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EXHIBIT 4.1    
    


 
 

TRANSMERIDIAN EXPLORATION, INC.
  
    2003 STOCK COMPENSATION PLAN    
    


SECTION 1. PURPOSE.  


        The purpose of this 2003 Stock Compensation Plan (the "Plan") of Transmeridian Exploration, Inc. (together with any subsidiaries, affiliates or successor
thereto, the "Company") is (a) to promote the identity of interests between shareholders, employees, and directors of the Company by encouraging and creating significant ownership of Common
Stock of the Company by such officers, employees, and directors of the Company and its subsidiaries; (b) to enable the Company to attract and retain qualified officers, employees and directors
who contribute to the Company's success by their ability, ingenuity and industry; (c) to provide meaningful motivation and incentive for officers, employees, and directors who are responsible
for the success of the Company and who are in a position to make significant contributions toward its objectives; and (d) to provide a means to compensate officers, employees and directors of
the Company as well as to compensate consultants, advisors, and other third parties who provide valuable services for the Company. Certain capitalized terms used in this Agreement are defined either
in the body of the Agreement or in Section 12, "Definitions". 


        Pursuant
to the terms and conditions of this Plan, the Company is authorized to issue shares of Common Stock of the Company, $.0006 par value, under the Plan, including the issuance of
the following types of Awards: 



	•
	Restricted
Stock Awards



	•
	Payments
of Bonuses in Stock



	•
	Payment
for Services to Consultants in Stock



	•
	Employer
Contributions to 401-K Plan



	•
	Stock
Appreciation Rights



	•
	Warrants





SECTION 2. SHARES SUBJECT TO THE PLAN.  


        Subject to adjustment as provided in Section 9, the total number of Shares reserved and available for Awards under the Plan during the term hereof shall be
2,500,000 million shares. For purposes of this Section 2, the number of and time at which Shares shall be deemed to be subject to Awards and therefore counted against the number of
Shares reserved and available under the Plan shall be the earliest date at which the Committee can reasonably estimate the number of Shares to be distributed in settlement of an Award or with respect
to which payments will be made; provided, however, that, subject to the requirements of Rule 16b-3, the Committee may adopt procedures for the counting of Shares relating to any
Award for which the number of Shares to be distributed or with respect to which payment will be made cannot be fixed at the date of grant to ensure appropriate counting, avoid double counting (in the
case of tandem or substitute awards), and provide for adjustments in any case in which the number of Shares actually distributed or with respect to which payments are actually made differs from the
number of Shares previously counted in connection with such Award. 


        If
any Shares to which an Award relates are forfeited or the Award is settled or terminates without a distribution of Shares (whether or not cash, other Awards, or other property is
distributed with respect to such Award), any Shares counted against the number of Shares reserved and available under the Plan with respect to such Award shall, to the extent of any such forfeiture,
settlement or termination, again be available for Awards under the Plan; provided, however, that such Shares shall be available for issuance only to the extent that the related award would be exempt
under Rule 16b-3. 







 



SECTION 3. ELIGIBILITY.  


        Awards may be granted only to individuals who are officers, employees (including employees who are also directors), directors and Consultants of the Company or a
Subsidiary; provided, however, that no Award shall be granted to any member of the Committee. 


SECTION 4. SPECIFIC TERMS OF AWARDS.  



        4.01.    General.    Awards may be granted on the terms and conditions set forth in this Section 4. In
addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 10.02), such additional terms and conditions, not inconsistent
with the provisions of the Plan, as the Committee shall determine, including without limitation the acceleration of vesting of any Awards or alteration of terms requiring forfeiture of Awards in the
event of termination of employment by the Participant. 



