or estate.

7.2 Terms and Conditions of Options. An Option shall be exercisable in whole or
in such installments and at such times as may be determined by the Committee.
The price at which a share of Common Stock may be purchased upon exercise of an
Option shall be determined by the Committee, but such exercise price shall not
be less than 100% of the Fair Market Value per share of Common Stock on the
Grant Date unless the Option was granted through the assumption of, or in
substitution for, outstanding awards previously granted to individuals who
became Employees as a result of a merger, consolidation, acquisition, or other
corporate transaction involving the Company and complies with Section 409A of
the Code. Except as otherwise provided in Section 7.3, the term of each Option
shall be as specified by the Committee; provided, however, that no Options shall
be exercisable later than ten years after the Grant Date. Options may be granted
with respect to Restricted Stock or shares of Common Stock that are not
Restricted Stock, as determined by the Committee in its sole discretion.

 

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7.3 Restrictions Relating to Incentive Stock Options.

(a) Options granted in the form of Incentive Stock Options shall, in addition to
being subject to the terms and conditions of Section 7.2, comply with
Section 422(b) of the Code. To the extent the aggregate Fair Market Value
(determined as of the times the respective Incentive Stock Options are granted)
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by an individual during any calendar year under all incentive
stock option plans of the Company exceeds $100,000, such excess Incentive Stock
Options shall be treated as options that do not constitute Incentive Stock
Options. The Committee shall determine, in accordance with the applicable
provisions of the Code, which of a Participant’s Incentive Stock Options will
not constitute Incentive Stock Options because of such limitation and shall
notify the Participant of such determination as soon as practicable after such
determination. The price at which a share of Common Stock may be purchased upon
exercise of an Incentive Stock Option shall be determined by the Committee, but
such exercise price shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the Grant Date. No Incentive Stock Option shall be
granted to an Employee under the Plan if, at the time such Option is granted,
such Employee owns stock possessing more than 10% of the total combined voting
power of all classes of stock of GeoMet or an Affiliate, within the meaning of
Section 422(b)(6) of the Code, unless (i) on the Grant Date of such Option, the
exercise price of such Option is at least 110% of the Fair Market Value of the
Common Stock subject to the Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the Grant Date of the
Option.

(b) Each Participant awarded an Incentive Stock Option shall notify GeoMet in
writing immediately after the date he or she makes a disqualifying disposition
of any shares of Common Stock acquired pursuant to the exercise of such
Incentive Stock Option. A disqualifying disposition is any disposition
(including any sale) of such Common Stock before the later of (i) two years
after the Grant Date of the Incentive Stock Option or (ii) one year after the
date of exercise of the Incentive Stock Option.

7.4 Exercise of Options.

(a) Subject to the terms and conditions of the Plan, Options shall be exercised
by the delivery of a written notice of exercise to GeoMet, setting forth the
number of whole shares of Common Stock with respect to which the Option is to be
exercised, accompanied by full payment for such shares.

(b) Upon exercise of an Option, the exercise price of the Option shall be
payable to GeoMet in full either: (i) in cash or an equivalent acceptable to the
Committee, or (ii) in the sole discretion of the Committee and in accordance
with any applicable administrative guidelines established by the Committee, by
tendering one or more previously acquired nonforfeitable, unrestricted shares of
Common Stock that have been held by the Participant for at least six months

 

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having an aggregate Fair Market Value at the time of exercise equal to the total
exercise price, or (iii) in a combination of the forms of payment specified in
clauses (i) and (ii) above.

(c) During such time as the Common Stock is registered under Section 12 of the
Exchange Act, to the extent permissible under applicable law, payment of the
exercise price of an Option may also be made, in the absolute discretion of the
Committee, by delivery to GeoMet or its designated agent of an executed
irrevocable option exercise form together with irrevocable instructions to a
broker-dealer to sell or margin a sufficient portion of the shares with respect
to which the Option is exercised and deliver the sale or margin loan proceeds
directly to GeoMet to pay the exercise price and any required withholding taxes.

(d) As soon as reasonably practicable after receipt of written notification of
exercise of an Option and full payment of the exercise price and any required
withholding taxes, GeoMet shall (i) deliver to the Participant, in the
Participant’s name or the name of the Participant’s designee, a stock
certificate or certificates in an appropriate aggregate amount based upon the
number of shares of Common Stock purchased under the Option, or (ii) cause to be
issued in the Participant’s name or the name of the Participant’s designee, in
book-entry form, an appropriate number of shares of Common Stock based upon the
number of shares purchased under the Option.

