Exhibit 4.1










	






Exhibit
4.1 




AMERICAN
INTERNATIONAL PETROLEUM CORPORATION
2001 LONG-TERM PERFORMANCE PLAN



1. Objectives. 



The American International
Petroleum Corporation 2001 Long-Term Performance Plan (the “Plan”) is
designed to attract, motivate and retain selected employees of, and other
individuals providing services to, American International Petroleum Corporation
(the “Company”). These objectives are accomplished by making long-term
incentive and other awards under the Plan, thereby providing Participants with a
proprietary interest in the growth and performance of the Company. 



2. Definitions. 



(a) “Awards”
— The grant of any form of stock option, stock appreciation right, stock or
cash award, whether granted singly, in combination or in tandem, to a
Participant pursuant to such terms, conditions, performance requirements,
limitations and restrictions as the Committee may establish in order to fulfill
the objectives of the Plan. 



(b) “Award
Agreement” — An agreement between the Company and a Participant that
sets forth the terms, conditions, performance requirements, limitations and
restrictions applicable to an Award. 



(c) “Board” — The Board of Directors
of American International Petroleum Corporation. 



(d) “Capital Stock” or
“stock” — Authorized and issued or unissued Capital Stock of the Company, at
such par value as may be established from time to time.  



(e) “Code” — The
Internal Revenue Code of 1986, as amended from time to time.  



(f) “Committee” — The committee
designated by the Board to administer the Plan. 



(g) “Company” — American
International Petroleum Corporation and its subsidiaries. 



(h) “Fair Market Value” — The
average of the high and low prices of Capital Stock on the Nasdaq SmallCap Market or
other principal stock exchange or automated quotation service (including the OTC Bulletin
Board) on which the Capital Stock is then listed or quoted for the date in question,
provided that, if no sales of Capital Stock were made on said exchange or automated
quotation service on that date, the average of the high and low prices of Capital Stock
as reported for the most recent preceding day on which sales of Capital Stock were made
on said exchange or quotation service.  



(i) “Participant” — An
individual to whom an Award has been made under the Plan. Awards may be made to any
employee of, or any other individual or entity providing services to, the Company.
However, incentive stock options may be granted only to individuals who are employed by
the Company or by a subsidiary corporation (within the meaning of section 424(f) of the
Code) of the Company, including a subsidiary that becomes such after the adoption of the
Plan.  




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(j) “Performance Period” — A
multi-year period of no more than five consecutive calendar years over which one or more
of the performance criteria listed in Section 6 shall be measured pursuant to the grant
of Long-Term Performance Incentive Awards (whether such Awards take the form of stock,
stock units or equivalents or cash). Performance Periods may overlap one another, but no
two Performance Periods may consist solely of the same calendar years.  



3. Capital Stock Available for
Awards. 



The number of shares that may be
issued under the Plan for Awards granted wholly or partly in stock during the term of the
Plan is 5,000,000. Shares of Capital Stock may be made available from the authorized but
unissued shares of the Company or from shares held in the Company’s treasury and not
reserved for some other purpose. For purposes of determining the number of shares of
Capital Stock issued under the Plan, no shares shall be deemed issued until they are
actually delivered to a Participant, or such other person in accordance with Section 10.
Shares covered by Awards that either wholly or in part are not earned, or that expire or
are forfeited, terminated, canceled, settled in cash, payable solely in cash or exchanged
for other awards, shall be available for future issuance under Awards. Further, shares
tendered to or withheld by the Company in connection with the exercise of stock options,
or the payment of tax withholding on any Award, shall also be available for future
issuance under Awards.  



4. Administration. 



The Plan shall be administered by
the Committee, which shall have full power to select Participants, to interpret the Plan,
to grant waivers of Award restrictions, to continue, accelerate or suspend
exercisability, vesting or payment of an Award and to adopt such rules, regulations and
guidelines for carrying out the Plan as it may deem necessary or proper. These powers
include, but are not limited to, the adoption of modifications, amendments, procedures,
subplans and the like as necessary to comply with provisions of the laws and regulations
of the countries in which the Company operates in order to assure the viability of Awards
granted under the Plan and to enable Participants regardless of where employed to receive
advantages and benefits under the Plan and such laws and regulations.  



5. Delegation of Authority. 



The Committee may delegate to
officers of the Company its duties, power and authority under the Plan pursuant to such
conditions or limitations as the Committee may establish, except that only the Committee
or the Board may select, and grant Awards to, Participants who are subject to Section 16
of the Securities Exchange Act of 1934.  