        4.02.    Restricted Stock.    The Committee is authorized to grant Restricted Stock to Participants on the following
terms and conditions: 


                (i)    Issuance
and Restrictions.    Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee
may impose. The Committee shall have the authority to set the period of time during which the restrictions shall apply and the vesting provisions relating to such Restricted Stock. Such Restricted
Stock shall vest either: (x) if the Committee so determines, in full with respect to all Shares underlying such Award of Restricted Stock at the expiration of the restriction period; or
(y) if the Committee so determines, proportionally in installments of the Shares underlying such Award of Restricted Stock over the restriction period, except that such restrictions may lapse
earlier in the event of death, disability, termination of employment, or retirement of an awardee, on such terms as the Committee shall determine, or in accordance with Section 8 hereof. The
Committee shall have the authority to accelerate the vesting of an Award of Restricted Stock. The Committee shall have the authority to award Restricted Stock without cash consideration or, if it so
determines, for an exercise price. 


                (ii)    Termination.    The
Committee shall have the authority to determine the events giving rise to the termination of such Restricted Stock and the
terms and provisions relating to such Restricted Stock in the event of the termination of any employee's, officer's, director's, or Consultant's relationship with the Company. The Committee may
provide, by rule or regulation or in any Award Agreement, or may determine in any individual case after the award has been made, that restrictions or forfeiture conditions relating to Restricted Stock
will be waived in whole or in part in the event of terminations resulting from specified causes. 


                (iii)    Certificates
of Shares.    Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. The
Company, or if the Committee so designates, an escrow agent acting on behalf of the Company, shall retain physical possession of the certificates until such time as the shares are no longer
restricted, and the Participant shall deliver a stock power to the Company or such agent, endorsed in blank, relating to the Restricted Stock. 


                (iv)    Restrictions
on Transfer.    Except as may be otherwise expressly permitted by the Award Agreement, no right or interest of any Participant in
the Restricted Stock prior to vesting of such Restricted Stock will be assignable or transferable, or subjected to any lien, either voluntarily or involuntarily, directly or indirectly, by operation
of law or otherwise. 


                (v)    Ownership.    During
the restriction period relating to the Restricted Stock, the Participant shall possess all incidents of ownership of such
shares, including the right to vote and to receive dividends, subject to the restrictions set forth in this Plan, the Award Agreement, or as otherwise determined by the Committee. 


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                (vi)    Dividends
and Distributions.    Unless otherwise set forth in the Award Agreement, the Committee shall determine at the time of the declaration
of any dividends or distributions with respect to shares of
Common Stock subject to the unvested portion of an Award whether such dividends or distributions will be subject to the same restrictions (including risk of forfeiture) as the shares to which such
dividends or distributions relate. The Committee shall also determine whether the Company will withhold any such dividends or distributions pending vesting of the shares to which it relates and, in
such event, the Committee will determine whether any interest will be paid on such dividends or distributions. 


        4.03.    Bonus Awards.    The Committee is authorized to grant Bonus Awards to Participants on the following terms and
conditions: 


                (i)    Awards
and Conditions.    A Bonus Award shall confer upon the Participant rights, valued as determined by the Committee, and payable to, or
exercisable by, the Participant to whom the Bonus Award is granted, in whole or in part, as determined by the Committee, conditioned upon, or in recognition of, the achievement of any performance
criteria determined by the Committee. 


                (ii)    Performance
Period.    The period of time with respect to which it is to be determined whether the performance criteria applicable to a Bonus
Award have been achieved shall be such period of time as shall be determined by the Committee. A Bonus Award may be granted for past performance by a Participant and may include discretionary criteria
for such performance as determined by the Committee. The vesting requirements, if any, attributable to Bonus Awards shall be determined by the Committee. 



                (iii)    Other
Terms.    A Bonus Award shall be denominated in Shares and may be payable in cash, Shares, other Awards, or other property, and have such
other terms as shall be determined by the Committee. 


        4.04    Payment for Services by Consultants.    The Committee is authorized to issue Shares of the Company as direct
payment for services by Consultants. The Committee shall establish the number of Shares to be issued to such Consultant as equivalent value for the services rendered by such Consultants, and the
Committee shall otherwise make all determinations regarding the payment for such services in the form of Shares. 