7.5 Termination of Employment or Service. Each Award Agreement embodying the
Award of an Option shall set forth the extent to which the Participant shall
have the right to exercise the Option following termination of the Participant’s
employment or service with the Company. Such provisions shall be determined by
the Committee in its absolute discretion, need not be uniform among all Options
granted under the Plan and may reflect distinctions based on the reasons for
termination of employment or service. In the event a Participant’s Award
Agreement embodying the award of an Option does not set forth such termination
provisions, the following termination provisions shall apply with respect to
such Award:

(a) Termination Other Than For Cause. If the employment or service of a
Participant shall terminate for any reason other than Cause, each outstanding
Option held by the Participant may be exercised, to the extent then vested,
until the earlier of (i) the expiration of one year from the date of such
termination of employment or service or (ii) the expiration of the term of such
Option.

(b) Termination for Cause. Notwithstanding paragraphs (a) above, if the
employment or service of a Participant shall terminate for Cause, each
outstanding Option held by the Participant may be exercised, to the extent then
vested, until the earlier of (i) the expiration of 30 days from the date of such
termination of employment or service or (ii) the expiration of the terms of such
Option.

 

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Notwithstanding the foregoing, an Option will not be treated as an Incentive
Stock Option unless at all times beginning on the Grant Date and ending on the
day three months (one year in the case of a Participant who is “disabled” within
the meaning of Section 22(e)(3) of the Code) before the date of exercise of the
Option, the Participant is an employee of GeoMet or an Affiliate (or a
corporation or a parent or subsidiary corporation of such corporation issuing or
assuming an option in a transaction to which Section 424(a) of the Code
applies).

ARTICLE VIII. STOCK APPRECIATION RIGHTS

8.1 General.

(a) The Committee may grant Awards in the form of SARs in such numbers and at
such times as it shall determine. SARs shall vest and be exercisable in whole or
in such installments and at such times as may be determined by the Committee.
The price at which SARs may be exercised shall be determined by the Committee
but shall not be less than 100% of the Fair Market Value per share of Common
Stock on the Grant Date unless the SARs were granted through the assumption of,
or in substitution for, outstanding awards previously granted to individuals who
became Employees as a result of a merger, consolidation, acquisition, or other
corporate transaction involving the Company and comply with Section 409A of the
Code. The term of each SAR shall be as specified by the Committee; provided,
however, that no SARs shall be exercisable later than ten years after the Grant
Date. At the time of an Award of SARs, the Committee may, in its sole
discretion, prescribe additional terms, conditions, restrictions and limitations
applicable to the SARs, including without limitation rules pertaining to the
termination of employment or service (by reason of death, permanent and total
disability, or otherwise) of a Participant prior to exercise of the SARs, as it
determines are necessary or appropriate, provided they are not inconsistent with
the Plan.

(b) SARs may be granted only to Employees or Outside Directors performing
services for GeoMet or a corporation or other type of entity in a chain of
corporations or other entities in which each corporation or other entity has a
“controlling interest” in another corporation or entity in the chain, starting
with GeoMet and ending with the corporation or other entity for which the
Employee or Outside Director performs services. For purposes of this subsection,
“controlling interest” means (i) in the case of a corporation, ownership of
stock possessing at least 50% of total combined voting power of all classes of
stock entitled to vote of such corporation or at least 50% of the total value of
shares of all classes of stock of such corporation; (ii) in the case of a
partnership, ownership of at least 50% of the profits interest or capital
interest of such partnership; (iii) in the case of a sole proprietorship,
ownership of the sole proprietorship; or (iv) in the case of a trust or estate,
ownership of an actuarial interest (as defined in Treasury Regulation
Section 1.414(c)-2(b)(2)(ii)) of at least 50% of such trust or estate.

 

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8.2 Exercise of SARs. SARs shall be exercised by the delivery of a written
notice of exercise to GeoMet, setting forth the number of whole shares of Common
Stock with respect to which the Award is being exercised. Upon the exercise of
SARs, the Participant shall be entitled to receive an amount equal to the excess
of the aggregate Fair Market Value of the shares of Common Stock with respect to
which the Award is exercised (determined as of the date of such exercise) over
the aggregate exercise price of such shares. Such amount shall be payable to the
Participant in cash or in shares of Common Stock, as provided in the Award
Agreement.

ARTICLE IX. RESTRICTED STOCK

9.1 General. Awards may be granted in the form of Restricted Stock in such
numbers and at such times as the Committee shall determine. The Committee shall
impose such terms, conditions and restrictions on Restricted Stock as it may
deem advisable, including without limitation providing for vesting upon the
achievement of specified performance goals pursuant to a Performance Award and
restrictions under applicable Federal or state securities laws. A Participant
shall not be required to make any payment for Restricted Stock unless required
by the Committee pursuant to Section 9.2.

9.2 Purchased Restricted Stock. The Committee may in its sole discretion require
a Participant to pay a stipulated purchase price for each share of Restricted
Stock.

9.3 Restricted Period. At the time an Award of Restricted Stock is granted, the
Committee shall establish a Restricted Period applicable to such Restricted
Stock. Each Award of Restricted Stock may have a different Restricted Period in
the sole discretion of the Committee.

