|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | STOCK OPTION PLAN                      
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|1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Purpose                                
|The purpose of the Stock Option Plan (the "Amended 2002 Plan") of Birch
    Mountain Resources Ltd., a corporation incorporated under the Business
    Corporations Act (Alberta) (the "Corporation"), is to advance the interests
    of the Corporation by encouraging the directors, senior officers, employees
    and consultants of the Corporation, and of its subsidiaries, if any, to
    acquire common shares in the share capital of the Corporation, thereby
    increasing their proprietary interest in the Corporation, encouraging them
    to remain associated with the Corporation and furnishing them with
    additional incentive in their efforts on behalf of the Corporation in the
    conduct of its affairs.
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|2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Administration                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | (a)                                    
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|3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Stock Exchange Rules                   
|All options granted pursuant to this Amended 2002 Plan shall be subject to
    rules and policies of any stock exchange or exchanges on which the common
    shares of the Corporation are then listed and any other regulatory body
    having jurisdiction hereinafter (hereinafter collectively referred to as,
    the "Exchange").                                                                                                                                                                                                                                                                                                                                                                                                  
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|4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Shares Subject to Amended 2002
    Plan
|Subject to adjustment as provided in Section 15 hereof, the shares to be
    offered under the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



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|Amended 2002 Plan shall consist of
    common shares of the Corporation's authorized but unissued common shares ("Shares"). The
    aggregate number of Shares issuable upon the exercise of all options granted
    under the Amended 2002 Plan shall not exceed 3,735,211 Shares. If any option
    granted hereunder shall expire or terminate for any reason in accordance
    with the terms of the Amended 2002 Plan without being exercised, the
    unpurchased Shares subject thereto shall again be available for the purpose
    of this Amended 2002 Plan.
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|5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The Corporation shall at all times during the term of the Amended 2002 Plan
    reserve and keep available such numbers of Shares as will be sufficient to
    satisfy the requirements of the Amended 2002 Plan.                                                                                                                                                                                                                                                                                                                                                     
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|6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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|7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                              | the exercise price of an option may be reduced
    only if disinterested shareholder approval is obtained.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
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|8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Number of Optioned Shares                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (a)                                          | The number of Shares subject to an
    option granted to any one Participant shall be determined by the Board, but
    no one Participant shall be granted an option which exceeds the maximum
    number permitted by the Exchange.                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (b)                                          | No single Participant may be
    granted options to purchase a number of Shares equaling more than 5% of the
    issued Shares of the Corporation in any one twelve-month period unless the
    Corporation has obtained the requisite disinterested shareholder approval
    and meets applicable Exchange requirements.                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (c)                                          | Options shall not be granted if the
    exercise thereof would result in the issuance of more than 2% of the issued
    Shares of the Corporation in any one twelve month period to any one
    consultant of the Corporation (or its subsidiaries or affiliates).                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (d)                                          | Options shall not be granted if the
    exercise thereof would result in the issuance of more than 2% of the issued
    Shares of the Corporation in any one twelve-month period to persons employed
    to provide investor relations activities (as such terms are defined in the
    policies of the Exchange) for the Corporation. Options granted to
    consultants performing investor relations activities for the Corporation
    will contain vesting provisions such that vesting occurs over at least 12
    months with no more than 1⁄4 of the options vesting in any 3 month period.
|9.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Duration of Option                          
|Each option and all rights thereunder shall be expressed to expire on the
    date set out in the option agreement and shall be subject to earlier
    termination as provided in Sections 11 and 12, provided that in no
    circumstance shall the duration of an option exceed the maximum term
    permitted by the Exchange. For greater certainty, if the Corporation is
    listed on the TSX Venture Exchange Inc. ("TSX-V"), the maximum term may not
    exceed 10 years if the Corporation is classified as a "Tier 1 Issuer" by the
    TSX-V, and the maximum term may not exceed 5 years if the Corporation is
    classified as a "Tier 2 Issuer" by the TSX-V.
