<PAGE>

                                                                     EXHIBIT 4.1
                                                                     -----------

                     2000 PINNACLE OIL INTERNATIONAL. INC.

                             DIRECTORS' STOCK PLAN

The Board of Directors of Pinnacle Oil International. Inc. (the "Company"), a
corporation organized under the laws of the State of Nevada, hereby adopts this
2000 Pinnacle Oil International. Inc. Directors' Stock Plan.

WHEREAS, the growth, development and financial success of the Company (and any
parents and/or any subsidiaries of the Company) is and will remain dependent, in
significant part, upon the judgment, initiative, efforts and/or services their
respective directors;

WHEREAS, the Company desires, in order to attract, compensate and motivate
selected directors for the Company (and any parent and/or any subsidiaries of
the Company), and to appropriately compensate them for their efforts, to create
a stock plan which will enable the Company, in its sole discretion and from
time-to-time, to offer to or provide such persons with incentives and/or
inducements in the form of capital stock of the Company, or rights in the form
of options to acquire capital stock of the Company, thereby affording such
persons with an opportunity to share in potential capital appreciation in the
capital stock of the Company and/or potential distributions made in connection
therewith;

WHEREAS, the Company further desires that the stock plan be structured to permit
it, in its sole discretion, to offer and issue capital stock or options to
acquire capital stock in reliance upon certain exemptions from registration or
qualification afforded under certain federal, state, territorial or provincial
securities laws to be selected by the Company as are or may become applicable;
and

WHEREAS, insofar as the Company's common stock is currently registered under
Section12(g) of the Securities and Exchange Act of 1934, the Company desires
that the stock plan be structured to comply with the Securities and Exchange Act
of 1934 for so long as the Company's common stock or any of its other equity
securities are registered under Sections 12(b) or 12(g) of the Securities and
Exchange Act of 1934.

                                   ARTICLE I

                                  DEFINITIONS
                                  -----------

Set forth below are definitions of capitalized terms which are generally used
throughout the Plan, or references to provisions containing such definitions
(Capitalized terms used only in a specific section of the Plan are defined in
such section):

1.01   "Applicable Laws" means the requirements relating to the administration
       of stock plans under:

       A.   applicable corporate laws of the United States and the State of
            Nevada and, to the extent applicable, any foreign country or
            jurisdiction where Awards are, or will be, granted under the Plan,
            including Canada and the Province of Alberta;

       B.   applicable Securities Laws, including those of any foreign country
            or jurisdiction where Awards are, or will be, granted under the
            Plan, including Canada and the Province of Alberta; and

       C.   any stock exchange or quotation system on which the Common Stock is
            listed or quoted.
<PAGE>

1.02   "Approved Corporate Transaction" shall mean any time the Board and/or, to
       the extent required by law, the stockholders of the Company, approve
       either:

       A.  a merger or consolidation or stock exchange or divisive
           reorganization (i.e., spin-off, split-off or split-up) and/or other
           reorganization with respect to the Company and/or its stockholders,
           or

       B.  the sale, transfer, exchange or other disposition by the Company of
           fifty percent (50%) or more of its assets in a single or series of
           related transactions, is approved, provided, however, the term
           Approved Corporate Transaction shall not include any transaction
           wherein the stockholders of the Company immediately before such
           transaction directly or indirectly own, immediately following such
           transaction, a majority of the Total Combined Voting Power (as such
           term is defined in section 1.07A below) of the outstanding Voting
                              -------------
           Securities (as such term is defined in section 1.07A below) of the
                                                  -------------
           surviving corporation (or other entity) resulting from such
           transaction pursuant to clause A, or the acquiring corporation (or
                                   --------
           other entity) pursuant to clause B.
                                     --------

1.03   "Award" "shall collectively and severally refer to any Options or Grant
       Shares granted or awarded under the Plan.

1.04   "Award Agreement" shall collectively and severally refer to:

       A.  in the case of the grant or award of an Option, a Stock Option
           Certificate in such form as prescribed by the Plan Administrator from
           time-to-time;

       B.  in the case of the grant or award of Grant Shares, a Stock Grant
           Agreement in such form as prescribed by the Plan Administrator from
           time-to-time; and

       C.  in the case of the grant or award of SARs, a SAR Agreement in such
           form as prescribed by the Plan Administrator from time-to-time;

       provided, however, the Company may, in its sole discretion, (1) revise
       any such form of Award Agreement to reflect or incorporate such changes
       as the Company or its legal counsel may determine is appropriate and
       consistent with the terms of the Plan, and/or (2) evidence or confirm the
       grant of an Award in a written employment or consulting agreement in lieu
       of the form of any of the foregoing Award Agreements.

1.05   "Blue Sky Laws" shall mean the securities laws of any state or territory
       of the United States, including any regulations or rules promulgated
       thereunder, which may apply to a transaction described in this Plan by
       reason of, among other things, the Recipient's residing in such, state
       and/or territory at the time of such transaction.

1.06   "Board" shall mean the Board of Directors of the Company, as such body
       may be reconstituted from time to time.

1.07   "Change In Control" shall mean the occurrence of any "Control
       Acquisition" or any "Significant Board Change" (as such terms are defined
       below).

       A.  "Control Acquisition" shall mean any time an "Acquiring Person"
           attains, by reason of and immediately after a transaction or series
           of related transactions (other than a "Non-Control Transaction"),
           "Beneficial Ownership" of fifty percent (50%) or more of the "Total
           Combined Voting Power" of the Company's then outstanding "Voting
           Securities" (all as defined below); unless the Board determines that
           it is not in the best interests of the Company for such transaction

                                      -2-
<PAGE>

           to be construed as a Control Acquisition; provided, however that at
           the time of such approval of the Board there are then in office not
           less than two Continuing Directors (as such term is defined below)
           and such action or transaction or series of related actions or
           transactions are approved by a majority of the Continuing Directors
           then in office.

           (1)  "Acquiring Person" shall mean any "Person" (as defined below)
                with the exception of:

                (i)   any employee benefit plan (or a trust forming a part
                      thereof) maintained by the Company, or by any corporation
                      or entity in which the Company holds fifty percent (50%)
                      or more of the Voting Securities (each, a "Controlled
                      Subsidiary");

                (ii)  the Company or any Controlled Subsidiary; or

                (iii) any Person which acquires the threshold percentage of
                      Voting Securities through a Non-Control Transaction.

           (2)  "Non-Control Transaction" shall mean any transaction in which
                the stockholders of the Company immediately before such
                transaction directly or indirectly own, immediately following
                such transaction, at least a majority of the Total Combined
                Voting Power (as defined below) of the outstanding Voting
                Securities (as defined below) of the surviving corporation (or
                other entity) resulting from such transaction, in substantially
                the same proportion as such stockholders' ownership of the
                Company's Voting Securities immediately before such transaction.

           (3)  "Person," "Beneficial Ownership," "Total Combined Voting Power"
                and "Voting Securities" shall have the meaning described to such
                terms in Sections 13(d) and 14(d) of the Exchange Act and Rule
                13d-3 promulgated thereunder.

           (4)  "Continuing Director" shall mean:

                (i)   any member of the Board, while such Person is a member of
                      the Board, who is not an Acquiring Person or an
                      "Affiliate" or "Associate" (as defined below) of an
                      Acquiring Person, or a representative of an Acquiring
                      Person or any such Affiliate or Associate, and was a
                      member of the Board prior to the date of this Plan, or

                (ii)  any Person who subsequently becomes a member of the Board,
                      while such Person is a member of the Board, who is not an
                      Acquiring Person or an Affiliate or Associate of an
                      Acquiring Person or a representative of an Acquiring
                      Person or any such Affiliate or Associate, if such
                      Person's nomination for election or election to the Board
                      is recommended or approved by a majority of the Continuing
                      Directors. The terms "Affiliate" and "Associates" shall
                      have the respective meanings ascribed to such terms in
                      Rule 12b-2 of the General Rules and Regulations under the
                      Exchange Act.

           (5)  Notwithstanding the foregoing, a Control Acquisition shall not
                be deemed to have occurred solely because any Person acquires
                Beneficial

                                      -3-
<PAGE>

                Ownership of more than the threshold percentage of the
                outstanding Voting Securities as a result of an acquisition of
                Voting Securities by the Company (each, a "Redemption") which,
                by reducing the number of Voting Securities outstanding,
                increased the percentage of outstanding Voting Securities
                Beneficially Owned by such Person; provided, however, that if

                (i)   a Control Acquisition would occur as a result of a
                      Redemption but for the operation of this sentence, and

                (ii)  after such Redemption, such Person becomes the Beneficial
                      Owner of any additional Voting Securities, which increase
                      the percentage of the then outstanding Voting Securities
                      Beneficially Owned by such Person over the percentage
                      owned as a result of the Redemption, then a Control
                      Acquisition shall occur.

       B.  "Significant Board Change" shall mean any time, during any period of
           three (3) consecutive years after the date of this Agreement, wherein
           the individuals who constituted the Board at the beginning of such
           period (the "Incumbent Board") cease to constitute a majority of the
           Board, for any reason other than:

           (1)  the voluntary resignation of one or more Board members;

           (2)  the refusal by one or more Board members to stand for election
                to the Board; and/or

           (3)  the removal of one or more Board members for good cause;

           provided, however,

           (i)  that if the nomination or election of any new director of the
                Company was approved by a vote of at least a majority of the
                Incumbent Board, such new director shall be deemed a member of
                the Incumbent Board; and

           (ii) that no individual shall be considered a member of the
                Incumbent Board if such individual initially assumed office as
                a result of either an actual or threatened "Election Contest"
                (as described in Rule 14a-11 promulgated under the Exchange
                Act), or as a result of a solicitation of proxies or consents
                by or on behalf of an Acquiror, other than a member of the
                Board (a "Proxy Contest"), or as a result of any agreement
                intended to avoid or settle any Election Contest or Proxy
                Contest.