        4.05.    Employer Contributions to 401-K Plan.    The Committee is authorized to issue Shares under the
Plan as employer contributions to any 401-K Plan established by the Company. The Committee shall approve the terms of any such 401-K Plan(s), including the employee
contributions eligible for employer matching contributions and the provisions of such matching contributions, including vesting periods and terms of forfeiture. 


        4.06.    Stock Appreciation Rights.    The Committee is authorized to grant Stock Appreciation Rights to Participants
on the following terms and conditions: 



                (i)    Right
to Payment.    A Stock Appreciation Right shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one Share on the date of exercise (or, if the Committee shall so determine in the case of any such right, the Fair Market Value of one Share at any
time during a specified period before or after the date of exercise or the Change of Control Price as defined in Section 8.03) over (B) the base price of the Stock Appreciation Right as
determined by the Committee as of the date of grant of the Stock Appreciation Right, which shall be not less than the Fair Market Value of one Share on the date of grant. On and after the date of
grant of a Stock Appreciation Right hereunder, the Committee shall not have the authority to reduce the base price of such Stock Appreciation Right, except as provided in Section 9 hereof. 


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                (ii)    Other
Terms.    The Committee shall determine the time or times at which a Stock Appreciation Right may be exercised in whole or in part, the
method of exercise, method of settlement, form of consideration payable in settlement, method by which Shares will be delivered or deemed to be delivered to Participants, and any other terms and
conditions of any Stock Appreciation Right. 


        4.07.    Warrants.    The Committee is authorized to grant Warrants to purchase Shares of the Company. The Committee
shall establish the number of Shares to be exercised pursuant to such Warrants, the terms and conditions applicable to the Warrants (including, without limitation, the exercise price, which does not
need to equal or exceed the Fair Market Value of the Shares at the date of the grant of the Warrant, and the period during which the Warrant is exercisable), and the criteria for issuing such
Warrants. The Committee shall make all determinations regarding such Warrants and the rights thereto. 


SECTION 5. ADMINISTRATION.  


        5.01.    Authority
of the Committee.    The Plan shall be administered by the Committee. The Committee shall have full and final authority to take the following
actions, in each case subject to and consistent with the provisions of the Plan: 


                (i)    to
select and designate Participants; 


                (ii)    to
designate Subsidiaries; 


                (iii)    to
determine the type or types of Awards to be granted to each Participant; 



                (iv)    to
determine the number of Awards to be granted, the number of Shares to which an Award will relate, the terms and conditions of any Award granted under
the Plan (including, but not limited to, any exercise price, grant price, or purchase price, any restriction or condition, any schedule for lapse of restrictions or conditions relating to
transferability or forfeiture, exercisability, or settlement of an Award, and waivers or accelerations thereof, and waiver of performance conditions relating to an Award, based in each case on such
considerations as the Committee shall determine), and all other matters to be determined in connection with an Award; 



                (v)    to
determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares,
other Awards, or other property, or an Award may be cancelled, forfeited, or surrendered; 


                (vi)    to
determine whether, to what extent, and under what circumstances cash, Shares, other Awards, or other property payable with respect to an Award will be
deferred either automatically, at the election of the Committee, or pursuant to an agreement between the Company and the Participant; 



                (vii)    to
prescribe the form of each Award Agreement, which need not be identical for each Participant; 


                (viii)    to
adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to
administer the Plan; 


                (ix)    to
correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and
regulations, Award Agreement, or other instrument hereunder; 


                (x)    to
interpret and administer the Plan and any instrument or agreement relating to, or Award under, the Plan; and 


                (xi)    to
make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the
administration of the Plan. 