9.4 Other Terms and Conditions. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. Restricted Stock
awarded to a Participant under the Plan shall be registered in the name of the
Participant or, at the option of GeoMet, in the name of a nominee of GeoMet, and
shall be issued in book-entry form or represented by a stock certificate.
Subject to the terms and conditions of the Award Agreement, a Participant to
whom Restricted Stock has been awarded shall have the right to receive dividends
thereon during the Restricted Period, to vote the Restricted Stock and to enjoy
all other stockholder rights with respect thereto, except that (a) GeoMet shall
retain custody of any certificates evidencing the Restricted Stock during the
Restricted Period, and (b) the Participant may not sell, transfer, pledge,
exchange, hypothecate or otherwise dispose of the Restricted Stock during the
Restricted Period. A breach of the terms and conditions established by the
Committee pursuant to the Award of the Restricted Stock may result in a
forfeiture of the Restricted Stock. At the time of an Award of Restricted Stock,
the Committee may, in its sole discretion, prescribe additional terms,
conditions, restrictions and limitations applicable to the Restricted Stock,
including without limitation rules pertaining to the termination of employment
or service (by reason of death, permanent and total disability, retirement,
cause or otherwise) of a Participant prior to expiration of the Restricted
Period.

 

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9.5 Miscellaneous. Nothing in this Article shall prohibit the exchange of shares
of Restricted Stock pursuant to a plan of merger or reorganization for stock or
other securities of GeoMet or another corporation that is a party to the
reorganization, provided that the stock or securities so received in exchange
for shares of Restricted Stock shall, except as provided in Article XIII, become
subject to the restrictions applicable to such Restricted Stock. Any shares of
Common Stock received as a result of a stock split or stock dividend with
respect to shares of Restricted Stock shall also become subject to the
restrictions applicable to such Restricted Stock.

ARTICLE X. RESTRICTED STOCK UNITS

10.1 General. Awards may be granted in the form of Restricted Stock Units in
such numbers and at such times as the Committee shall determine. The Committee
shall impose such terms, conditions and restrictions on Restricted Stock Units
as it may deem advisable, including without limitation prescribing the period
over which and the conditions upon which a Restricted Stock Unit may become
vested or be forfeited, and providing for vesting upon the achievement of
specified performance goals pursuant to a Performance Award. Upon the lapse of
restrictions with respect to each Restricted Stock Unit, the Participant shall
be entitled to receive from the Company one share of Common Stock or an amount
of cash equal to the Fair Market Value of one share of Common Stock, as provided
in the Award Agreement. A Participant shall not be required to make any payment
for Restricted Stock Units.

10.2 Restricted Period. At the time an Award of Restricted Stock Units is
granted, the Committee shall establish a Restricted Period applicable to such
Restricted Stock Units. Each Award of Restricted Stock Units may have a
different Restricted Period in the sole discretion of the Committee.

10.3 Cash Dividend Rights and Dividend Unit Rights. To the extent provided by
the Committee in its sole discretion, a grant of Restricted Stock Units may
include a tandem Cash Dividend Right or Dividend Unit Right grant. A grant of
Cash Dividend Rights may provide that such Cash Dividend Rights shall be paid
directly to the Participant at the time of payment of related dividend, be
credited to a bookkeeping account subject to the same vesting and payment
provisions as the tandem Award (with or without interest in the sole discretion
of the Committee), or be subject to such other provisions or restrictions as
determined by the Committee in its sole discretion. A grant of Dividend Unit
Rights may provide that such Dividend Unit Rights shall be subject to the same
vesting and payment provisions as the tandem Award or be subject to such other
provisions and restrictions as determined by the Committee in its sole
discretion.

10.4 Other Terms and Conditions. At the time of an Award of Restricted Stock
Units, the Committee may, in its sole discretion, prescribe additional terms,
conditions, restrictions and limitations applicable to the Restricted Stock
Units, including

 

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without limitation rules pertaining to the termination of employment or service
(by reason of death, permanent and total disability, retirement, cause or
otherwise) of a Participant prior to expiration of the Restricted Period.

ARTICLE XI. PERFORMANCE AWARDS

11.1 General. Awards may be granted in the form of Performance Awards that may
be payable in the form of cash, shares of Common Stock, or a combination of
both, in such amounts and at such times as the Committee shall determine.
Performance Awards shall be conditioned upon the level of achievement of one or
more stated performance goals over a specified performance period that shall not
be shorter than one year. Performance Awards may be combined with other Awards
to impose performance criteria as part of the terms of such other Awards.

11.2 Terms and Conditions. Each Award Agreement embodying a Performance Award
shall set forth (a) the amount, including a target and maximum amount if
applicable, a Participant may earn in the form of cash or shares of Common Stock
or a formula for determining such amount, (b) the performance criteria and level
of achievement versus such criteria that shall determine the amount payable or
number of shares of Common Stock to be granted, issued, retained and/or vested,
(c) the performance period over which performance is to be measured, (d) the
timing of any payments to be made, (e) restrictions on the transferability of
the Award, and (f) such other terms and conditions as the Committee may
determine that are not inconsistent with the Plan.