1.08   "Code" shall mean the United States Internal Revenue Code of 1986, as
       amended (references herein to sections of the Code are intended to refer
       to sections of the Code as enacted at the time of the adoption of the
       Plan by the Board and as subsequently amended, or to any substantially
       similar successor provisions of the Code resulting from recodification,
       renumbering or otherwise).

1.09   "Commission" shall mean the United States Securities and Exchange
       Commission.

1.10   "Common Stock" shall mean the Company's common stock, par value $0.001.

1.11   "Company" shall mean Pinnacle Oil International. Inc., a Nevada
       corporation, and its successors.

                                      -4-
<PAGE>

1.12   "Consent of Spouse" shall mean that Consent of Spouse in such form as
       prescribed by the Plan Administrator from time-to-time.

1.13   "Director" shall mean any Person who is voted or appointed as a member of
       the Board of Directors of the Company and/or of any Parent and/or of any
       Subsidiary, whether such Person is so engaged at the time the Plan is
       adopted or becomes so engaged subsequent to the adoption of the Plan.

1.14   "Disability" (or the related term "Disabled") shall be defined, without
       limitation, as any of the following with respect to a Recipient who is a
       Director:

       A.  the receipt of any disability insurance benefits by the Recipient;

       B.  a declaration by a court of competent jurisdiction that the Recipient
           is legally incompetent;

       C.  the Recipient's material inability due to medically documented mental
           or physical illness or disabilities to fully perform the Recipient's
           regular obligations as a Director under such office, with reasonable
           accommodation if then required by applicable federal, state,
           territorial or provincial laws or regulations, for a three (3) month
           continuous period, or for six (6) cumulative months within any one
           (1) year continuous period, or the reasonable determination by the
           Board that the Recipient will not be able to fully perform the
           Recipient's regular obligations as a Director under such office, with
           reasonable accommodation if then required by applicable federal,
           state territorial or provincial laws or regulations, for a three (3)
           month continuous period.

       If the Board determines that the Recipient is Disabled under clause C
                                                                    --------
       above, and the Recipient disagrees with the conclusion of the Board, then
       the Company shall engage a qualified independent physician reasonably
       acceptable to the Recipient to examine the Recipient at the Company's
       sole expense. The determination of such physician shall be provided in
       writing to the parties and shall be final and binding upon the parties
       for all purposes of this Agreement. The Recipient hereby consents to
       examination in the manner set forth above, and waives any physician-
       patient privilege arising from any such examination as it relates to the
       determination of the purported disability.

1.15   "Eligible Director" shall mean any Person who, at the applicable time of
       the grant or award of an Award under the Plan, is a Director.
       Notwithstanding the foregoing, no Award hereunder may be granted to any
       Person, even if otherwise an Eligible Director, with respect to:

       A.  any circumstances which would not be considered to be either a bonus
           or reward for services provided, or compensation for goods or
           services rendered; or

       B.  services rendered wholly or partially in connection with the offer
           and sale of securities in a capital-raising transaction.

1.16   "Exchange Act" shall mean the Securities and Exchange Act of 1934, as
       amended, including any regulations or rules promulgated by the Commission
       thereunder (references herein to sections of the Exchange Act are
       intended to refer to sections of the Exchange Act as enacted at the time
       of the adoption of the Plan by the Board and as subsequently amended, or
       to any substantially similar successor provisions of the Exchange Act
       resulting from recodification, renumbering or otherwise).

                                      -5-
<PAGE>

1.17   "Fair Market Value" of a share of Common Stock as of a given valuation
       date shall be determined as follows:

       A.  If the Common Stock is traded on a stock exchange, the Fair Market
           Value will be equal to the closing price of Common Stock on the
           principal exchange on which the Common Stock is then trading as
           reported by such exchange (or as reported by any composite index
           which includes such principal exchange) for the trading day previous
           to the date of valuation, or if the Common Stock is not traded on
           such date, on the next preceding trading day during which a trade
           occurred;

       B.  If the Common Stock is traded over-the-counter on the Nasdaq National
           Market on the date in question, the Fair Market Value will be equal
           to the last transaction-price of the Common Stock as reported by
           Nasdaq for the trading day previous to the date of valuation, or if
           the Common Stock is not traded on such date, on the next preceding
           trading day during which a trade occurred;

       C.  If the Common Stock is traded over-the-counter on the Nasdaq SmallCap
           Market, the Fair Market Value will equal the mean between the last
           reported closing representative bid and asked price for the Common
           Stock as reported by Nasdaq for the trading day previous to the date
           of valuation, or if the Common Stock is not traded on such date, on
           the next preceding trading day during which a trade occurred; or

       D.  If the Common Stock is not publicly traded on an exchange and is not
           traded over-the-counter on Nasdaq, the Fair Market Value shall be
           determined by the Board acting in good faith on such basis as it
           deems appropriate, including quotations by market makers if the
           Common Stock is traded over-the-counter on the NASD Electronic
           Bulletin Board or Pink Sheets on the date in question should the Plan
           Administrator deem such quotations to be appropriate given the volume
           and circumstances of trades.

       The Fair Market Value as determined above shall be subject to such
       discount as the Plan Administrator may, in its sole discretion and
       without obligation to do so, determine to be appropriate to reflect any
       such impairments to the value of the associated Option Shares and/or
       Grant Shares to which the valuation relates such as, by way of example
       and not limitation,

       (1) the fact that such Option Shares and/or Grant Shares constitute
           unregistered securities (whether or not considered "restricted stock"
           within the meaning of Rule 144 of the Securities Act), and/or

       (2) such Option Shares and/or Grant Shares are subject to conditions,
           risk of forfeiture, or repurchase rights or rights of first refusal
           which impair their value including, without limitation, those
           forfeiture conditions more particularly described in Article VII.
                                                                -----------

1.18   "Forfeitable Grant Shares" shall mean Grant Shares that are subject to
       restrictions set forth in Article VII.
                                 -----------

1.19   "Grant Shares" shall mean Plan Shares granted or awarded in accordance
       with Article VI.
            ----------

1.20   "Independent SAR" shall have the meaning ascribed to such term in section
                                                                         -------
       9.01.
       ----

                                      -6-
<PAGE>

1.21   "Option" shall mean an option to purchase Plan Shares granted or awarded
       pursuant to Article V.
                   ---------

1.22   "Option Price" is defined in section 5.02 of the Plan.
                                    ------------

1.23   "Option Shares" shall mean any Plan Shares which an Option entitles the
       holder thereof to purchase.

1.24   "Parent" shall mean any "parent" of the Company, as such term is defined
       by, or interpreted under, Rule 405 of Regulation C promulgated under the
       Securities Act, including any such parent which is a corporation,
       partnership, limited partnership or limited liability company to the
       extent permitted under Rule 405.

1.25   "Person" shall be defined, in its broadest sense, as any individual,
       entity or fiduciary such as, by way of example and not limitation,
       individual or natural persons, corporations, partnerships (limited or
       general), joint-ventures, associations, limited liability
       companies/partnerships or fiduciary arrangements (such as trusts and
       custodial arrangements).

1.26   "Plan" shall mean this 2000 Pinnacle Oil International. Inc. Directors'
       Stock Plan.

1.27   "Plan Administrator" shall refer to the Person or Persons who are
       administering the Plan as described in Article III, to wit, the Board,
                                              -----------
       the Plan Committee, or any Director-Officers designated by the Board or
       the Plan Committee.

1.28   "Plan Committee" shall mean that Committee comprised of members of the
       Board that may be appointed by the Board to administer and interpret the
       Plan as more particularly described in Article III of the Plan.
                                              -----------

1.29   "Plan Shares" shall refer to shares of Common Stock issuable in
       connection with Awards in accordance with section 4.01, including, Option
                                                 ------------
       Shares, Grant Shares and SAR Shares.

1.30   "Provincial Securities Laws" shall mean the securities laws of any
       province of Canada, including any regulations or rules promulgated
       thereunder, which may apply to a transaction described in this Plan by
       reason of, among other things, the Company's principal executive offices
       being located in such province or a Recipient residing in such province,
       at the time of such transaction.

1.31   "Recipient" shall mean any Eligible Director who, at a particular time,
       receives the grant of an Award.

1.32   "Recipient's Representative's Letter" shall mean that letter from an
       independent investment advisor of a Recipient in such form as prescribed
       by the Plan Administrator from time-to-time.

1.33   "Replacement Option" shall mean an Option specifically granted as a
       Replacement Option under the Plan in accordance with the applicable
       provisions of section 5.08.
                     ------------

1.34   "Reporting Company" shall mean a corporation which registers its equity
       securities pursuant to Sections 12(b) or 12(g) of the Exchange Act;
       provided, however, any foreign corporation which registers its equity
       securities as a "foreign private issuer" shall not be deemed a Reporting
       Company for purposes of this Plan unless and until such time as it is
       required or elects to register its equity securities as a foreign issuer
       other than a foreign private issuer.