6. Awards. 



The Committee shall determine the
type or types of Award(s) to be made to each Participant and shall set forth in the
related Award Agreement the terms, conditions, performance requirements, and limitations
applicable to each Award. Awards may include but are not limited to those listed in this
Section 6. Awards may be granted singly, in combination or in tandem. Awards may also be
made in combination or in tandem with, in replacement or payment of, or as alternatives
to, grants, rights or compensation earned under any other plan of the Company, including
the plan of any acquired entity.  



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(a) Stock Option — A grant of a
right to purchase a specified number of shares of Capital Stock the exercise price of
which shall be not less than 100% of Fair Market Value on the date of grant of such
right, as determined by the Committee, provided that, in the case of a stock option
granted retroactively in tandem with or as substitution for another award granted under
any plan of the Company, the exercise price may be the same as the purchase or designated
price of such other award. A stock option may be in the form of an incentive stock option
(“ISO”) which, in addition to being subject to applicable terms, conditions and
limitations established by the Committee, complies with section 422 of the Code; provided
this Plan is approved by the affirmative vote of the holders of a majority of the
outstanding shares of Capital Stock entitled to vote thereon within one year before or
after adoption of the Plan by the Board of Directors. All of the shares that may be
issued under the Plan are available for issuance under ISOs granted under the Plan.  



(b) Stock Appreciation Right — A
right to receive a payment, in cash and/or Capital Stock, equal in value to the excess of
the Fair Market Value of a specified number of shares of Capital Stock on the date the
stock appreciation right (SAR) is exercised over the grant price of the SAR, which shall
not be less than 100% of the Fair Market Value on the date of grant of such SAR, as
determined by the Committee, provided that, in the case of a SAR granted retroactively in
tandem with or as substitution for another award granted under any plan of the Company,
the grant price may be the same as the exercise or designated price of such other award.  



(c) Stock Award — An Award made
in stock and denominated in units of stock. All or part of any stock award may be subject
to conditions established by the Committee, and set forth in the Award Agreement, which
may include, but are not limited to, continuous service with Company, achievement of
specific business objectives, increases in specified indices, attaining growth rates, and
other comparable measurements of Company performance. An Award made in stock or
denominated in units of stock that is subject to restrictions on transfer and/or
forfeiture provisions may be referred to as an Award of “Restricted Stock,” “Restricted
Stock Units” or “Long-Term Performance Incentive” units.  



(d) Cash Award — An Award
denominated in cash with the eventual payment amount subject to future service and such
other restrictions and conditions as may be established by the Committee, and as set
forth in the Award Agreement, including, but not limited to, continuous service with the
Company, achievement of specific business objectives, increases in specified indices,
attaining growth rates, and other comparable measurements of Company performance.  



(e) Performance Criteria under
section 162(m) of the Code for Long-Term Performance Incentive Awards — The
performance criteria for Long-Term Performance Incentive Awards (whether such Awards take
the form of stock, stock units or equivalents or cash) made to any “covered employee” (as
defined by section 162(m) of the Code) shall consist of objective tests based on one or
more of the following: earnings, cash flow, customer satisfaction, revenues, financial
return ratios, market performance, shareholder return and/or value, operating profits
(including EBITDA), net profits, earnings per share, profit returns and margins, stock
price and working capital. Performance criteria may be measured solely on a corporate,
subsidiary or business unit basis, or a combination thereof. Further, performance
criteria may reflect absolute entity performance or a relative comparison of entity
performance to the performance of a peer group of entities or other external measure of
the selected performance criteria. The formula for any Award may include or exclude items
to measure specific objectives, such as losses from discontinued operations,
extraordinary gains or losses, the cumulative effect of accounting changes, acquisitions
or divestitures, foreign exchange impacts and any unusual, nonrecurring gain or loss.
Nothing herein shall preclude the Committee from making any payments or granting any
Awards whether or not such payments or Awards qualify for tax deductibility under section
162(m) of the Code.  



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7. Payment of Awards. 



Payment of Awards may be made in the
form of cash, stock or combinations thereof and may include such restrictions, as the
Committee shall determine. Further, with Committee approval, payments may be deferred,
either in the form of installments or as a future lump-sum payment, in accordance with
such procedures as may be established from time to time by the Committee. Any deferred
payment, whether elected by the Participant or specified by the Award Agreement or the
Committee, may require the payment to be forfeited in accordance with the provisions of
Section 13. Dividends or dividend equivalent rights may be extended to and made part of
any Award denominated in stock or units of stock, subject to such terms, conditions and
restrictions as the Committee may establish. The Committee may also establish rules and
procedures for the crediting of interest on deferred cash payments and dividend
equivalents for deferred payments denominated in stock or units of stock. At the
discretion of the Committee, a Participant may be offered an election to substitute an
Award for another Award or Awards of the same or different type.  