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        5.02.    Manner
of Exercise of Committee Authority.    Unless authority is specifically reserved to the Board under the terms of the Plan, or applicable law, the
Committee shall have sole discretion in exercising such authority under the Plan. Any action of the Committee with respect to the Plan shall be final, conclusive, and binding on all persons, including
the Company, Subsidiaries, Participants, any person claiming any rights under the Plan from or through any Participant, and shareholders. The express grant of any specific power to the Committee, and
the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company or any
Subsidiary the authority, subject to such terms as the Committee shall determine, to perform administrative functions under the Plan. 


        5.03.    Limitation
of Liability.    Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to
him by any officer or other employee of the Company or any Subsidiary, the Company's independent certified public accountants, or any executive compensation consultant or other professional retained
by the Company to assist in the administration of the Plan. No member of the Committee, nor any officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any
action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any officer or employee of the Company acting on their behalf,
shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation. 


SECTION 6. CERTAIN PROVISIONS APPLICABLE TO AWARDS.  



        6.01.    Stand-Alone,
Additional, Tandem, and Substitute Awards.    Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or
in addition to or in tandem with any other Award granted under the Plan or any award granted under any other plan of the Company, any Subsidiary, or any business entity to be acquired by the Company
or a Subsidiary, or any other right of a Participant to receive payment from the Company or any Subsidiary. Awards granted in addition to or in tandem with other Awards or awards may be granted either
as of the same time as or a different time from the grant of such other Awards or awards. 



        6.02.    Exchange
Provisions.    The Committee may at any time offer to exchange or buy out any previously granted Award for a payment in cash, Shares, or other
property based on such terms and conditions as the Committee shall determine and communicate to the Participant at the time that such offer is made. 


        6.03.    Term
of Awards.    The term of each Award shall be for such period as may be determined by the Committee; provided, however, that in no event shall the term
of any Stock Appreciation Right granted in tandem therewith exceed a period of ten years from the date of its grant (or such shorter period as may be required under Section 422 of the Code). 



        6.04.    Form
of Payment under Awards.    Subject to the terms of the Plan and any applicable Award Agreement, payments (if any) to be made by the Company or a
subsidiary upon the grant or exercise of an Award may be made in such forms as the Committee shall determine, including without limitation, cash, Shares, other Awards, or other property, and may be
made in a single payment or transfer, in installments, or on a deferred basis. Such payments may include, without limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments. 


        6.05.    Loan
Provisions.    With the consent of the Committee, and subject to compliance with applicable laws and regulations, the Company may make, guarantee, or
arrange for, a loan or loans to a Participant with respect to the exercise of any Option or other payment in connection with any Award, including the payment by a Participant of any or all federal,
state, or local income or other taxes due in connection with any Award. Subject to such limitations, the Committee shall have full 


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authority
to decide whether to make a loan or loans hereunder and to determine the amount, terms, and provisions of any such loan or loans, including the interest rate to be charged in respect of any
such loan or loans, whether the loan or loans are to be with or without recourse against the borrower, the terms on which the loan is to be repaid and conditions, if any, under which the loan or loans
may be forgiven. Nothing in this Section shall be construed as implying that the Committee shall or will offer such loans. 


SECTION 7. GENERAL RESTRICTIONS APPLICABLE TO AWARDS.  


        7.01.    Restrictions
Under Rule 16b-3.    If and to the extent the Company is (or becomes) subject to Section 16 under the Exchange Act,
then at such time, the following provisions shall apply: 



                (i)    Six-Month
Holding Period.    Unless a Participant could otherwise transfer an equity security, derivative security, or Shares issued
upon exercise of a derivative security granted under the Plan without incurring liability under Section 16(b) of the Exchange Act, (i) an equity security issued under the Plan, other
than an equity security issued upon exercise or conversion of a derivative security granted under the Plan, shall be held for at least six months from the date of acquisition; (ii) with respect
to a derivative security issued under the Plan, at least six months shall elapse from the date of acquisition of the derivative security to the date of disposition of the derivative security (other
than upon exercise or conversion) or its underlying equity security; and (iii) any Award in the nature of a Stock Appreciation Right must be held for six months from the date of grant to the
date of cash settlement. 