11.3 Code Section 162(m) Requirements. From and after the date on which
remuneration paid pursuant to the Plan becomes subject to the deduction
limitation of Section 162(m) of the Code, the Committee shall determine in its
sole discretion whether all or any portion of a Performance Award shall be
intended to satisfy the requirements for “performance-based compensation” under
Section 162(m) of the Code (the “162(m) Requirements”). The performance criteria
for any Performance Award that is intended to satisfy the 162(m) Requirements
shall be established in writing by the Committee based on one or more
performance goals as set forth in Section 11.4 not later than 90 days after
commencement of the performance period with respect to such Award, provided that
the outcome of the performance in respect of the goals remains substantially
uncertain as of such time. The maximum amount that may be paid in cash pursuant
to Performance Awards granted to a Participant with respect to a GeoMet’s fiscal
year that are intended to satisfy the 162(m) Requirements is $1,000,000;
provided, however, that such maximum amount with respect to a Performance Award
that provides for a performance period longer than one fiscal year shall be the
foregoing limit multiplied by the number of full fiscal years in the performance
period. At the time of the grant of a Performance Award and to the extent
permitted under Code Section 162(m) and regulations thereunder for a Performance
Award intended to satisfy the 162(m) Requirements, the Committee may provide for
the manner in which the performance goals will be measured in light of specified
corporate transactions, extraordinary events, accounting changes and other
similar occurrences.

 

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11.4 Performance Goals. The performance measure(s) to be used for purposes of
Performance Awards may be described in terms of objectives that are related to
the individual Participant or objectives that are Company-wide or related to a
subsidiary, division, department, region, function or business unit of the
Company in which the Participant is employed or with respect to which the
Participant performs services, and may consist of one or more or any combination
of the following criteria, or such other relevant criteria as the Committee may
determine: (a) earnings or earnings per share (whether on a pre-tax, after-tax,
operational or other basis), (b) return on equity, (c) return on assets or net
assets, (d) return on capital or invested capital and other related financial
measures, (e) cash flow or EBITDA (measured as the Committee may determine),
(f) revenues, (g) income or operating income, (h) expenses or costs or expense
levels or cost levels (absolute or per unit), (i) one or more operating ratios,
(j) stock price, (k) total stockholder return, (l) operating profit, (m) profit
margin, (n) capital expenditures, (o) net borrowing, debt leverage levels,
credit quality or debt ratings, (p) the accomplishment of mergers, acquisitions,
dispositions, public offerings or similar extraordinary business transactions,
(q) net asset value per share, (r) economic value added, (s) individual business
objectives, (t) growth in production, (u) growth in reserves, (v) reserve
replacement ratio and (w) finding and development cost per unit. The performance
goals based on these performance measures may be made relative to the
performance of other business entities.

11.5 Certification and Negative Discretion. Prior to the payment of any
compensation pursuant to a Performance Award that is intended to satisfy the
162(m) Requirements, the Committee shall certify the extent to which the
performance goals and other material terms of the Award have been achieved or
satisfied. The Committee in its sole discretion shall have the authority to
reduce, but not to increase, the amount payable and the number of shares to be
granted, issued, retained or vested pursuant to a Performance Award.

ARTICLE XII. STOCK AWARDS AND OTHER INCENTIVE AWARDS

12.1 Stock Awards. Stock Awards may be granted to Participants upon such terms
and conditions as the Committee may determine. Shares of Common Stock issued
pursuant to Stock Awards may be issued for cash consideration or for no cash
consideration. The Committee shall determine the number of shares of Common
Stock to be issued pursuant to a Stock Award.

12.2 Other Incentive Awards. Other Incentive Awards may be granted in such
amounts, upon such terms and at such times as the Committee shall determine.
Other Incentive Awards may be granted based upon, payable in or otherwise
related to, in whole or in part, shares of Common Stock if the Committee, in its
sole discretion, determines that such Other Incentive Awards are consistent with
the purposes of the Plan. Each grant of an Other Incentive Award shall be
evidenced by an Award Agreement that shall specify the amount of the Other
Incentive Award and the terms, conditions, restrictions and limitations
applicable to such Award. Payment of Other Incentive Awards shall be made at
such times and in such form, which may be cash, shares of Common Stock or other
property (or a combination thereof), as established by the Committee, subject to
the terms of the Plan.

