BIRCH MOUNTAIN RESOURCES LTD.



2002 STOCK OPTION PLAN



1.        Purpose

The purpose of the 2002 Stock Option Plan (the "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, officers, employees and
consultants of the Corporation, and of its subsidiaries and affiliates, to
acquire shares in 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.



2.        Administration

The Plan shall be administered by the Board of Directors of
the Corporation or by a special committee of the directors appointed from time
to time by the Board of Directors of the Corporation pursuant to rules of
procedure fixed by the Board of Directors (such committee or, if no such
committee is appointed, the Board of Directors of the Corporation is hereinafter
referred to as the "Board"). A majority of the Board shall constitute a quorum,
and the acts of a majority of the directors present at any meeting at which a
quorum is present, or acts unanimously approved in writing, shall be the acts of
the directors.



Subject to the provisions of the Plan, the Board shall have
authority to construe and interpret the Plan and all option agreements entered
into thereunder, to define the terms used in the Plan and in all option
agreements entered into thereunder, to prescribe, amend and rescind rules and
regulations relating to the Plan and to make all other determinations necessary
or advisable for the administration of the Plan. All determinations and
interpretations made by the Board shall be binding and conclusive on all
participants in the Plan and on their legal personal representatives and
beneficiaries.



Each option granted hereunder may be evidenced by an
agreement in writing, signed on behalf of the Corporation and by the optionee,
in such form as the Board shall approve. Each such agreement shall recite that
it is subject to the provisions of this Plan.



3.        Stock Exchange
Rules

All options granted pursuant to this 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 (collectively referred to as, the "Exchange"),
including any requirement to legend securities with a hold period, restricted
period or seasoning period.



4.        Shares Subject
to Plan

Subject to adjustment as provided in Section 15 hereof, the
shares to be offered under the Plan shall consist of shares of the Corporation's
authorized but unissued common shares. The aggregate number of shares issuable
upon the exercise of all options granted under the Plan shall not exceed
3,392,674 common shares. If any option granted hereunder shall expire or
terminate for any reason in accordance with the terms of the Plan without being
exercised, the unpurchased shares subject thereto shall again be available for
the purpose of this Plan.







5.        Maintenance of
Sufficient Capital

The Corporation shall at all times during the term of the
Plan reserve and keep available such numbers of shares as will be sufficient to
satisfy the requirements of the Plan.



6.        Eligibility and
Participation

Directors, officers, consultants, and employees (including
employees providing investor relations services) of the Corporation or its
subsidiaries, and employees of a person or company which provides management
services (excluding investor relations services) to the Corporation or its
subsidiaries ("Management Company Employees") shall be eligible for selection to
participate in the Plan (such persons hereinafter collectively referred to as
"Participants"). Subject to compliance with applicable requirements of the
Exchange, Participants may elect to hold options granted to them in an
incorporated entity wholly owned by them and such entity shall be bound by the
Plan in the same manner as if the options were held by the Participant.



Subject to the terms hereof, the Board shall determine to
whom options shall be granted, the terms and provisions of the respective option
agreements, the time or times at which such options shall be granted and vested,
and the number of shares to be subject to each option. In the case of employees
or consultants of the Corporation or Management Company Employees, the option
agreements to which they are party must contain a representation of the
Corporation that such employee, consultant or Management Company Employee, as
the case may be, is a bona fide employee, consultant or Management Company
Employee of the Corporation or its subsidiaries.



An individual who has been granted an option may, if he is
otherwise eligible, and if permitted under the policies of the Exchange, be
granted an additional option or options if the Board shall so determine.



7.        Exercise Price

|(a) | The exercise price of the shares subject to each option
    shall be determined by the Board, subject to applicable Exchange approval,
    at the time any option is granted. In no event shall such price be lower
    than the price permitted by the Exchange.                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Once the exercise price has been determined by the Board,
    accepted by the Exchange and the option has been granted, the exercise price
    of an option may only be reduced, in the case of options held by insiders of
    the Corporation (as defined by the Exchange), if disinterested shareholder
    approval is obtained at a meeting of the shareholders of the Corporation.

8.        Number of
Optioned Shares

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.



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.



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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 period of time 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, 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(c) | Options which have vested, 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 Plan
    until this 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, 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 common 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 common 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 subject to an option under this Plan, unless and until the
    certificates for such shares are issued to him or them under the terms of
    the Plan.

11.        Ceasing To Be a
Director, Officer, Consultant or Employee

If a Participant shall cease to be a director, officer,
consultant, employee of the Corporation or its subsidiaries, or a Management
Company Employee for any reason (other than death), he may exercise his option
to the extent that he was entitled to exercise it at the date of such cessation,
but only within 90



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days after his ceasing to be a director, officer, consultant,
employee or a Management Company Employee.



Nothing contained in the Plan, nor in any option granted
pursuant to the Plan, shall as such confer upon any Participant any right with
respect to continuance as a director, officer, consultant, employee or
Management Company Employee of the Corporation or of any of its subsidiaries or
affiliates.



12.        Death of
Participant

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 he 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
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 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

If the outstanding shares of the Corporation are increased,
decreased, changed into or exchanged for a different number or kind of shares of
securities of the Corporation through re-organization, merger,
re-capitalization, re-classification, stock dividend, subdivision or
consolidation, an appropriate and proportionate adjustment shall be made by the
Board in its discretion in the number or kind of shares optioned and the
exercise price per share, as regards previously granted and unexercised options
or portions thereof, and as regards options which may be granted subsequent to
any such change in the Corporation's capital.



Upon the liquidation or dissolution of the Corporation or
upon a re-organization, merger or consolidation of the Corporation with one or
more corporations as a result of which the Corporation is not the surviving
corporation, or upon the sale of substantially all of the property or more than
eighty (80%) percent of the then outstanding shares of the Corporation to
another corporation, the Plan shall terminate, and any options theretofore
granted hereunder shall terminate unless provision is made in writing in
connection with such transaction for the continuance of the Plan and for the
assumption of options theretofore granted, or the substitution for such options
of new options covering the shares of a successor employer corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to number and kind
of shares and exercise prices, in which event the Plan and options theretofore
granted shall continue in the manner and upon the terms so provided. If the Plan
and unexercised options shall terminate pursuant to the foregoing sentence, the
shares subject to all options granted shall immediately vest and all
Participants then entitled to exercise an unexercised portion of options then
outstanding shall have the



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right at such time immediately prior to consummation of the
event which results in the termination of the Plan as the Corporation shall
designate, to exercise their options to the full extent not theretofore
exercised.



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 share shall be
required to be issued under the 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 Plan shall not be
transferrable 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.



17.        Amendment and
Termination of Plan

Subject to applicable approval of the Exchange, the Board
may, at any time, suspend or terminate the Plan. Subject to applicable approval
of the Exchange, the Board may also at any time amend or revise the terms of the
Plan, Provided that no such amendment or revision shall alter the terms of any
options theretofore granted under the Plan.



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
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.



19.        Effective Date
of Plan

The Plan has been adopted by the Board of the Corporation
subject to the approval of the Exchange and, if so approved, the Plan shall
become effective upon such approvals being obtained.



20.        Interpretation

The 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 March 27, 2002.







| | BIRCH MOUNTAIN RESOURCES LTD.        
| | -------------------------------------
| | Per: /s/ Douglas J. Rowe             
| | Douglas J. Rowe,                     
| | President and Chief Executive Officer

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