                (ii)    Nontransferability.    Awards
which constitute derivative securities (including any option, stock appreciation right, or similar right) shall
not be transferable by a Participant except upon such terms and conditions as the Committee may determine to an Immediate Family Member of such Participant, or to a trust, partnership or limited
liability company all of whose beneficiaries, partners or members, as the case may be, are Immediate Family Members, or by will or the laws of descent and distribution (except pursuant to a
beneficiary designation authorized under Section 7.02) or, if then permitted under Rule 16b-3, pursuant to a qualified domestic relations order as defined under the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, and, in the case of an Incentive Stock Option or, if then required by
Rule 16b-3, any other derivative security granted under the Plan, shall be exercisable during the lifetime of a Participant only by such Participant or his legal representative. 


                (iii)    Compliance
with Rule 16b-3.    It is the intent of the Company that this Plan comply in all respects with
Rule 16b-3 in connection with any Award granted to a person who is subject to Section 16 of the Exchange Act. Accordingly, if any provision of this Plan or any Award
Agreement does not comply with the requirements of Rule 16b-3 as then applicable to any such person, such provision shall be construed or deemed amended to the extent necessary to
conform to such requirements with respect to such person. 


        7.02.    Limits
on Transfer of Awards; Beneficiaries.    Except as provided in Section 7.01(ii), no right or interest of a Participant in any Award shall be
pledged, encumbered or hypothecated to or in favor of any party (other than the Company or a Subsidiary), or shall be subject to any lien, obligation, or liability of such Participant to any party
(other than the Company or a Subsidiary). Unless otherwise determined by the Committee (subject to the requirements of Section 7.01(ii)), no Award subject to any restriction shall be assignable
or transferable by a Participant otherwise than by will or the laws of descent and distribution (except to the Company under the terms of the Plan); provided, however, that a Participant may, in the
manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant, and to receive any distribution, with respect to any Award, upon the death of
the Participant. A beneficiary, guardian, legal representative, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and 


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conditions
of the Plan and any Award Agreement applicable to such Participant or other agreement applicable to such, except to the extent the Plan and such Award Agreement or other agreement otherwise
provide with respect to such persons, and to any additional restrictions deemed necessary or appropriate by the Committee. 


        7.03.    Registration
and Listing Compliance.    The Company shall not be obligated to deliver any Award or distribute any Shares with respect to any Award in a
transaction subject to regulatory approval, registration, or any other applicable requirement of federal or state law, or subject to a listing requirement under any listing or similar agreement
between the Company and any national securities exchange, until such laws, regulations, and contractual obligations of the Company have been complied with in full, although the Company shall be
obligated to use its best efforts to obtain any such approval and comply with such requirements as promptly as practicable. 


        7.04.    Share
Certificates.    All certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such
stop-transfer order and other restrictions as the Committee may deem advisable under applicable federal or state laws, rules and regulations thereunder, and the rules of any national
securities exchange or the OTC Bulletin Board on which Shares are listed. The Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such
restrictions or any other restrictions that may be applicable to Shares, including under the terms of the Plan or any Award Agreement. In addition, during any period in which Awards or Shares are
subject to restrictions under the terms of the Plan or any Award Agreement, or during any period during which delivery or receipt of an Award or Shares has been deferred by the Committee or a
Participant, the Committee may require the Participant to enter into an agreement providing that certificates representing Shares issuable or issued pursuant to an Award shall remain in the physical
custody of the Company or such other person as the Committee may designate. 



SECTION 8. CHANGE OF CONTROL PROVISIONS.  


        Notwithstanding any other provision of the Plan, the following acceleration and valuation provisions shall apply in the event of a "Change of Control" as defined
in this Section 8. 