 

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ARTICLE XIII. CORPORATE CHANGE

13.1 Vesting of Awards. Except as provided otherwise below in this Article or in
an Award Agreement at the time an Award is granted, notwithstanding anything to
the contrary in this Plan, if a Participant’s employment or service with the
Company is terminated for any reason other than death, Cause or Inability to
Perform or if a Participant voluntarily terminates employment or service for
Good Reason, in either case within the one-year period following a Corporate
Change of GeoMet, any time periods, conditions or contingencies relating to the
exercise or realization of, or lapse of restrictions under, any Award shall be
automatically accelerated or waived so that:

(a) if no exercise of the Award is required, the Award may be realized in full
at the time of the occurrence of the Participant’s termination of employment or
service; or

(b) if exercise of the Award is required, the Award may be exercised in full
commencing on the date of the Participant’s termination of employment or
service;

provided, however, that with respect to any Award that consists of deferred
compensation within the meaning of Section 409A of the Code, such Participant’s
termination of employment must constitute a “separation from service” within the
meaning of Section 409A of the Code and Treasury guidance and regulations
thereunder; provided, further, that delivery of payment upon separation from
service to a Participant who is a “specified employee” (as defined in Code
Section 409A and the regulations thereunder) as of the date of his or her
separation from service shall be delayed for a period of six months after the
Participant’s separation from service (or, if earlier than the end of the
six-month period, the date of death of the Participant). Notwithstanding the
foregoing, except as permissible under Section 409A of the Code and Treasury
guidance and regulations thereunder, the time of payment provisions in this
Section 13.1 shall not apply to any Award that consists of deferred compensation
within the meaning of Section 409A of the Code if application of such provisions
would change the time of payment set out in the Award.

13.2 Replacement Awards. In the event all outstanding Awards are replaced in
connection with a Corporate Change by comparable types of awards of at least
substantially equivalent value, as determined by the Committee in its sole
discretion, such replacement awards shall provide for automatic acceleration or
waiver as provided in Section 13.1 in the event of a Participant’s involuntary
termination of employment or service with the Company other than for Cause,
death or Inability to Perform, or voluntary termination of employment or service
for Good Reason, as applicable, within the one-year period following the
Corporate Change of GeoMet.

 

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13.3 Cancellation of Awards. Notwithstanding the foregoing, on or prior to the
date of a Corporate Change, the Committee may take any of the following actions
with respect to all outstanding Awards, without the consent of any Participant:
(a) the Committee may require that Participants surrender their outstanding
Options and SARs in exchange for payment by the Company, in cash, Common Stock,
the securities of another company, or a combination thereof, as determined by
the Committee, in an amount equal to the amount, if any, by which the then Fair
Market Value of the shares of Common Stock subject to the Participant’s
unexercised Options and SARs exceeds the exercise price or grant price, and
(b) with respect to Participants holding Restricted Stock, Restricted Stock
Units, Performance Awards or Other Incentive Awards, and related Cash Dividend
Rights and Dividend Unit Rights (if applicable), the Committee may determine
that such Participants shall receive payment in settlement of such Awards (and
dividend rights), in an amount equivalent to the value of such Awards (and
dividend rights) at the time of such settlement; provided, however, that except
as permissible under Section 409A of the Code and Treasury guidance and
regulations thereunder, this Section 13.3 shall not apply to change the time of
payment set out in any Award that consists of deferred compensation within the
meaning of Section 409A of the Code.

ARTICLE XIV. AMENDMENT AND TERMINATION

14.1 Plan Amendment and Termination. The Board may at any time suspend,
terminate, amend or modify the Plan, in whole or in part; provided, however,
that no amendment or modification of the Plan shall become effective without the
approval of such amendment or modification by the holders of at least a majority
of the shares of Common Stock if (a) such amendment or modification increases
the maximum number of shares subject to the Plan (except as provided in Article
IV) or changes the designation or class of persons eligible to receive Awards
under the Plan, or (b) counsel for GeoMet determines that such approval is
otherwise required by or necessary to comply with applicable law or the listing
requirements of NASDAQ or such other exchange or association on which the Common
Stock is then listed or quoted. An amendment to the Plan shall not require
stockholder approval if it curtails rather than expands the scope of the Plan,
nor if it is made to conform the Plan to new statutory or regulatory
requirements that arise after submission of the Plan to stockholders for their
approval, such as, without limitation, changes to Code Section 409A, or
regulations issued thereunder. Upon termination of the Plan, the terms and
provisions of the Plan shall, notwithstanding such termination, continue to
apply to Awards granted prior to such termination. Except as otherwise provided
herein, no suspension, termination, amendment or modification of the Plan shall
adversely affect in any material way any Award previously granted under the
Plan, without the consent of the Participant (or the Permitted Transferee)
holding such Award. Notwithstanding the foregoing, GeoMet may amend any Award
Agreement to be exempt from Code Section 409A or to comply with the requirements
of Code Section 409A or to modify any provision that causes an Award that is
intended to be classified as an “equity instrument” under FAS 123R to be
classified as a liability on GeoMet’s financial statements.

 

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14.2 Award Amendment and Cancellation. The Committee may amend the terms of any
outstanding Award granted pursuant to the Plan, but except as otherwise provided
herein, no such amendment shall adversely affect in any material way the
Participant’s (or a Permitted Transferee’s) rights under an outstanding Award
without the consent of the Participant (or the Permitted Transferee) holding
such Award.