                                      -7-
<PAGE>

1.35   "Stock Appreciation Rights" or "SARs" shall have the meaning ascribed to
       such terms in section 9.01.
                     ------------

1.36   "Securities Act" shall mean the Securities Act of 1933, as amended,
       including all regulations or rules promulgated by the Commission
       thereunder (references herein to sections of the Securities Act are
       intended to refer to sections of the Securities Act as enacted at the
       time of the adoption of the Plan by the Board and as subsequently
       amended, or to any substantially similar successor provisions of the
       Securities Act resulting from recodification, renumbering or otherwise).

1.37   "Securities Laws" shall collectively refer to the Securities Act, the
       Exchange Act, the Blue Sky Laws and the Provincial Securities Laws.

1.38   "Subsidiary" shall mean any "majority-owned subsidiary" of the Company,
       as such term is defined by, or interpreted under, Rule 405 of Regulation
       C promulgated under the Securities Act, including any such subsidiary
       which is a corporation, partnership, limited partnership or limited
       liability company to the extent permitted under Rule 405. The term
       Subsidiary shall specifically exclude any majority-owned subsidiaries
       (other than the Company, if applicable) of any Parent.

1.39   "Tandem SAR" shall have the meaning ascribed to such term in section
                                                                    -------
       9.01.
       ----

1.40   "Termination Of Recipient" is defined as the time when the Recipient's
       status as a Director ceases for any reason whatsoever, whether voluntary
       or involuntary (including death or Disability), or with or without good
       cause, but excluding cases where the Recipient remains a Director of the
       Company (if such termination relates to the Recipient's status as a
       Director of any Parent and/or any Subsidiary) and/or by any Parent and/or
       any Subsidiary (if such termination relates to the Recipient's status as
       a Director of the Company).

1.41   "Transfer" shall mean any transfer or alienation of an Award which would
       directly or indirectly change the legal or beneficial ownership thereof,
       whether voluntary or by operation of law, and regardless of payment or
       provision of consideration, including, by way of example and not
       limitation:

       A.   the sale, assignment, bequest or gift of the Award;

       B.   any transaction that creates or grants an option, warrant, or right
            to obtain an interest in the Award;

       C.   any transaction that creates a form of joint ownership in the Award
            between the Recipient and one or more other Persons;

       D.   any Transfer of the Award to a creditor of the Recipient, including
            the hypothecation, encumbrance or pledge of the Award or any
            interest therein, or the attachment or imposition of a lien by a
            creditor of the Recipient on the Award or any interest therein which
            is not released within thirty (30) days after the imposition
            thereof;

       E.   any distribution by a Recipient which is an entity to its
            stockholders, partners, co-venturers or members, as the case may be;
            or

       F.   any distribution by a Recipient which is a fiduciary such as a
            trustee or custodian to its settlors or beneficiaries.

                                      -8-
<PAGE>

1.42  "Withholding Taxes" means any federal, state, territorial, provincial or
      local employment taxes which the Company shall have the obligation to
      withhold from a Recipient in connection with the grant of any Award and/or
      exercise of any Option, as the case may be.

                                  ARTICLE II

                                 TERM OF PLAN
                                 ------------

2.01  Effective Date for Plan; Termination Date for Plan. The Plan shall be
      --------------------------------------------------
      effective as of such time and date as the Plan is adopted by the Board,
      and the Plan shall terminate on the first business day prior to the ten
      (10) year anniversary of the date the Plan became effective. No Awards
      shall be granted or awarded under the Plan before the date the Plan
      becomes effective or after the date the Plan terminates; provided,
      however:

      A.   all Awards granted pursuant to the Plan prior to the effective date
           of the Plan shall not be affected by the termination of the Plan; and

      B.   all other provisions of the Plan shall remain in effect until the
           terms of all outstanding Awards have been satisfied or terminated in
           accordance with the Plan and the terms of such Awards.

                                  ARTICLE III

                              PLAN ADMINISTRATION
                              -------------------

3.01  General. The Plan shall be administered exclusively by the Board and/or,
      -------
      to the extent authorized pursuant to this Article III, the Plan Committee
                                                -----------
      or Director-Officers (collectively, the "Plan Administrator").

3.02  Delegation to Plan Committee. Subject to the authority granted to the
      ----------------------------
      Board under the Articles of Incorporation and the Bylaws of the Company,
      the Board may, in its sole discretion and at any time, establish a
      committee comprised of two (2) or more members of the Board (the "Plan
      Committee") to administer the Plan either in its entirety or to administer
      such functions concerning the Plan as delegated to such Committee by the
      Board. Members of the Plan Committee may resign at any time by delivering
      written notice to the Board. Vacancies in the Plan Committee shall be
      filled by the Board. The Plan Committee shall act by a majority of its
      members in office. The Plan Committee may act either by vote at a meeting
      or by a memorandum or other written instrument signed by a majority of the
      Plan Committee.

3.03  Compliance with Rule 16b-3 of the Exchange Act. Anything in this Article
      ----------------------------------------------                   -------
      III to the contrary notwithstanding, so long as this Company continues as
      ---
      a Reporting Company, or is otherwise required to register its equity
      securities under Sections 12(b) or 12(g) of the Exchange Act, any matter
      concerning a grant or award of an Award under the Plan to any Director
      shall, to the extent desirable to qualify such Awards as exempt under Rule
      16b-3(b)(3) promulgated under the Exchange Act, be made only by:

      A.   the Board;

      B.   the Plan Committee (provided it is comprised solely of "non-employee
           directors" within the meaning of Rule 16b-3(b)(3)); or

      C.   a special committee of the Board, or subcommittee of the Plan
           Committee, comprised solely of two (2) or more members of the Board
           who are non-employee directors.

                                      -9-
<PAGE>

3.04  Compliance with Section 162(m) of the Code.  Anything in this Article III
      ------------------------------------------                    -----------
      to the contrary notwithstanding, in the event and commencing at such time
      as any grant of an Award shall be subject to the deduction limitations
      prescribed by Section 162(m) of the Code, and the Plan Administrator
      determines it to be desirable to qualify Awards granted hereunder as
      "performance-based compensation" within the meaning of Section 162(m), the
      Plan Administrator shall (for purposes of making such grant) consist of a
      special committee of the Board comprised solely of two or more "outside
      directors" within the meaning of Section 162(m).

3.05  Delegation to Director-Officers. Subject to the authority granted to the
      -------------------------------
      Board under the Articles of Incorporation and the Bylaws of the Company,
      the Board may, in its sole discretion and at any time, and subject to the
      authority granted to it by the Board, the Plan Committee may, in its sole
      discretion and at any time, delegate all or any portion of their authority
      described below under section 3.06A through section 3.07 to one or more
                            -------------         ------------
      Directors who are also Director-Officers, provided that the Board or the
      Plan Committee (as the case may be) ratifies such actions by such
      designated Director-Officers. Notwithstanding the foregoing, so long as
      this Company continues as a Reporting Company, no authority shall be
      delegated to the aforesaid Director-Officers with respect to any matter
      concerning a grant or award of an Award under the Plan to any Director.

3.06  Authority to Make Awards and to Determine Terms and Conditions of Awards.
      ------------------------------------------------------------------------
      Subject to any limitations prescribed by the Articles of Incorporation and
      Bylaws of the Company, and further subject to the express terms,
      conditions, limitations and other provisions of the Plan, the Plan
      Administrator shall have the full and final authority, in its sole
      discretion at any time and from time-to-time, to do any of the following:

      A.   designate and/or identify the Persons or classes of Persons who are
           considered Eligible Directors;

      B.   grant Awards to such selected Eligible Directors or classes of
           Eligible Directors in such form and amount as the Plan Administrator
           shall determine;

      C.   determine the number of Plan Shares to be covered by each Award;

      D.   approve forms of Award Agreements for use under the Plan;

      E.   impose such terms, limitations, restrictions and conditions upon any
           Award as the Plan Administrator shall deem appropriate and necessary
           including, without limitation:

           (1)  the date of grant of the Award;

           (2)  the time or times when Options or SARs may be exercised (which
                may be based on performance criteria);

           (3)  any vesting and/or forfeiture conditions placed upon any Awards;
                and

           (4)  and repurchase conditions placed upon grants or awards of Grant
                Shares;

      F.   require as a condition of the grant of an Award that the Recipient
           surrender for cancellation some or all of any unexercised Options
           which have previously been granted to the Recipient under the Plan or
           otherwise (an Award, the grant of which is conditioned upon such
           surrender; may have a price or value lower (or

                                      -10-
<PAGE>

           higher) than the surrendered Option; may cover the same (or a lesser
           or greater) number of shares of Common Stock as such surrendered
           Option; may contain such other terms as the Plan Administrator deems
           appropriate and necessary; and shall be exercisable in or granted in
           accordance with its terms, without regard to the number of shares,
           price, exercise period or any other term or condition of such
           surrendered Option);

      G.   approve the reduction in the exercise price of any Option or SAR to
           the then current Fair Market Value if the Fair Market Value of the
           Common Stock covered by such Option or SAR shall have declined since
           the date such Option or SAR was granted;

      H.   determine the type and value of consideration which the Company will
           accept from Recipients in payment for the exercise of Options and/or
           the award of Grant Shares;

      I.   determine the type and value of consideration which the Company will
           pay in connection with the exercise of SARs;

      J.   adopt, amend and rescind rules and regulations relating to the Plan,
           including rules and regulations relating to sub-plans established for
           the purpose of qualifying for preferred tax treatment under foreign
           tax laws, and make all other determinations and take all other action
           necessary or advisable for the implementation and administration of
           the Plan;

      K.   modify or amend each Award (subject to Article XVIII), including the
                                                  -------------
           discretionary authority to extend the post-termination exercisability
           period of Options or SARs longer than is otherwise provided for in
           the Plan; and

      L.   agree to withhold Plan Shares in satisfaction of any applicable
           Withholding Taxes.

      In determining the recipient, form and amount of Awards, the Plan
      Administrator shall consider any factors it may deem relevant such as, by
      way of example and not limitation or obligation, the Recipient's
      functions, responsibilities, value of services to the Company, and past
      and potential contributions to the Company's profitability and sound
      growth.