|10.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Option Period, Consideration and
    Payment
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (a)                                          | The option period shall be a period
    of time fixed by the Board not to exceed the maximum term permitted by the
    Exchange, provided that the option period shall be reduced with respect to
    any option as provided in Sections 11 and 12 covering cessation as a
    director, senior officer, consultant, employee or Management Company
    Employee of the Corporation or its subsidiaries, or death of the
    Participant.                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (b)                                          | Subject to the policies of the
    Exchange, an option shall vest and may be exercised (in each case to the
    nearest full Share) during the option period:                                                                                                                                                                                                                                                                                                                                                                                                                                    



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|    |                                                                      | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | in the circumstance where the
    number of Shares reserved for issuance by the Board pursuant to the exercise
    of options granted is less than or equal to 10% of the number of issued and
    outstanding Shares of the Corporation, in such manner as the Board may
    determine;                                                                                                                                      
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|    |                                                                      | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | in the circumstance where the
    Corporation is classified as a Tier 2 Issuer by the TSX-V, and the number of
    Shares reserved for issuance by the Board pursuant to the exercise of
    options granted is greater than 10% of the issued and outstanding Shares of
    the Corporation, in accordance with a vesting schedule which shall be
    established by the Board and which shall be acceptable to the Exchange.
|    | (c)                                                                  | Subject to any vesting restrictions
    imposed by the Board or the Exchange, options may be exercised in whole or
    in part at any time and from time to time during the option period. To the
    extent required by the Exchange, no options may be exercised under this
    Amended 2002 Plan until this Amended 2002 Plan has been approved by a
    resolution duly passed by the shareholders of the Corporation.                                                                                                                                                                                                                                                                                                                                                     
|    | (d)                                                                  | Except as set forth in Sections 11
    and 12, no option may be exercised unless the Participant is at the time of
    such exercise a director, senior officer, consultant, or employee of the
    Corporation or any of its subsidiaries, or a Management Company Employee of
    the Corporation or any of its subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | (e)                                                                  | The exercise of any option will be
    contingent upon receipt by the Corporation at its head office of a written
    notice of exercise, specifying the number of Shares with respect to which
    the option is being exercised, accompanied by cash payment, certified cheque
    or bank draft for the full purchase price of such Shares with respect to
    which the option is exercised. No Participant or his legal representatives,
    legatees or distributees will be, or will be deemed to be, a holder of any
    Shares of the Corporation, unless and until the certificates for such Shares
    issuable pursuant to options under the Amended 2002 Plan are issued to him
    or them under the terms of the Amended 2002 Plan.                             
|11. | Ceasing To Be a Director, Senior
    Officer, Consultant or Employee
|    | (a)                                                                  | If a Participant shall cease to be
    a director, senior officer, consultant, employee or a Management Company
    Employee of the Corporation or its subsidiaries for any reason (other than
    death), such Participant may exercise his option to the extent that the
    Participant was entitled to exercise it at the date of such cessation,
    provided that such exercise must occur within 90 days after the Participant
    ceases to be a director, senior officer, consultant, employee or a
    Management Company Employee, unless such Participant was engaged in investor
    relations activities, in which case such exercise must occur within 30 days
    after the cessation of the Participant's services to the Corporation or its
    subsidiaries.