ARTICLE XV. MISCELLANEOUS

15.1 Award Agreements. After the Committee grants an Award under the Plan to a
Participant, GeoMet and the Participant shall enter into an Award Agreement
setting forth the terms, conditions, restrictions and limitations applicable to
the Award and such other matters as the Committee may determine to be
appropriate. The Committee may permit or require a Participant to defer receipt
of the payment of cash or the delivery of shares of Common Stock that would
otherwise be due to the Participant in connection with any Award; provided,
however, that any permitted deferrals shall be structured to meet the
requirements of Section 409A of the Code and regulations thereunder. Awards that
are not paid currently shall be recorded as payable on GeoMet’s records for the
Plan. The terms and provisions of the respective Award Agreements need not be
identical. All Award Agreements shall be subject to the provisions of the Plan,
and in the event of any conflict between an Award Agreement and the Plan, the
terms of the Plan shall govern. All Awards under the Plan are intended to be
structured in a manner that will either comply with or be exempt from
Section 409A of the Code.

15.2 Listing; Suspension.

(a) As long as the Common Stock is listed on a national securities exchange or
system sponsored by a national securities association, the issuance of any
shares of Common Stock pursuant to an Award shall be conditioned upon such
shares being listed on such exchange or system. GeoMet shall have no obligation
to issue such shares unless and until such shares are so listed, and the right
to exercise any Option or other Award with respect to such shares shall be
suspended until such listing has been effected.

(b) If at any time counsel to GeoMet or its Affiliates shall be of the opinion
that any sale or delivery of shares of Common Stock pursuant to an Award is or
may in the circumstances be unlawful or result in the imposition of excise taxes
on GeoMet or its Affiliates under the laws of any applicable jurisdiction,
GeoMet or its Affiliates shall have no obligation to make such sale or delivery,
or to make any application or to effect or to maintain any qualification or
registration under the Securities Act, or otherwise, with respect to shares of
Common Stock or Awards, and the right to exercise any Option or other Award
shall be suspended until, in the opinion of such counsel, such sale or delivery
shall be lawful or will not result in the imposition of excise taxes on GeoMet
or its Affiliates.

 

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(c) Upon termination of any period of suspension under this Section, any Award
affected by such suspension that shall not then have expired or terminated shall
be reinstated as to all shares available before such suspension and as to shares
that would otherwise have become available during the period of such suspension,
but no such suspension shall extend the term of any Award unless otherwise
determined by the Committee in its sole discretion.

15.3 Additional Conditions. Notwithstanding anything in the Plan to the
contrary: (a) the Committee may, if it shall determine it necessary or desirable
in its sole discretion, at the time of grant of any Award or the issuance of any
shares of Common Stock pursuant to any Award, require the recipient of the Award
or such shares of Common Stock, as a condition to the receipt thereof, to
deliver to GeoMet a written representation of present intention to acquire the
Award or such shares of Common Stock for his own account for investment and not
for distribution, (b) the certificate for shares of Common Stock issued to a
Participant may include any legend that the Committee deems appropriate to
reflect any restrictions on transfer, and (c) all certificates for shares of
Common Stock delivered under the Plan shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the SEC, any stock exchange or
association upon which the Common Stock is then listed or quoted, any applicable
federal or state securities law, and any applicable corporate law, and the
Committee may cause a legend or legends to be placed on any such certificates to
make appropriate reference to such restrictions.

15.4 Transferability.

(a) All Awards granted to a Participant shall be exercisable during his lifetime
only by such Participant, or if applicable, a Permitted Transferee as provided
in subsection (c) of this Section; provided, however, that in the event of a
Participant’s legal incapacity, an Award may be exercised by his guardian or
legal representative. When a Participant dies, the personal representative,
beneficiary, or other person entitled to succeed to the rights of the
Participant may acquire the rights under an Award. Any such successor must
furnish proof satisfactory to GeoMet of the successor’s entitlement to receive
the rights under an Award under the Participant’s will or under the applicable
laws of descent and distribution.

(b) Except as otherwise provided in this Section, no Award shall be subject to
execution, attachment or similar process, and no Award may be sold, transferred,
pledged, exchanged, hypothecated or otherwise disposed of, other than by will or
pursuant to the applicable laws of descent and distribution. Any attempted sale,
transfer, pledge, exchange, hypothecation or other disposition of an Award not
specifically permitted by the Plan or the Award Agreement shall be null and void
and without effect.