3.07  Authority to Interpret Plan; Binding Effect of All Determinations. The
      -----------------------------------------------------------------
      Plan Administrator shall, in its sole and absolute discretion, interpret
      and determine the effect of all matters and questions relating to the Plan
      including, without limitation, all questions relating to whether a
      Termination Of Recipient has occurred. All interpretations and
      determinations of the Plan Administrator under the Plan (including,
      without limitation, determinations pertaining to the eligibility of
      Persons to receive Awards, the form, amount and timing of Awards, the
      methods of payment for Awards, the restrictions and conditions placed upon
      Awards, and the other terms and provisions of Awards and the certificates
      or agreements evidencing same) need not be uniform and may be made by the
      Plan Administrator selectively among Persons who receive, or are eligible
      to receive, Awards under the Plan, whether or not such Persons are
      similarly situated.

      All actions taken and all interpretations and determinations made under
      the Plan in good faith by the Plan Administrator shall be final and
      binding upon the Recipient, the Company, and all other interested Persons.
      No member of the Plan Administrator shall be personally liable for any
      action taken or decision made in good faith relating to the Plan, and all
      Persons constituting the Plan Administrator shall be fully protected and
      indemnified to the fullest extent permitted under applicable law by the
      Company in

                                      -11-
<PAGE>

      respect to any such action, determination, or interpretation.

3.08  Compensation; Advisors.  Members of the Plan Administrator shall receive
      ----------------------
      such compensation for their services hereunder as may be determined by the
      Board. All expenses and liabilities incurred by members of the Plan
      Administrator in connection with the administration of the Plan shall be
      borne by the Company. The Plan Administrator may, at the cost of the
      Company, employ attorneys, consultants, advisors, accountants, appraisers,
      brokers or other Persons to provide advice, opinions or valuations, and
      the Plan Administrator shall be entitled to rely upon any such advice,
      opinions or valuations.

                                  ARTICLE IV

                  SHARES OF COMMON STOCK ISSUABLE UNDER PLAN
                  ------------------------------------------

4.01  Maximum Number of Shares Authorized Under Plan.  Plan Shares which may be
      ----------------------------------------------
      issued or granted under the Plan shall be authorized and unissued or
      treasury shares of Common Stock. The aggregate maximum number of Plan
      Shares which may be issued, whether upon exercise of Options or as a grant
      of Grant Shares, or in payment of SARs, shall not exceed four hundred
      thousand (400,000) shares of Common Stock; provided, however, that such
      number shall be increased by the following:
                      ---------

      A.  Any shares of Common Stock tendered by a Recipient as payment for
          Option Shares (in connection with the exercise of the associated
          Option) or Grant Shares;

      B.  Any shares of Common Stock underlying any options, warrants or other
          rights to purchase or acquire Common Stock which options, warrants or
          rights are surrendered by a Recipient as payment for Option Shares (in
          connection with the exercise of the associated Option) or Grant
          Shares;

      C.  Any shares of Common Stock subject to an Option which, for any reason,
          is terminated unexercised or expires;

      D.  Any Forfeitable Grant Shares which, for any reason, are forfeited by
          the holder thereof or repurchased by the Company; and

      E.  Any SAR Shares subject to an Independent SAR which, for any reason, is
          terminated unexercised or expires.

4.02  Calculation of Number of Shares Available for Awards.  For purposes of
      ----------------------------------------------------
      calculating the maximum number of Plan Shares which may be issued under
      the Plan, the following rules shall apply:

      A.  When Options are exercised, and when cash is used as full payment for
          Option Shares issuable upon exercise of such Options, all Option
                                                                ---
          Shares issued in connection with such exercise (including Option
          Shares, if any, withheld in satisfaction of any applicable Withholding
          Taxes) shall be counted;

      B.  When Options are exercised, and when shares of Common Stock are used
          as full or partial payment for Option Shares issuable upon exercise of
          such Options, the net Option Shares issued in connection with such
                            ---
          exercise (including Option Shares, if any, withheld in satisfaction of
          any Applicable Withholding Tax Requirements) shall be counted;

                                      -12-
<PAGE>

      C.  When Grant Shares are granted, and when shares of Common Stock are
          used as full or partial payment therefore, the net Grant Shares issued
          (including Grant Shares, if any, withheld in satisfaction of any
          applicable Withholding Taxes) shall be counted;

      D.  When SARs are exercised, only the Plan Shares issued in payment
          thereof (including Plan Shares, if any, withheld in satisfaction of
          any applicable Withholding Taxes) shall be counted; and

      E.  If the exercise price of an Option or SAR is reduced, the transaction
          will be treated as a cancellation of the Option or SAR, and the grant
          of a new Option or SAR.

4.03  Date of Awards.  The date an Award is granted shall mean the date selected
      --------------
      by the Plan Administrator as of which the Plan Administrator allots a
      specific number of Plan Shares to a Recipient with respect to such Award
      pursuant to the Plan.

                                   ARTICLE V

                      OPTIONS (TO PURCHASE OPTION SHARES)
                      -----------------------------------

5.01  Grant.  The Plan Administrator may from time to time, and subject to the
      -----
      provisions of the Plan and such other terms and conditions as the Plan
      Administrator may prescribe, grant to any Eligible Director one or more
      options ("Options") to purchase the number of Plan Shares allotted by the
      Plan Administrator ("Option Shares"). The grant of an Option shall be
      evidenced by a written Stock Option Certificate, executed by the Recipient
      and an authorized officer of the Company, stating:

      A.  the number of Option Shares subject to the Option;

      B.  the Option Price (as such term is defined below) for the Option; and

      C.  all other material terms and conditions of such Option.

5.02  Option Price.  The purchase price per Option Share deliverable upon the
      ------------
      exercise of an Option (the "Option Price") shall be such price as may be
      determined by the Plan Administrator.

5.03  Option Term; Expiration.  The term of each Option shall commence at the
      -----------------------
      grant date for such Option as determined by the Plan Administrator, and
      shall expire (unless an earlier expiration date is expressly provided in
      the underlying Stock Option Certificate or another section of the Plan
      including, without limitation, section 5.05), on the first business day
                                     ------------
      prior to the ten (10) year anniversary of the date of grant thereof. The
      Plan Administrator may extend the term of any outstanding Option should
      the Plan Administrator, in its sole and absolute discretion, determine it
      advisable or necessary to do so including, without limitation, in
      connection with any Termination Of Recipient.

5.04  Exercise Date.     Unless a later exercise date is expressly provided in
      -------------
      the underlying Stock Option Certificate or another section of the Plan,
      each Option shall become exercisable on the later of:
                                                  -----

      A.  the date of its grant as determined by the Plan Administrator; or

                                      -13-
<PAGE>

      B.  the date of delivery to the Recipient, and execution by the Company
          and the Recipient, of the underlying Stock Option Certificate
          evidencing the grant of the Option.

      No Option shall be exercisable after the expiration of its applicable term
      as set forth in section 5.03.  Subject to the foregoing, each Option shall
                      ------------
      be exercisable in whole or in part during its applicable term unless
      expressly provided otherwise in the underlying Stock Option Certificate.

5.05  Vesting Conditions.  Subject to the limitations in Article X relating to
      ------------------                                 ---------
      Termination Of Recipient, the Plan Administrator may subject any Options
      granted to such vesting conditions as the Plan Administrator, in its sole
      discretion, determines are appropriate and necessary, such as, by way of
      example and not obligation:

      A.  the attainment of goals by the Recipient; or

      B.  the continued service by the Recipient as a Director to the Company
          and/or to any Parent or Subsidiary.

      If no vesting is expressly provided in the underlying Stock Option
      Certificate, the Option Shares shall be deemed fully vested upon date of
      grant. Where vesting conditions are based upon continued performance of
      services to the Company, the special rules of Article X relating to
                                                    ---------
      Termination Of Recipient shall apply. No vesting conditions may be imposed
      which are not permitted, or exceed those permitted, under the exemption
      from registration or qualification to be relied upon under applicable
      Securities Laws, as selected by the Company in its sole discretion. If no
      vesting is expressly provided in the underlying Stock Option Certificate,
      the Option Shares shall be deemed fully vested upon date of grant. The
      Plan Administrator may waive the acceleration of any vesting and/or
      expiration provision of any outstanding Option should the Plan
      Administrator, in its sole and absolute discretion, determine it advisable
      or necessary to do so including, without limitation, in connection with
      any Termination Of Recipient.