8. Stock Option Exercise.



The price
at which shares of Capital Stock may be purchased under a stock option shall be paid in
full in cash at the time of the exercise or, if permitted by the Committee, by means of
tendering Capital Stock or surrendering another Award or any combination thereof. The
Committee shall determine acceptable methods of tendering Capital Stock or other Awards
and may impose such conditions on the use of Capital Stock or other Awards to exercise a
stock option as it deems appropriate.  



9. Tax Withholding. 



Prior to the payment or settlement
of any Award, the Participant must pay, or make arrangements acceptable to the Company
for the payment of, any and all federal, state and local tax withholding and employment
taxes that in the opinion of the Company is required by law. The Company shall have the
right to deduct applicable taxes from any Award payment and withhold, at the time of
delivery or vesting of shares under the Plan, an appropriate number of shares for payment
of taxes required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes or for payment of
employment taxes.  




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10. Transferability. 



No Award shall be transferable or
assignable, or payable to or exercisable by, anyone other than the Participant to whom it
was granted, except (i) by law, will or the laws of descent and distribution, (ii) as a
result of the disability of a Participant or (iii) that the Committee (in the form of an
Award Agreement or otherwise) may permit transfers of Awards by gift or otherwise to a
member of a Participant’s immediate family and/or trusts whose beneficiaries are
members of the Participant’s immediate family, or to such other persons or entities
as may be approved by the Committee. Notwithstanding the foregoing, in no event shall
ISOs be transferable or assignable other than by will or by the laws of descent and
distribution.  



11. Amendment, Modification,
Suspension or Discontinuance of the Plan. 



The Board may amend, modify, suspend
or terminate the Plan for the purpose of meeting or addressing any changes in legal
requirements or for any other purpose permitted by law. Subject to changes in law or
other legal requirements that would permit otherwise, the Plan may not be amended without
the consent of the holders of a majority of the shares of Capital Stock then outstanding,
to (i) increase the aggregate number of shares of Capital Stock that may be issued under
the Plan (except for adjustments pursuant to Section 14 of the Plan), or (ii) permit the
granting of stock options or SARs with exercise or grant prices lower than those
specified in Section 6.  



12. Termination of Employment. 



If the employment of a Participant
terminates, other than as a result of the death or disability of a Participant, all
unexercised, deferred and unpaid Awards shall be canceled immediately, unless the Award
Agreement provides otherwise. In the event of the death of a Participant or in the event
a Participant is deemed by the Company to be disabled and eligible for benefits under the
terms of any long-term disability plan or policy maintained by the Company, the
Participant’s estate, beneficiaries or representative, as the case may be, shall
have the rights and duties of the Participant under the applicable Award Agreement.  



13. Cancellation and Rescission of
Awards. 



(a) Unless the Award Agreement
specifies otherwise, the Committee may cancel, rescind, suspend, withhold or otherwise
limit or restrict any unexpired, unpaid, or deferred Awards at any time if the
Participant is not in compliance with all applicable provisions of the Award Agreement
and the Plan, or if the Participant engages in any “Detrimental Activity.” For
purposes of this Section 13, “Detrimental Activity” shall include: (i) the
rendering of services for any organization or engaging directly or indirectly in any
business which is or becomes competitive with the Company, or which organization or
business, or the rendering of services to such organization or business, is or becomes
otherwise prejudicial to or in conflict with the interests of the Company; (ii) the
disclosure to anyone outside the Company, or the use in other than the Company’s
business, without prior written authorization from the Company, of any confidential
information or material relating to the business of the Company, acquired by the
Participant either during or after employment with the Company; (iii) the failure or
refusal to disclose promptly and to assign to the Company all right, title and interest
in any invention or idea, patentable or not, made or conceived by the Participant during
employment by the Company, relating in any manner to the actual or anticipated business,
research or development work of the Company or the failure or refusal to do anything
reasonably necessary to enable the Company to secure a patent where appropriate in the
United States and in other countries; (iv) activity that results in termination of the
Participant’s employment for cause; (v) a violation of any rules, policies,
procedures or guidelines of the Company; (vi) any attempt directly or indirectly to
induce any employee of the Company to be employed or perform services elsewhere or any
attempt directly or indirectly to solicit the trade or business of any current or
prospective customer, supplier or partner of the Company; (vii) the Participant being
convicted of, or entering a guilty plea with respect to, a crime, whether or not
connected with the Company; or (viii) any other conduct or act determined to be
injurious, detrimental or prejudicial to any interest of the Company.  