(c) If provided in the Award Agreement, Nonqualified Stock Options may be
transferred by a Participant to a Permitted Transferee. For purposes of the

 

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Plan, “Permitted Transferee” means (i) a member of a Participant’s immediate
family, (ii) any person sharing the Participant’s household (other than a tenant
or employee of the Participant), (iii) trusts in which a person listed in (i) or
(ii) above has more than 50% of the beneficial interest, (iv) a foundation in
which the Participant or a person listed in (i) or (ii) above controls the
management of assets, (v) any other entity in which the Participant or a person
listed in (i) or (ii) above owns more than 50% of the voting interests, provided
that in the case of the preceding clauses (i) through (v), no consideration is
provided for the transfer, and (vi) any transferee permitted under applicable
securities and tax laws as determined by counsel to GeoMet. In determining
whether a person is a “Permitted Transferee,” immediate family members shall
include a Participant’s child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships.

(d) Incident to a Participant’s divorce, the Participant may request that GeoMet
agree to observe the terms of a domestic relations order which may or may not be
part of a qualified domestic relations order (as defined in Code Section 414(p))
with respect to all or a part of one or more Awards made to the Participant
under the Plan. GeoMet’s decision regarding such a request shall be made by the
Committee, in its sole and absolute discretion, based upon the best interests of
GeoMet. The Committee’s decision need not be uniform among Participants. As a
condition of participation, a Participant agrees to hold GeoMet harmless from
any claim that may arise out of GeoMet’s observance of the terms of any such
domestic relations order.

15.5 Withholding Taxes. The Company shall be entitled to deduct from any payment
made under the Plan, regardless of the form of such payment, the amount of all
applicable income and employment taxes required by law to be withheld with
respect to such payment, may require the Participant to pay to the Company such
withholding taxes prior to and as a condition of the making of any payment or
the issuance or delivery of any shares of Common Stock under the Plan, and shall
be entitled to deduct from any other compensation payable to the Participant any
withholding obligations with respect to Awards. In accordance with any
applicable administrative guidelines it establishes, the Committee may allow a
Participant to pay the amount of taxes required by law to be withheld from or
with respect to an Award by (a) withholding shares of Common Stock from any
payment of Common Stock due as a result of such Award, or (b) permitting the
Participant to deliver to the Company previously acquired shares of Common
Stock, in each case having an aggregate Fair Market Value equal to the amount of
such required withholding taxes. No payment shall be made and no shares of
Common Stock shall be issued pursuant to any Award unless and until the
applicable tax withholding obligations have been satisfied.

15.6 No Fractional Shares. No fractional shares of Common Stock shall be issued
or delivered pursuant to the Plan or any Award granted hereunder, provided that
the Committee in its sole discretion may round fractional shares down to the
nearest whole share or settle fractional shares in cash.

 

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15.7 Notices. All notices required or permitted to be given or made under the
Plan or pursuant to any Award Agreement (unless provided otherwise in such Award
Agreement) shall be in writing and shall be deemed to have been duly given or
made if (a) delivered personally, (b) transmitted by first class registered or
certified United States mail, postage prepaid, return receipt requested,
(c) sent by prepaid overnight courier service, or (d) sent by telecopy or
facsimile transmission, with confirmation receipt, to the person who is to
receive it at the address that such person has theretofore specified by written
notice delivered in accordance herewith. Such notices shall be effective (a) if
delivered personally or sent by courier service, upon actual receipt by the
intended recipient, (b) if mailed, upon the earlier of five days after deposit
in the mail or the date of delivery as shown by the return receipt therefor, or
(c) if sent by telecopy or facsimile transmission, when the answer back is
received. GeoMet or a Participant may change, at any time and from time to time,
by written notice to the other, the address that it or such Participant had
theretofore specified for receiving notices. Until such address is changed in
accordance herewith, notices hereunder or under an Award Agreement shall be
delivered or sent (a) to a Participant at his address as set forth in the
records of the Company or (b) to GeoMet at the principal executive offices of
GeoMet clearly marked “Attention: General Counsel.”

15.8 Compliance with Law and Stock Exchange or Association Requirements. In
addition, it is the intent of GeoMet that Options designated Incentive Stock
Options comply with the applicable provisions of Section 422 of the Code, and
that Awards intended to constitute “qualified performance-based awards” comply
with the applicable provisions of Section 162(m) of the Code and that any
deferral of the receipt of the payment of cash or the delivery of shares of
Common Stock that the Committee may permit or require, and all Awards either be
exempt from Code section 409A or, if not exempt, comply with the requirements of
Section 409A of the Code. To the extent that any legal requirement of Section 16
of the Exchange Act or Sections 422, 162(m) or 409A of the Code as set forth in
the Plan ceases to be required under Section 16 of the Exchange Act or Sections
422, 162(m) or 409A of the Code, that Plan provision shall cease to apply. Any
provision of this Plan to the contrary notwithstanding, the Committee may revoke
any Award if it is contrary to law, governmental regulation, or stock exchange
or association requirements or modify an Award to bring it into compliance with
any government regulation or stock exchange or association requirements. The
Committee may agree to limit its authority under this Section.