5.06  Manner of Exercise.  An exercisable Option, or any exercisable portion
      ------------------
      thereof, may be exercised solely by delivery to the Secretary of the
      Company at its principal executive offices prior to the time when such
      Option (or such portion) becomes unexercisable under this Article V of
                                                                ---------
      each of the following:

      A.  a Notice of Exercise of Stock Option in the form attached to the
          underlying Stock Option Certificate, duly signed by the Recipient or
          other Person then entitled to exercise the Option or portion thereof,
          stating the number of Option Shares to be purchased by exercise of the
          associated Option;

      B.  subject to Article VIII relating to non-cash form of consideration,
                     ------------
          payment in full for the Option Shares to be purchased by exercise of
          the underlying Option, together with payment in satisfaction of any
          applicable Withholding Taxes (collectively, the "Gross Option Exercise
          Price"), in immediately available funds, in U.S. dollars; provided,
          however, the Plan Administrator may, in its sole discretion, permit a
          delay in payment of the Gross Option Exercise Price for a period of up
          to thirty (30) days;

      C.  a Consent of Spouse from the spouse of the Recipient, if any, duly
          signed by such spouse;

                                      -14-
<PAGE>

      D.  in the event that the Option or portion thereof shall be exercised by
          any Person other than the Recipient, appropriate proof of the right of
          such person or persons to exercise the Option or portion thereof; and

      E.  such documents, representations and undertakings as provided in the
          Stock Option Certificate and/or which the Plan Administrator, in its
          absolute discretion, deems necessary or advisable pursuant to section
                                                                        -------
          13.01.
          -----

5.07  Net Conversion of Option.  Notwithstanding section 5.06B, if and to the
      ------------------------                   -------------
      extent expressly permitted in the underlying Stock Option Certificate, or
      if and to the extent otherwise consented to by the Plan Administrator in
      writing, the Recipient may convert an Option, in whole or in part, into
      such net number of Option Shares as shall be determined by dividing (x)
      the difference between (I) the aggregate Fair Market Value of the total
      number Option Shares to be exercised as of the conversion date, together
      with payment in satisfaction of any applicable Withholding Taxes, and (II)
      the aggregate Exercise Price of such total number of Option Shares, by (y)
      the Fair Market Value of one Option Share as of the date of conversion.

      The Recipient shall, in the event of such permitted conversion, deliver to
      the Company all of the items described in section 5.06 with respect to the
                                                ------------
      underlying Option (other than section 5.06B to the extent payment
                                    -------------
      therefore is not required by operation of this section 5.07).
                                                     ------------

5.08  Grant of Replacement Options.  In the event:
      ----------------------------

      A.  the Gross Option Exercise Price is paid in the form of shares of
          Common Stock owned by the Recipient pursuant to section 8.01A; and
                                                          -------------

      B.  the exercising Recipient is then an Eligible Director,

      then the Plan Administrator in its sole discretion may, or the Plan
      Administrator (if and to the extent expressly required by the underlying
      Stock Option Certificate) shall, grant to the exercising Recipient options
      (the "Replacement Options") entitling the exercising Recipient to purchase
      such number of Plan Shares as shall equal the number of shares of Common
      Stock delivered to the Company in payment of the Gross Option Exercise
      Price with respect to the underlying Stock Option Certificate.

      Each Replacement Option shall:

      (1) Be immediately exercisable upon its grant (without any vesting
          conditions);

      (2) have an Option Price for each Option Share which equals the Fair
          Market Value of the Common Stock so paid as determined for purposes
          of payment pursuant to section 8.01A;
                                 -------------

      (3) have an Option Term co-terminus with that of the underlying Option;
          and

      (4) contain such other terms and conditions as contained in the
          underlying Stock Option Certificate.

      Shares of Common Stock received by the Recipient in connection with the
      grant of the Replacement Option may not be used as consideration in
      connection with the exercise of the Replacement Option, unless such shares
      of Common Stock have been held by the Recipient for a period of at least
      one (1) year, and such form of payment is otherwise permitted pursuant to
      the terms of Article VIII.
                   ------------

                                      -15-
<PAGE>

      The grant of a Replacement Option shall be evidenced by a written Stock
      Option Certificate, executed by the Recipient and an authorized officer of
      the Company, stating:

      (i)   the number of Option Shares subject to the Option;

      (ii)  the Option Price (determined in the manner prescribed above in this
            section) for the Option; and

      (iii) all other material terms and conditions of such Option.

5.09  Conditions to Issuance of Option Shares.  The Company shall not be
      ---------------------------------------
      required to issue or deliver any certificate or certificates representing
      the Option Shares purchased upon exercise of any Option or any portion
      thereof prior to fulfillment of all of the following conditions:

      A.    the delivery of the documents described in section 5.06;
                                                       ------------
      B.    the receipt by the Company of full payment for such Option Shares,
            together with payment in satisfaction of any applicable Withholding
            Taxes;

      C.    subject to Article XIII, the satisfaction of any requirements or
                       ------------
            conditions of the Applicable Laws; and

      D.    the lapse of such reasonable period of time following the exercise
            of the Option as the Plan Administrator may establish from time-to-
            time for administrative convenience.

                                  ARTICLE VI

                                 GRANT SHARES
                                 ------------

6.01  Grant.  The Plan Administrator may from time to time, subject to the
      -----
      provision of the Plan and such other terms and conditions as the Plan
      Administrator may prescribe, grant to any Eligible Director one or more
      Plan Shares allotted by the Plan Administrator ("Grant Shares"). The grant
      of Grant Shares or the grant of the right to receive Grant Shares shall be
      evidenced by a written Stock Grant Agreement, executed by the Recipient
      and an authorized officer of the Company on or before the time of the
      grant of such Grant Shares, setting forth:

      A.    the number of Grant Shares granted;

      B.    the consideration (if any) for such Grant Shares; and

      C.    all other material terms and conditions of such grant.

6.02  Consideration (Purchase Price).  The Plan Administrator, in its sole
      ------------------------------
      discretion, may grant or award Grant Shares in any of the following
      instances:

      A.    As Bonus/Reward.  As a "bonus" or "reward" for services previously
            ---------------
            rendered and otherwise fully compensated, in which case the
            recipient of the Grant Shares shall not be required to pay any
            consideration to the Company for such Grant Shares, and the value of
            each Grant Shares shall be the Fair Market Value of a share of
            Common Stock on the date of grant.

                                      -16-
<PAGE>

      B.  As Compensation.  As "compensation" for the previous performance or
          ---------------
          future performance of services or attainment of goals, in which case
          the recipient of the Grant Shares shall not be required to pay any
          consideration to the Company for such Grant Shares (other than the
          performance of the Recipient's services), and the value of each Grant
          Share received (together with the value of such services or attainment
          of goals attained by the Recipient), shall be the Fair Market Value of
          a share of Common Stock on the date of grant.

      C.  As Purchase Price Consideration.  In "consideration" for the payment
          -------------------------------
          of a purchase price to the Company for each of such Grant Shares (the
          "Stock Grant Purchase Price") in an amount established by the Plan
          Administrator, provided, however:

          (1)  The Stock Grant Purchase Price shall not be less than that
               allowed under the exemption from registration under the
               applicable Blue Sky Laws (as selected by the Company in its sole
               discretion) of the state or territory in which the Recipient then
               resides;

          (2)  If the Common Stock is traded on a stock exchange or over-the-
               counter on Nasdaq, the purchase price shall not be less than the
               minimum price per share permitted by such stock exchange or
               Nasdaq; and

          (3)  Under no circumstances shall the Stock Grant Purchase Price per
               Grant Share be less than the then current par value per share of
               Common Stock.

6.03  Term; Expiration.  The term in which a Recipient may purchase any Grant
      ----------------
      Shares awarded for which the Recipient is required to pay consideration
      shall commence at the grant date of the underlying Stock Grant Agreement
      as determined by the Plan Administrator, and shall expire on the date
      specified in the underlying Stock Grant.

6.04  Deliveries; Manner of Payment.  The Grant Shares may be purchased solely
      -----------------------------
      by delivery to the Secretary of the Company at the principal executive
      offices at the Company prior to the time the Grant Shares become
      purchasable under this Article VI of each of the following:
                             ----------

      A.  the Stock Grant Agreement for the Grant Shares, duly signed by the
          Recipient;

      B.  a Consent of Spouse from the spouse of the Recipient, if any, duly
          signed by such spouse;

      C.  subject to Article VIII relating to non-cash form of consideration,
                     ------------
          payment in full of the Stock Grant Purchase Price (where payment
          thereof is required), together with payment in satisfaction of any
          applicable Withholding Taxes (collectively, the "Gross Stock Grant
          Purchase Price"), in immediately available funds, in U.S. dollars;
          provided, however, the Plan Administrator may, in its sole discretion,
          permit a delay in payment of the Gross Stock Grant Purchase Price for
          a period of up to thirty (30) days; and

      D.  such documents, representations and undertakings as provided in the
          Stock Grant Agreement and/or which the Plan Administrator, in its
          absolute discretion, deems necessary or advisable pursuant to section
                                                                        -------
          13.01.
          -----

6.05  Conditions to Issuance of Grant Shares.  The Company shall not be
      --------------------------------------
      required to issue or deliver any certificate or certificates representing
      the Grant Shares prior to fulfillment of all of the following conditions:

                                      -17-
<PAGE>

      A.  the delivery of the documents described in section 6.04;
                                                     ------------

      B.  the receipt by the Company of full payment (if applicable) for such
          Grant Shares, together with payment in satisfaction of any applicable
          Withholding Taxes;

      C.  subject to Article XIII, the satisfaction of any requirements or
                     ------------
          conditions of the Applicable Laws; and

      D.  the lapse of such reasonable period of time following the award of the
          Grant Shares as the Plan Administrator may establish from time-to-time
          for administrative convenience.