        8.01.    Acceleration
and Cash-Out Rights.    In the event of a "Change of Control," as defined in Section 8.02, automatically in the case of all
Participants: 


                (i)    The
performance criteria of all Bonus Awards shall be deemed fully achieved and all such Awards shall be fully earned and vested, subject only to the
restrictions on dispositions of equity securities set forth in Section 7.01(i) and legal restrictions on the issuance of Shares set forth in Sections 7.03 and 7.04; 


                (ii)    Any
Stock Appreciation Right and other Award in the nature of a right that may be exercised which was not previously exercisable and vested shall become
fully exercisable and vested, subject only to the restrictions on disposition of equity securities set forth in Section 7.01(i) and legal restrictions on the issuance of Shares set forth
in Sections 7.03 and 7.04; 


                (iii)    The
restrictions, deferral limitations, and forfeiture conditions applicable to any other Award granted under the Plan shall lapse and such Awards shall
be deemed fully vested, subject only to the restrictions on dispositions of equity securities set forth in Section 7.01(i) and legal restrictions on the issuance of Shares set forth in
Sections 7.03 and 7.04; 


                (iv)    In
the sole discretion of the Committee, all outstanding Awards may be cancelled and in such event a Participant holding any such Award shall be paid in
cash therefor on the basis of the "Change of Control Price" (as defined in Section 8.03) as of the date that the Change of Control occurs, or such other date as the Committee may determine
prior to the Change of Control; provided, however, that this Section 8.01(iv) shall not apply in the case of any Award if the cancellation of and 


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payment
for such Award would cause the Participant to incur actual short-swing profits liability under Section 16(b) of the Exchange Act; and 



                (v)    To
the extent Section 8.01(iv) of this Section 8 does not apply and at any time after the Change of Control the Shares are no longer
readily tradable on an established exchange or the OTC Bulletin Board, a Participant shall, as of the date on which the Change of Control occurs, be entitled to receive,
consistent with Rule 16b-3, and the Company shall use its best efforts to compel and obligate the surviving or resulting company in the Change of Control and/or the other party to
the agreement or transaction resulting in the Change of Control to grant to the Participant, substitute Stock Appreciation Rights and/or Restricted Stock, as the case may be, in respect of the shares
of common stock or other capital stock of such surviving or resulting company, or such other party involved in the Change of Control, on such terms and conditions, as to the number of shares, pricing,
vesting, exercisability and otherwise, which shall substantially preserve the value, rights and benefits of any affected Stock Appreciation Rights and/or Restricted Stock, as the case may be,
previously granted hereunder. 


        8.02.    Change
of Control.    For purposes of Section 8.01, a "Change of Control" shall mean a change in ownership or control of the Company effected through
any of the following transactions: 



                (i)    the
direct or indirect acquisition by any person or related group of persons (other than by the Company or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than 50%
of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's shareholders, or other transaction, in each case which
the Board does not recommend such shareholders to accept; or 



                (ii)    a
change in the composition of the Board over a period of 24 consecutive months or less such that a majority of the Board members (rounded up to the next
whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (i) have been Board members continuously since the beginning
of such period or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (i) who were still
in office at the time such election or nomination was approved by the Board; or 


                (iii)    any
Corporate Transaction. 


        8.03.    Change
of Control Price.    For purposes of this Section 8, "Change of Control Price" means the highest price per share paid in any transaction
reported on the securities exchange or trading system on which the Shares are then primarily listed or traded, or paid or offered in any transaction related to a Change of Control of the Company at
any time during the preceding 60-day period as determined by the Committee, except that in the case of Stock Appreciation Rights relating thereto, such price shall be based only on
transactions reported for the date on which the Committee decides to cash out such Awards. 



SECTION 9. ADJUSTMENT PROVISIONS.  


        In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or
event, affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of Shares which may thereafter be issued in connection with Awards (ii) the 


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number
and kind of Shares issued or issuable in respect of outstanding Awards, and (iii) the exercise price, base price, or purchase price relating to any Award or, if deemed appropriate, make
provision for a cash payment with respect to any outstanding Award. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any Subsidiary or the financial statements of the
Company or any Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles. 