15.9 California Blue Sky Laws. Prior to the effective registration of the Common
Stock under Section 12 of the Exchange Act, (a) GeoMet shall deliver a balance
sheet and an income statement at least annually to each Participant who performs
services in the State of California, unless such Participant is a key employee
whose duties in connection with the Company assure such Participant access to
equivalent information, (b) the Committee may not impose upon any Award grant
made to a Participant who performs services in the State of California a vesting
schedule that is more restrictive than 20 percent per year vesting, with the
initial vesting to occur not later than one year after

 

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the Award’s grant date; provided, however, that such vesting limitation shall
not be applicable to any Award grants made to individuals who are officers of
GeoMet, and (c) with respect to California Participants (including any
individual whose Award is based in whole or in part on services performed in
California), the Plan shall otherwise be administered in accordance with
California Corporations Code Section 25102(o) and California Code of
Regulations, Title 10, Sections 260.140.41, 260.140.42, 260.140.45, and
260.140.46.

15.10 Binding Effect. The obligations of GeoMet under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of GeoMet, or upon any successor
corporation or organization succeeding to all or substantially all of the assets
and business of GeoMet. The terms and conditions of the Plan shall be binding
upon each Participant and his Permitted Transferees, heirs, legatees,
distributees and legal representatives.

15.11 Severability. If any provision of the Plan or any Award Agreement is held
to be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the Plan or such agreement, as the case may
be, but such provision shall be fully severable and the Plan or such agreement,
as the case may be, shall be construed and enforced as if the illegal or invalid
provision had never been included herein or therein.

15.12 No Restriction of Corporate Action. Nothing contained in the Plan shall be
construed to prevent GeoMet or any Affiliate from taking any corporate action
(including any corporate action to suspend, terminate, amend or modify the Plan)
that is deemed by GeoMet or such Affiliate to be appropriate or in its best
interest, whether or not such action would have an adverse effect on the Plan or
any Awards made or to be made under the Plan. No Participant or other person
shall have any claim against GeoMet or any Affiliate as a result of such action.

15.13 Governing Law. The Plan shall be governed by and construed in accordance
with the internal laws (and not the principles relating to conflicts of laws) of
the State of Texas except as superseded by applicable federal law.

15.14 No Right, Title or Interest in Company Assets. No Participant shall have
any rights as a stockholder of GeoMet as a result of participation in the Plan
until the date of issuance of Common Stock in his name and, in the case of
Restricted Stock, unless and until such rights are granted to the Participant
pursuant to the Plan. To the extent any person acquires a right to receive
payments from the Company under the Plan, such rights shall be no greater than
the rights of an unsecured general creditor of the Company, and such person
shall not have any rights in or against any specific assets of the Company. All
Awards shall be unfunded.

15.15 Risk of Participation. Nothing contained in the Plan shall be construed
either as a guarantee by GeoMet or the Affiliates, or their respective
stockholders, directors, officers or employees, of the value of any assets of
the Plan or as an agreement by GeoMet or the Affiliates, or their respective
stockholders, directors, officers or employees, to indemnify anyone for any
losses, damages, costs or expenses resulting from participation in the Plan.

 

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15.16 No Guarantee of Tax Consequences. No person connected with the Plan in any
capacity, including without limitation GeoMet and the Affiliates and their
respective directors, officers, agents and employees, makes any representation,
commitment or guarantee that any tax treatment, including without limitation
federal, state and local income, estate and gift tax treatment, will be
applicable with respect to any Awards or payments thereunder made to or for the
benefit of a Participant under the Plan or that such tax treatment will apply to
or be available to a Participant on account of participation in the Plan.

15.17 Continued Employment or Service. Nothing contained in the Plan or in any
Award Agreement shall confer upon any Participant the right to continue in the
employ or service of the Company, or interfere in any way with the rights of the
Company to terminate a Participant’s employment or service at any time, with or
without cause. The loss of existing or potential profit in Awards will not
constitute an element of damages in the event of termination of employment or
service for any reason, even if the termination is in violation of an obligation
of GeoMet or an Affiliate to the Participant.

15.18 Miscellaneous. Headings are given to the articles and sections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction of the Plan or any
provisions hereof. The use of the masculine gender shall also include within its
meaning the feminine. Wherever the context of the Plan dictates, the use of the
singular shall also include within its meaning the plural, and vice versa.

15.19 Participating Affiliates. With the consent of the Committee, any Affiliate
that is not considered a single employer with GeoMet under Code Section 414(b)
or Code Section 414(c) may adopt the Plan for the benefit of its Employees by
written instrument delivered to the Committee before the grant to the
Affiliate’s Employees under the Plan of any Award subject to Code Section 409A.

IN WITNESS WHEREOF, this amended and restated Plan has been executed as of the
Restatement Effective Date.

 

GEOMET, INC. By:  

/s/ J. Darby Seré

Name:   J. Darby Seré Title:   President and Chief Executive Officer

 

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