                                  ARTICLE VII

                FORFEITURE CONDITIONS PLACED UPON GRANT SHARES
                ----------------------------------------------

7.01  Vesting Conditions; Forfeiture of Unvested Grant Shares.  Subject to the
      -------------------------------------------------------
      limitations in Article X relating to Termination Of Recipient, the Plan
                     ---------
      Administrator may subject or condition Grant Shares granted or awarded
      (hereinafter referred to as "Forfeitable Grant Shares") to such vesting
      conditions based upon continued provision of services or attainment of
      goals subsequent to such grant of Forfeitable Grant Shares as the Plan
      Administrator, in its sole discretion, may deem appropriate and necessary,
      such as, by way of example and not obligation:

      A.  the attainment of goals by the Recipient; or

      B.  the continued service by such Recipient as a Director to the Company
          and/or to any Parent or Subsidiary; subject to the provisions set
          forth below.

      Where vesting conditions are based upon continued performance of services
      to the Company, the special rules of Article X relating to Termination Of
                                           ---------
      Recipient shall apply.  In the event the Recipient does not satisfy any
      vesting conditions, the Company may require the Recipient, subject to the
      repurchase payment terms of section 7.02, to forfeit such unvested
                                  ------------
      Forfeitable Grant Shares to the Company. All vesting conditions imposed on
      the grant of Forfeitable Grant Shares, including repurchase payment terms
      complying with section 7.02, shall be set forth in a written Stock Grant
                     ------------
      Agreement, executed by the Company and the Recipient on or before the time
      of the grant of such Forfeitable Grant Shares, stating the number of said
      Forfeitable Grant Shares subject to such conditions, and further
      specifying the vesting conditions.

      If no vesting conditions are expressly provided in the underlying Stock
      Grant Agreement, the Grant Shares shall not be deemed to be Forfeitable
      Grant Shares, and will not be subject to forfeiture. The Plan
      Administrator may waive the acceleration of any vesting conditions placed
      upon any Forfeitable Grant Shares should the Plan Administrator, in its
      sole and absolute discretion, determine it advisable or necessary to do so
      including, without limitation, in connection with any Termination Of
      Recipient.

7.02  Repurchase of Forfeitable Grant Shares Which Are Forfeited.
      ----------------------------------------------------------

      A.  Repurchase Rights and Price.  In the event the Company does not waive
          ---------------------------
          its right to require the Recipient to forfeit any or all of such
          unvested Forfeitable Grant Shares, the Company shall be required to
          --------
          pay the Recipient, for each unvested Forfeitable Grant Share which the
          Company requires the Recipient to forfeit, the amount per Forfeitable
          Grant Share set forth in the Stock Grant Agreement, provided,
          however:

                                      -18-
<PAGE>

          (1)  The repurchase price per Forfeitable Grant Share in any event may
               not be less that the "original cost" (as such term is defined
               below) of such Forfeitable Grant Shares to be forfeited or, if
               elected by the Plan Administrator in its sole discretion and
               without any obligation to do so in the underlying Stock Grant
               Agreement, the "book value" (as such term is defined below) of
               such Forfeitable Grant Shares to be forfeited, if higher than the
               original cost; and

          (2)  The "original cost" per Forfeitable Grant Share means the
               aggregate amount originally paid to the Company by the Recipient
               (or his, her or its predecessor) to purchase or acquire all of
               the Grant Shares to be forfeited, divided by the total number of
               such shares. The amount of consideration paid by any Recipient
               (or his, her or its predecessor) who originally received the
               Grant Shares as compensation for services or a bonus, or
               otherwise without payment of consideration in cash or property,
               shall be zero

           The "book value" per Forfeitable Grant Share means the difference
           between the Company's total assets and total liabilities as of the
           close of business on the last day of the calendar month preceding the
           date of forfeiture, divided by the total number of shares of Common
           Stock then outstanding. The book value per Forfeitable Grant Share
           shall be determined by the independent certified public accountant
           regularly engaged by the Company. The determination shall be
           conclusive and binding and made in accordance with generally accepted
           accounting principles applied on a basis consistent with those
           previously applied by the Company.

      B.   Form of Payment.  The repurchase payments to be made by the Company
           ---------------
           to a Recipient for forfeited Forfeitable Grant Shares shall be in the
           form of cash or cancellation of purchase money indebtedness with
           respect to the initial purchase of said Forfeitable Grant Shares by
           the Recipient, if any, and must be paid no later than ninety (90)
           days after the date of termination.

7.03  Restrictive Legend.  Until such time as all conditions placed upon
      ------------------
      Forfeitable Grant Shares lapse, the Plan Administrator may place a
      restrictive legend on the share certificate representing such Forfeitable
      Grant Shares which evidences said restrictions in such form, and subject
      to such stop instructions, as the Plan Administrator shall deem
      appropriate and necessary, including the following legend with respect to
      vesting conditions based upon continued provision of services by the
      Recipient:

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
          FORFEITURE IN THE EVENT CERTAIN VESTING CONDITIONS BASED UPON THE
          CONTINUED PROVISION OF SERVICES TO THE COMPANY BY THE HOLDER HEREOF
          ARE NOT SATISFIED.  THIS RISK OF FORFEITURE AND UNDERLYING VESTING
          CONDITIONS ARE SET FORTH IN FULL IN THAT CERTAIN STOCK GRANT AGREEMENT
          BETWEEN THE HOLDER OF THIS CERTIFICATE AND THE COMPANY DATED THE
          _______DAY OF ___________, _____________, AND THAT CERTAIN 2000
          PINNACLE OIL INTERNATIONAL. INC. DIRECTORS' STOCK pLAN DATED FEBRUARY
          15, 2000, A COPY OF WHICH MAY BE INSPECTED BY AUTHORIZED PERSONS AT
          THE PRINCIPAL OFFICE OF THE COMPANY AND ALL THE PROVISIONS OF WHICH
          ARE INCORPORATED BY REFERENCE IN THIS CERTIFICATE.

      The conditions shall similarly apply to any new, additional or different
      securities the Recipient may become entitled to receive with respect to
      such Forfeitable Grant Shares by

                                      -19-
<PAGE>

      virtue of a stock split or stock dividend or any other change in the
      corporate or capital structure of the Company.

      The Plan Administrator shall also have the right, should it elect to do
      so, to require the Recipient to deposit the share certificate for the
      Forfeitable Grant Shares with the Company or its agent, endorsed in blank
      or accompanied by a duly executed irrevocable stock power or other
      instrument of transfer, until such time as the conditions lapse. The
      Company shall remove the legend with respect to any Forfeitable Grant
      Shares which become vested, and remit to the Recipient a share certificate
      evidencing such vested Grant Shares.

                                 ARTICLE VIII

                        NON-CASH PURCHASE CONSIDERATION
                        -------------------------------

8.01  General.  Notwithstanding section 5.06B or section 6.04, if and to the
      -------                   -------------    ------------
      extent expressly permitted in the underlying Stock Option Certificate or
      Stock Grant Agreement (as the case may be), or if and to the extent
      otherwise consented to by the Plan Administrator in writing, payment of
      the Gross Option Exercise Price or the Gross Stock Grant Purchase Price
      (as the case may be) may be made by one or more of the following non-cash
      forms of payment in lieu of cash consideration:

      A.  Shares of Common Stock owned by the Recipient duly endorsed for
          transfer to the Company, with a Fair Market Value on the date of
          delivery equal:

          (1)  in the case of the exercise of an Option, to the aggregate Gross
               Option Exercise Price of the Option Shares with respect to which
               the Option or portion thereof is thereby exercised, or

          (2)  in the case of the purchase of Grant Shares, to the Gross Stock
               Grant Purchase Price;

      B.  The surrender or relinquishment of options, warrants or other rights
          to acquire Common Stock held by the Recipient, with a Fair Market
          Value on the date of delivery (or date of grant if permitted by the
          Plan Administrator) equal:

          (1)  in the case of the exercise of an Option, to the aggregate Gross
               Option Exercise Price of the Option Shares with respect to which
               the Option or portion thereof is thereby exercised, or

          (2)  in the case of the purchase of Grant Shares, to the Gross Stock
               Grant Purchase Price;

      C.  A reduction in the amount of any Company liability to the Recipient,
          including any liability attributable to the Recipient's participation
          in any Company-sponsored deferred compensation program or arrangement;

      D.  A full recourse promissory note bearing interest at a rate as shall
          then preclude the imputation of interest under the Code, and payable
          upon such terms as may be prescribed by the Plan Administrator. The
          Plan Administrator shall prescribe the form of such note and the
          security to be given for such note. Notwithstanding the foregoing, no
          Option may be exercised by delivery of a promissory note or by a loan
          from the Company if such loan or other extension of credit is
          prohibited by law at the time of exercise of this Option or does not
          comply with the provisions of

                                      -20-
<PAGE>

          Regulation G promulgated by the Federal Reserve Board with respect to
          "margin stock" if the Company and the Recipient are then subject to
          such Regulation;

      E.  Any combination of the foregoing methods of payment; and/or

      F.  Such other good and valuable consideration and method of payment for
          the issuance of Plan Shares to the extent permitted by Applicable
          Laws.