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(b) Upon exercise, payment or
delivery pursuant to an Award, the Participant shall certify in a manner acceptable to
the Company that he or she is in compliance with the terms and conditions of the Plan. In
the event a Participant fails to comply with the provisions of paragraphs (a)(i)-(viii)
of this Section 13 prior to, or during the six months after, any exercise, payment or
delivery pursuant to an Award, such exercise, payment or delivery may be rescinded within
two years thereafter. In the event of any such rescission, the Participant shall pay to
the Company the amount of any gain realized or payment received as a result of the
rescinded exercise, payment or delivery, in such manner and on such terms and conditions
as may be required, and the Company shall be entitled to set-off against the amount of
any such gain any amount owed to the Participant by the Company.  



14. Adjustments. 



In the event of any change in the
outstanding Capital Stock of the Company by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization, merger, or similar event,
the Committee may adjust proportionately: (a) the number of shares of Capital Stock (i)
available for issuance under the Plan, (ii) available for issuance under ISOs, (iii) for
which Awards may be granted to an individual Participant set forth in Section 6, and (iv)
covered by outstanding Awards denominated in stock or units of stock; (b) the exercise
and grant prices related to outstanding Awards; and (c) the appropriate Fair Market Value
and other price determinations for such Awards. In the event of any other change
affecting the Capital Stock or any distribution (other than normal cash dividends) to
holders of Capital Stock, including a spin-off of the capital stock of a subsidiary, such
adjustments in the number and kind of shares and the exercise, grant and conversion
prices of the affected Awards as may be deemed equitable by the Committee, including
adjustments to avoid fractional shares, shall be made to give proper effect to such
event. In the event of a corporate merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation, the Company or its successor shall
issue or assume stock options, whether or not in a transaction to which section 424(a) of
the Code applies, by means of substitution of new stock options for previously issued
stock options or an assumption of previously issued stock options. In such event, the
aggregate number of shares of Capital Stock available for issuance under Awards under
Section 3, including the individual Participant maximums set forth in Section 6 will be
increased to reflect such substitution or assumption.  



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15. Miscellaneous. 



(a) Any notice to the Company
required by any of the provisions of the Plan shall be addressed to the chief financial
officer of the Company in writing, and shall become effective when it is received.  



(b) The Plan shall be unfunded and
the Company shall not be required to establish any special account or fund or to
otherwise segregate or encumber assets to ensure payment of any Award.  



(c) Nothing contained in the Plan
shall prevent the Company from adopting other or additional compensation arrangements or
plans, subject to shareholder approval if such approval is required, and such
arrangements or plans may be either generally applicable or applicable only in specific
cases.  



(d) No Participant shall have any
claim or right to be granted an Award under the Plan and nothing contained in the Plan
shall be deemed or be construed to give any Participant the right to be retained in the
employ of the Company or to interfere with the right of the Company to discharge any
Participant at any time without regard to the effect such discharge may have upon the
Participant under the Plan. Except to the extent otherwise provided in any plan or in an
Award Agreement, no Award under the Plan shall be deemed compensation for purposes of
computing benefits or contributions under any other plan of the Company.  



(e) Except as may otherwise be
required by federal law, the Plan and each Award Agreement shall be governed by the laws
of the State of California, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of the Plan to the substantive
law of another jurisdiction. Unless otherwise provided in the Award Agreement, recipients
of an Award under the Plan are deemed to submit to the exclusive jurisdiction and venue
of the federal or state courts of Texas, County of Harris, to resolve any and all issues
that may arise out of or relate to the Plan or any related Award Agreement.  



(f) In the event that a Participant
or the Company brings an action to enforce the terms of the Plan or any Award Agreement
and the Company prevails, the Participant shall pay all costs and expenses incurred by
the Company in connection with that action, including reasonable attorneys’ fees, and
all further costs and fees, including reasonable attorneys’ fees incurred by the
Company in connection with collection.  



(g) The Committee and any officers
to whom it may delegate authority under Section 5 shall have full power and authority to
interpret the Plan and to make any determinations thereunder, including determinations
under Section 13, and the Committee’s or such officer’s determinations shall be
binding and conclusive. Determinations made by the Committee or any such officer under
the Plan need not be uniform and may be made selectively among individuals, whether or
not such individuals are similarly situated.  



(h) If any provision of the Plan is
or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended or limited in scope to conform to
applicable laws or, in the discretion of the Committee, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.  



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(i) The Plan shall become effective
upon adoption by the Board of Directors of the Company.  



12. Not a Contract of Employment or
for Services. 



     Nothing
contained in the Plan or in any option agreement executed pursuant hereto shall
be deemed to confer upon any individual to whom an Option is or may be granted
hereunder any right to remain in the employ of the Company or of a subsidiary or
parent of the Company or in any way limit the right of the Company, or of any
parent or subsidiary thereof, to terminate the employment of any employee. 




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