SECTION 10. CHANGES TO THE PLAN AND AWARDS.  


        10.01.    Changes
to the Plan.    The Board may amend, alter, suspend, discontinue or terminate the Plan without the consent of shareholders or Participants, except
that any such amendment, alteration, suspension, discontinuation, or termination shall be subject to the approval of the Company's shareholders within one year after such Board action if such
shareholder approval is required by any federal or state law or regulation or the rules of any stock exchange on which the Shares may be listed in order to maintain compliance therewith, or if the
Board in its discretion determines that obtaining such shareholder approval is for any reason advisable; provided, however, that, without the consent of an affected Participant, no amendment,
alteration, suspension, discontinuation, or termination of the Plan after initial shareholder approval of the Plan may materially impair the rights of such Participant under any Award theretofore
granted to him. 


        10.02.    Changes
to Awards.    The Committee may, unless otherwise expressly prohibited by the Plan, waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award Agreement relating thereto; provided, however, that, without the
consent of an affected Participant, no such amendment, alteration, suspension, discontinuation, or termination of any Award may materially impair the rights of such Participant under such Award. 


SECTION 11. GENERAL PROVISIONS.  


        11.01.    No Rights to Awards.    No Participant or employee shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Participants and employees. 



        11.02.    No
Shareholder Rights.    Except to the extent provided in this Plan, an Award Agreement, or as otherwise designated by the Committee, no Award shall confer
on any Participant any of the rights of a shareholder of the Company unless and until Shares are duly vested, issued or transferred to the Participant in accordance with the terms of the Award.
However, the Committee may specifically convey such rights pursuant to an Award. 


        11.03.    Tax
Withholding.    To the extent and in the manner permitted by applicable law, the Company or any Subsidiary is authorized to withhold from any Award
granted (or from any payment relating to an Award under the Plan), any amounts of withholding and other taxes due with respect thereto, and to take such other action as the Committee may deem
necessary or advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax liabilities relating to any Award. This authority shall include
authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of the Participant's tax obligations. The Committee is also authorized to require
any Participant promptly to remit the amount necessary to satisfy any tax obligation to the Company before taking any action under the Plan, including the issuance of any Shares, with respect to an
Award. 


        11.04.    No
Right to Employment.    Nothing contained in the Plan or any Award Agreement shall confer, and no grant of an Award shall be construed as conferring,
upon any employee any right to 


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continue
in the employment of the Company or any Subsidiary or to interfere in any way with the right of the Company or any Subsidiary to terminate such employment at any time or increase or decrease
such employee's compensation from the rate in existence at the time of granting of an Award. 



        11.05.    Unfunded
Status of Awards.    With respect to any payments not yet made to a Participant pursuant to an Award the Plan constitutes a mere promise to make
the benefit payments provided for herein, and nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company's obligations under
the Plan to deliver cash, Shares, other Awards, or other property pursuant to any award, which trusts or other arrangements shall be consistent with the unfunded status of the Plan. 



        11.06.    Other
Compensatory Arrangements.    The Company or any Subsidiary shall be permitted to adopt other or additional compensation arrangements (which may
include arrangements which relate to Awards), and such arrangements may be either generally applicable or applicable only in specific cases. 


        11.07.    Fractional
Shares.    No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determined whether cash,
other Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated. 



        11.08.    Governing
Law.    The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of the State of Texas, without giving effect to principles of conflicts of laws, and applicable federal law. 


SECTION 12. DEFINITIONS.  


        In addition to the terms defined elsewhere in the Plan, the following shall be defined terms under the Plan: 



        12.01.    "Award"
means any Restricted Stock Award, Bonus Award, payment for services of a Consultant, Stock Appreciation Right, Warrant, or any other right or interest
relating to Shares or cash, granted to a Participant under the Plan. 


        12.02.    "Award
Agreement" means any written agreement, contract, or other instrument or document evidencing an Award. 