                                  ARTICLE IX

                           STOCK APPRECIATION RIGHTS
                           -------------------------

9.01  Grant.  The Plan Administrator may from time to time, and subject to
      -----
      the provisions of the Plan and such other terms and conditions as the Plan
      Administrator may prescribe, in its sole discretion, grant to any Eligible
      Director the following Stock Appreciation Rights ("SARs"):

      A.  in connection with all or any part of an Option granted to such
          Eligible Director, either concurrently with the grant of such
          underlying Option or at any time thereafter during the term of such
          underlying Option (a "Tandem SAR"); or

      B.  independently of the grant of any Option to such Eligible Director (an
          "Independent SAR").


      The grant of an SAR shall be evidenced by a written Stock Appreciation
      Rights Agreement ("SAR Agreement"), executed by the Recipient and an
      authorized officer of the Company, stating:

      C.  if the SAR is a Tandem SAR, the underlying Option to which the SAR
          relates;

      D.  if the SAR is an Independent SAR, the number of Plan Shares covered by
          the SAR (the "SAR Shares");

      E.  if the SAR is an Independent SAR, the term of the SAR; and

      F.  all other material terms and conditions of such SAR.

9.02  Tandem SARs.  The following provisions apply to each grant of a Tandem
      -----------
      SAR:

      A.  The Tandem SAR shall entitle the Recipient to exercise such Tandem SAR
          by surrendering to the Company unexercised a portion of the underlying
          Option. The Recipient shall receive in exchange from the Company an
          amount, payable pursuant to section 9.04, equal to the excess of (x)
                                      ------------
          the aggregate Fair Market Value on the date of exercise of the Tandem
          SAR of the Option Shares covered by the surrendered portion of the
          underlying Option, over (y) the aggregate Option Price of the Option
          Shares covered by the surrendered portion of the underlying Option.

          Notwithstanding the foregoing, the Plan Administrator may place limits
          on the amount that may be paid upon exercise of a Tandem SAR;
          provided, however, that such limit shall not restrict the
          exercisability of the underlying Option;

      B.  When a Tandem SAR is exercised, the underlying Option, to the extent
          surrendered, shall no longer be exercisable;

                                      -21-
<PAGE>

      C.  A Tandem SAR shall be exercisable only when and to the extent that the
          underlying Option is exercisable, and shall expire no later than the
          date on which such underlying Option expires; and

      D.  A Tandem SAR may only be exercised at a time when the Fair Market
          Value of the Option Shares covered by the underlying Option exceeds
          the exercise price of the Option Shares covered by the underlying
          Option.

9.03  Independent SARs.  The following provisions apply to each grant of an
      ----------------
      Independent SAR:

      A.  The Independent SAR shall entitle the Recipient, by exercising the
          Independent SAR, to receive from the Company an amount equal to the
          excess of (x) the Fair Market Value of the SAR Shares covered by
          exercised portion of the Independent SAR, as of the date of such
          exercise, over (y) the Fair Market Value of the SAR Shares covered by
          the exercised portion of the Independent SAR, as of the date on which
          the Independent SAR was granted; provided, however, that the Plan
          Administrator may place limits on the amount that may be paid upon
          exercise of a Independent SAR; and

      B.  Independent SARs shall be exercisable, in whole or in part, at such
          times as the Plan Administrator shall specify in the SAR Agreement.

9.04  Form of Payment.  The Company's obligation arising upon the exercise of
      ---------------

      A.  Tandem SARs shall be paid in cash (either outright or pursuant to such
          deferred payment arrangement as the Plan Administrator specifies in
          the underlying SAR Agreement); and

      B.  Independent SARs shall be paid in cash (either outright or pursuant to
          such deferred payment arrangement as the Plan Administrator specifies
          in the underlying SAR Agreement) or SAR Shares, or in any combination
          of cash and SAR Shares, as the Plan Administrator, in its sole
          discretion, may determine;

      provided, however, the Plan Administrator may, in the case of the exercise
      of either Tandem SARs or Independent SARS, withhold such amount of cash
      and, if applicable, SAR Shares, as the Plan Administrator deems necessary
      to satisfy any applicable Withholding Taxes.  SAR Shares issued upon the
      exercise of an Independent SAR shall be valued at their Fair Market Value
      as of the date of exercise.

9.05  SAR Term; Expiration.  The term of each SAR shall commence at the grant
      --------------------
      date for such SAR as determined by the Plan Administrator, and shall
      expire (unless, in the case of a Tandem SAR, an earlier expiration date is
      expressly provided in the underlying SAR Agreement or another section of
      the Plan including, without limitation, section 9.07), on the first
                                              ------------
      business day prior to the ten (10) year anniversary of the date of grant
      thereof. The Plan Administrator may extend the term of any outstanding SAR
      should the Plan Administrator, in its sole and absolute discretion,
      determine it advisable or necessary to do so including, without
      limitation, in connection with any Termination Of Recipient.

9.06  Exercise Date.  Unless a later exercise date is expressly provided in
      -------------
      the underlying SAR Agreement or another section of the Plan, each SAR
      shall become exercisable on the later of:
                                      -----

      A.  the date of its grant as determined by the Plan Administrator; or

                                      -22-
<PAGE>

      B.  the date of delivery to the Recipient, and execution by the Company
          and the Recipient, of the underlying SAR Agreement evidencing the
          grant of the SAR.

      No SAR shall be exercisable after the expiration of its applicable term as
      set forth in section 9.05.  Subject to the foregoing, each SAR shall be
                   ------------
      exercisable in whole or in part during its applicable term unless
      expressly provided otherwise in the underlying SAR Agreement.

9.07  Vesting Conditions.  Subject to the limitations in Article X relating to
      ------------------                                  ---------
      Termination Of Recipient, the Plan Administrator may subject any SARs
      granted to such vesting conditions (in addition, in the case of any Tandem
      SARs, to such vesting conditions as are specified in the underlying
      Option) as the Plan Administrator, in its sole discretion, determines are
      appropriate and necessary, such as, by way of example and not obligation:

      A.  the attainment of goals by the Recipient; or

      B.  the continued service by the Recipient as a Director to the Company
          and/or to any Parent or Subsidiary.

      Where vesting conditions are based upon continued performance of services
      to the Company, the special rules of Article X relating to Termination Of
                                           ---------
      Recipient shall apply.  If no vesting is expressly provided in the
      underlying SAR Agreement, the SAR shall be deemed fully vested upon date
      of grant (subject, in the case of any Tandem SAR, to such vesting
      conditions as are specified under the underlying Option).  The Plan
      Administrator may waive the acceleration of any vesting and/or expiration
      provision of any outstanding SAR should the Plan Administrator, in its
      sole and absolute discretion, determine it advisable or necessary to do so
      including, without limitation, in connection with any Termination Of
      Recipient.

9.08  Manner of Exercise.  An exercisable SAR, or any exercisable portion
      ------------------
      thereof, may be exercised solely by delivery to the Secretary of the
      Company at its principal executive offices prior to the time when such SAR
      (or such portion) becomes unexercisable under this Article IX of each of
                                                         ----------
      the following:

      A.  a Notice of Exercise of the SAR in the form attached to the underlying
          SAR Agreement, duly signed by the Recipient or other Person then
          entitled to exercise the SAR or portion thereof, stating the number of
          Option Shares (in the case of a Tandem SAR) or SAR Shares (in the case
          of an Independent SAR) to be exercised;

      B.  a Consent of Spouse from the spouse of the Recipient, if any, duly
          signed by such spouse;

      C.  in the event that the SAR or portion thereof shall be exercised by any
          Person other than the Recipient, appropriate proof of the right of
          such person or persons to exercise the SAR or portion thereof; and

      D.  such documents, representations and undertakings as provided in the
          SAR Agreement and/or which the Plan Administrator, in its absolute
          discretion, deems necessary or advisable pursuant to section 13.01.
                                                               -------------

9.09  Conditions to Issuance of SAR Shares.  The Company shall not be required
      ------------------------------------
      to issue or deliver any certificate or certificates representing the SAR
      Shares purchased upon

                                      -23-
<PAGE>

      exercise of any Independent SAR or any portion thereof prior to
      fulfillment of all of the following conditions:

      A.  the delivery of the documents described in section 9.08;
                                                     ------------
      B.  the receipt by the Company of full payment in satisfaction of any
          applicable Withholding Taxes;

      C.  subject to Article XIII, the satisfaction of any requirements or
                     ------------
          conditions of the Applicable Laws; and

      D.  the lapse of such reasonable period of time following the exercise of
          the Independent SAR as the Plan Administrator may establish from time-
          to-time for administrative convenience.

                                   ARTICLE X

                    SPECIAL RULES FOR VESTING OR FORFEITURE
             CONDITIONS BASED ON CONTINUED PERFORMANCE OF SERVICES
             -----------------------------------------------------

10.01 Lapse of Unvested Options, Unvested SARs, and Forfeitable Grant Shares.
      ----------------------------------------------------------------------
      Where vesting conditions are imposed upon Options or SARs, or forfeiture
      conditions are imposed upon Forfeitable Grant Shares, and such conditions
      are based upon continued performance of services to the Company, then, in
      the event of Termination Of Recipient:

      A.  in the case of unvested Options, the prospective right to purchase
                         --------
          unvested Option Shares shall immediately lapse upon such termination
          --------
          if not exercised prior thereto;

      B.  in the case of unvested SARs, the prospective right to exercise the
                         --------
          unvested portion of such SARs shall immediately lapse upon such
          termination if not exercised prior thereto; and

      C.  in the case of unvested Forfeitable Grant Shares, all such unvested
                         --------
          Forfeitable Grant Shares shall be immediately forfeited upon such
          termination unless such forfeiture is expressly waived in writing by
          the Company;

      provided, however, in each of the foregoing cases, the Plan Administrator
      may, but without any obligation to do so, provide in the underlying Award
      Agreement that such unvested Options, SARs or Forfeitable Grant Shares
      shall immediately vest upon the occurrence of one or more events expressly
            ----------------
      specified in the underlying Award Agreement.