|    | (b)                                                                  | Nothing contained in the Amended
    2002 Plan, nor in any option granted pursuant to the Amended 2002 Plan,
    shall as such confer upon any Participant any right with respect to
    continuance as a director, senior officer, consultant, employee or
    Management Company Employee of the Corporation or of any of                                                                                                                                                                                                                                                                                                                                                                                                                                                    



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|                                                                                                                                                                                                                                                                                                                                                                                                    |                              | its subsidiaries or affiliates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
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|12.                                                                                                                                                                                                                                                                                                                                                                                                 | Death of Participant        
|Notwithstanding section 11, in the event of the death of a Participant, the
    option previously granted to him shall be exercisable only within the one
    (1) year after such death and then only:                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                    | (a)                          | by the person or persons to whom
    the Participant's rights under the option shall pass by the Participant's
    will or the laws of descent and distribution; and                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                    | (b)                          | if and to the extent that such
    Participant was entitled to exercise the option at the date of his death.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|13.                                                                                                                                                                                                                                                                                                                                                                                                 | Rights of Optionee          
|No person entitled to exercise any option granted under the Amended 2002
    Plan shall have any of the rights or privileges of a shareholder of the
    Corporation in respect of any Shares issuable upon exercise of such option
    until certificates representing such Shares shall have been issued and
    delivered.                                                                      
|14.                                                                                                                                                                                                                                                                                                                                                                                                 | Proceeds from Sale of Shares
|The proceeds from the sale of Shares issued upon the exercise of options
    shall be added to the general funds of the Corporation and shall thereafter
    be used from time to time for such corporate purposes as the Board may
    determine.                                                                                                                                                 
|15.                                                                                                                                                                                                                                                                                                                                                                                                 | Adjustments                 
|                                                                                                                                                                                                                                                                                                                                                                                                    | (a)                          | If the outstanding Shares of the
    Corporation are increased, decreased, changed into or exchanged for a
    different number or kind of shares or securities of the Corporation or
    another corporation or entity through re-organization, merger,
    re-capitalization, re-classification, stock dividend, subdivision or
    consolidation, any adjustments relating to the Shares optioned or issued on
    exercise of options and the exercise price per Share as set forth in the
    respective stock option agreements shall be made in accordance with the
    terms of such agreements.
|                                                                                                                                                                                                                                                                                                                                                                                                    | (b)                          | Adjustments under this Section
    shall be made by the Board whose determination as to what adjustments shall
    be made, and the extent thereof, shall be final, binding and conclusive. No
    fractional Shares shall be required to be issued under the Amended 2002 Plan
    on any such adjustment.                                                                                                                                                                                                                                                                                             
|16.                                                                                                                                                                                                                                                                                                                                                                                                 | Transferability             
|All benefits, rights and options accruing to any Participant in accordance
    with the terms and conditions of the Amended 2002 Plan shall not be
    transferable or assignable unless specifically provided herein or the
    extent, if any, permitted by the Exchange. During the lifetime of a
    Participant any benefits, rights and options may only be exercised by the
    Participant.



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|17.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Amendment and Termination of
    Amended 2002 Plan
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|Subject to applicable approval of the Exchange, the Board may, at any time,
    suspend or terminate the Amended 2002 Plan. Subject to applicable approval
    of the Exchange, the Board may also at any time amend or revise the terms of
    the Amended 2002 Plan, provided that no such amendment or revision shall
    result in a material adverse change to the terms of any options theretofore
    granted under the Amended 2002 Plan unless shareholder approval, or
    disinterested shareholder approval, as the case may be, is obtained for such
    amendment or revision.                                      
|18.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Necessary Approvals                               
|The ability of a Participant to exercise options and the obligation of the
    Corporation to issue and deliver Shares in accordance with the Amended 2002
    Plan is subject to any approvals which may be required from shareholders of
    the Corporation and any regulatory authority or stock exchange having
    jurisdiction over the securities of the Corporation. If any Shares cannot be
    issued to any Participant for whatever reason, the obligation of the
    Corporation to issue such Shares shall terminate and any option exercise
    price paid to the Corporation will be returned to the Participant.
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|19.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Effective Date of Amended 2002
    Plan           
|The Amended 2002 Plan has been adopted by the Board of the Corporation
    subject to the approval of the Exchange and, if so approved, subject to the
    discretion of the Board, the Amended 2002 Plan shall become effective upon
    such approvals being obtained.                                                                                                                                                                                                                                                                                                                                                          
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|20.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Interpretation                                    
|The Amended 2002 Plan will be governed by and construed in accordance with
    the laws of the Province of Alberta.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                   
|MADE by the Board of Directors of the Corporation as evidenced by the
    signature of the following director duly authorized in that behalf effective
    the 8th day of May, 2003 and approved by the shareholders of the Corporation
    on _____________________, 2003.                                                                                                                                                                                                                                                                                                                                                       
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