        12.03.    "Board"
means the Board of Directors of the Company. 


        12.04    "Bonus
Award" means a right, granted to a Participant under Section 4.03, to receive cash, Shares, other Awards, or other property. 



        12.05    "Corporate
Transaction" means any of the following shareholder-approved transactions to which the Company is a party 


                (i)    a
merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the
jurisdiction in which the Company is incorporated; 


                (ii)    the
sale, transfer or other disposition of all or substantially all of the assets of the Company in complete liquidation or dissolution of the Company; or 



                (iii)    any
reverse merger in which the Company is the surviving entity but in which securities possessing more than 50% of the total combined voting power of
the Company's outstanding securities 


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are
transferred to a person or persons different from the persons holding those securities immediately prior to such merger. 



        12.06.    "Code"
means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code shall be deemed to include successor provisions
thereto and regulations thereunder. 


        12.07.    "Committee"
means the Compensation Committee of the Board, or such other Board committee as may be designated by the Board to administer the Plan, or any subcommittee
of either; provided, however, that if and when the Company shall be or become subject to Section 16 of the Exchange Act, then the Committee, and any subcommittee thereof, shall consist of two
or more directors (or such lesser number as may be permitted by applicable law or rule), each of whom is a "disinterested person" within the meaning of the applicable provisions of
Rule 16b-3 under the Exchange Act. 


        12.08.    "Consultant"
means any person who is engaged by the Company or a Subsidiary to render consulting, advisory or other services to the Company or a Subsidiary. 


        12.09.    "Disability"
shall mean the inability of a Grantee to perform his or her duties and responsibilities for a period of 90 consecutive days or an aggregate period of
180 days in any two year period. 


        12.10.    "Exchange
Act" means the Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act shall be deemed to include
successor provisions thereto and any rules and regulations thereunder. 


        12.11.    "Fair
Market Value" means, with respect to Shares, Awards, or other property, the fair market value of such Shares, Awards, or other property determined by such
methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of Shares as of any date shall be the closing
price of the Shares on the date of the grant of the Award, as reported in The Wall Street Journal (or if not so reported, as otherwise reported by the National Association of Securities Dealers
Automated Quotation System, Small Cap or National Markets, or the National Association of Securities Dealers OTC Bulletin Board). 


        12.12.    "Immediate
Family Member" means, with respect to any Participant, any of such Participant's spouse, children, parents or siblings. 


        12.13.    "Participant"
shall mean any officer, director, employee, or Consultant of the Company who has been granted an Award under the Plan. 



        12.14.    "Restricted
Stock" means Shares granted to a Participant under Section 4.02, that are subject to certain restrictions and to a risk of forfeiture. 


        12.15.    "Rule 16b-3"
means Rule 16b-3, as from time to time amended and applicable to Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act. 


        12.16.    "Shares"
means the Common Stock, $0.0006 par value per share, of the Company and such other securities of the Company as may be substituted for Shares or such other
securities pursuant to the Plan. 


        12.17.    "Stock
Appreciation Right" means a right, granted to a Participant under Section 4.05, to be paid an amount measured by the appreciation in the Fair Market
Value of Shares from the date of grant to the date of exercise of the right, with payment to be made in cash, Shares, other Awards, or other property as specified in the Award or determined by the
Committee. 


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        12.18.    "Subsidiary"
means any company (other than the Company) with respect to which the Company owns, directly or indirectly, 50% or more of the total combined voting power
for all classes of stock. In addition, any other related entity may be designated by the Board or the Committee as a Subsidiary, provided the Board or the Committee determines that the Company has a
substantial ownership interest in such entity. 


        12.19.    "Year"
means a calendar year. 


EFFECTIVE DATE. The Plan is effective May 27, 2003. 


DATE APPROVED BY BOARD OF DIRECTORS: May 27, 2003 


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EXHIBIT 4.1


TRANSMERIDIAN EXPLORATION, INC. 2003 STOCK COMPENSATION PLAN