10.02 Immediate Vesting of Unvested Options, Unvested SARs, and Forfeitable
      ---------------------------------------------------------------------
      Grant Shares Upon Specified Events.  The Plan Administrator may, but
      ----------------------------------
      without any obligation to do so, provide in the underlying Award
      Agreement that unvested Options, SARs or Forfeitable Grant Shares shall
      immediately vest upon the occurrence of one or more of the following
      ----------------
      events as selected by the Plan Administration in its sole and absolute
      discretion:

      A.  in the event of a Change In Control; and/or

      B.  in the event of an Approved Corporate Transaction.

                                      -24-
<PAGE>

10.03 Acceleration of Expiration Date - Vested Options and SARs.   Where vesting
      -------------------------------
      conditions are imposed upon Options or SARs, and such conditions are based
      upon continued performance of services to the Company, then, in the event
      of Termination Of Recipient, unless otherwise expressly waived or extended
      by the underlying Award Agreement, the following rules shall apply:

      A.  The expiration date for vested Options and vested SARs shall be
              ---------------     ------             ------
          accelerated to thirty (30) days after the effective date of
          Termination Of Recipient; provided, however, the Plan Administrator
          may, but without any obligation to do so, provide in the underlying
          Award Agreement that the expiration date for vested Options or vested
                                                       ------            ------
          SARs shall not be accelerated in any event, or be accelerated to a
          date later than said thirty (30) days after the effective date of
          Termination Of Recipient.

      B.  The expiration date for unvested Options and unvested SARs (insofar as
              ---------------     --------             --------
          they do not become immediately vested pursuant to section 10.02))
                                                            -------------
          shall be upon Termination Of Recipient if earlier than the expiration
          date specified in section 5.03 in the case of an Option and section
                            ------------                              -------
          9.05 in the case of an SAR.
          ----

                                  ARTICLE XI

                        ASSIGNABILITY OF CERTAIN AWARDS
                        -------------------------------

11.01 Exercise of Options and SARs.   Options and SARs (whether vested or
      ----------------------------
      unvested) may be exercised only by the original Recipient thereof or, to
      the extent a Transfer is permitted pursuant to section 11.02 and/or
                                                     -------------
      section 11.03 below, by a permitted transferee of such Options or SARs.
      -------------

11.02 Transfer of Options, SARs and Unvested Forfeitable Grant Shares.   Except
      ---------------------------------------------------------------
      as provided in section 11.03 below, neither Options and SARs (whether
                     -------------
      vested or unvested), nor unvested Forfeitable Grant Shares, may be
                               --------
      Transferred by a Recipient, including upon the Death of a Recipient
      and/or pursuant to a Qualified Domestic Relations Order as defined by
      Section 414(p) of the Code, unless (A) such Transfer is expressly
                                  ------
      permitted in the underlying Award Agreement, or (B) the Plan
      Administrator, in its sole and absolute discretion, otherwise consents to
      such Transfer in writing; provided, however, anything in the preceding
      sentence to the contrary notwithstanding, the following Options may not
      in any circumstances be Transferred:

      A.  Options registered under the Securities Act with the Commission on
          Form S-8; and/or

      B.  Options granted pursuant to any other exemption from registration or
          qualification to be relied upon by the Company under applicable
          Securities Laws which prohibits such assignment.

11.03 Death of Recipient.   Upon the death of the Recipient (if the Recipient
      ------------------
      is a natural Person, vested Options, vested SARs and unvested Forfeitable
                           ------          ------          --------
      Grant Shares may, if such Transfer is expressly permitted in the
      underlying Award Agreement, or if the Plan Administrator, in its sole and
      absolute discretion, otherwise consents to such Transfer in writing, be
      Transferred to such Persons who are the deceased Recipient's successors
      pursuant to will or the laws of descent or distribution by reason of the
      death of the Recipient (the "Recipient's Successors") and, in the case of
      vested Options, and vested SARs, may thereafter be exercised by the
      ------              ------
      Recipient's Successors.

                                      -25-
<PAGE>

      Options, SARs and unvested Forfeitable Grant Shares so Transferred shall
                        --------
      not be further Transferred by the Recipient's Successors except to the
      extent the original Recipient of such Options, SARs and unvested
                                                              --------
      Forfeitable Grant Shares would have been permitted to Transfer such
      Options and SARs pursuant to section 11.02.
                                   -------------

11.04 Effect of Prohibited Transfer or Exercise.   Any Transfer or exercise of
      -----------------------------------------
      any Option or SAR or unvested Forfeitable Grant Share so Transferred in
                           --------
      violation of this Article XI shall be null and void ab initio and of no
                        ----------
      further force and effect.

11.05 Application to Vested Grant Shares.   Under no circumstances shall the
      ----------------------------------
      prohibition against Transfer contained in this Article XI be construed to
                                                     ----------
      apply to vested Grant Shares.
               ------

                                  ARTICLE XII

              NO STOCKHOLDER RIGHTS FOR HOLDERS OF OPTIONS OR SARs
              ----------------------------------------------------

12.01 General.   The Recipient of any Option or SAR (whether vested or unvested)
      -------
      shall not be, nor shall such Recipient have any of the rights or
      privileges of, a stockholder of the Company with respect to the Option
      Shares underlying the Option or SAR Shares underlying the SAR including,
      by way of example and not limitation, the right to vote for the election
      of directors or upon any matter submitted to stockholders at any meeting
      thereof, or to give or withhold consent to any corporate action, or to
      receive notice of meetings or other actions affecting stockholders, or to
      receive dividends, distributions, subscription rights or otherwise, unless
      and until all conditions for exercise of the Option or SARs shall be
      satisfied, and the Option or SAR duly exercised and underlying Option
      Shares or SAR Shares duly issued and delivered, at which time the
      Recipient shall become a stockholder of the Company with respect to such
      issued Option Shares or SAR Shares and, in such capacity, shall thereafter
      be fully entitled to receive dividends (if any are declared and paid), to
      vote, and to exercise all other rights of a stockholder with respect to
      such issued Option Shares or SAR Shares.

                                 ARTICLE XIII

                   COMPLIANCE WITH APPLICABLE SECURITIES LAWS
                   ------------------------------------------

13.01 Registration or Exemption from Registration.   Unless expressly
      -------------------------------------------
      stipulated in the underlying Award Agreement, in no event shall the
      Company be required at any time to register any securities issued under or
      derivative from the Plan, including any Option, Option Shares, Grant
      Shares or SAR Shares awarded or granted hereunder (collectively, the "Plan
      Securities"), under the Securities Act (including, without limitation, as
      part of any primary or secondary offering, or pursuant to Form S-8) or to
      register or qualify the Plan Securities under any applicable Securities
      Laws. In the event the Company does not register or qualify the Plan
      Securities, the Plan Securities shall be issued in reliance upon such
      exemptions from registration or qualification under the applicable
      Securities Laws that the Company and its legal counsel, in their sole
      discretion, shall determine to be appropriate and necessary with respect
      to any particular offer or sale of securities under the Plan.

13.02 Failure or Inability to Obtain Regulatory Consents or Approvals.   In
      ---------------------------------------------------------------
      the event the Company is unable to obtain, without undue burden or
      expense, such consents or approvals that may be required from any
      applicable regulatory authority (or may be deemed reasonably necessary or
      advisable by legal counsel for the Company) with respect to the applicable
      exemptions from registration or qualification under the applicable
      Securities Laws which the Company is reasonably relying upon, the Company

                                      -26-
<PAGE>

      shall have no obligation under this Agreement to issue or sell the Plan
      Securities until such time as such consents or approvals may be reasonably
      obtained without undue burden or expense, and the Company shall be
      relieved of all liability therefor; provided, however, the Company shall,
      if requested by the Recipient, rescind the Recipient's investment
      decisions and return all funds or payments made by the Recipient to the
      Company should the Company fail to obtain such consents or approvals
      within a reasonable time after the Recipient tenders such funds or
      property to the Company.

13.03 Provision of Other Documents, Including Recipient's Representative's
      --------------------------------------------------------------------
      Letter.  If requested by the Company, the Recipient shall provide such
      ------
      further representations or documents as the Company or its legal counsel,
      in their reasonable discretion, deem necessary or advisable in order to
      effect compliance with the conditions of any and all of the aforesaid
      exemptions from registration or qualification under the applicable
      Securities Laws which the Company is relying upon, or with all applicable
      rules and regulations of any applicable securities exchanges or Nasdaq.

      If required by the Company, the Recipient shall provide a Recipient's
      Representative's Letter from a purchaser representative with credentials
      reasonably acceptable to the Company to the effect that such purchaser
      representative has reviewed the Recipient's proposed investment in the
      Plan Securities and has determined that an investment in the Plan
      Securities:

      A.  is appropriate in light of the Recipient's financial circumstances,

      B.  that the purchaser representative and, if applicable, the Recipient,
          have such knowledge and experience in financial and business matters
          that such persons are capable of evaluating the merits and risks of an
          investment in the Plan Securities, and

      C.  that the purchaser representative and, if applicable, the Recipient,
          have such business or financial experience to be reasonably assumed to
          have the capacity to protect the Recipient's interests in connection
          with the purchase of the Plan Securities.

13.04 Legend on Plan Shares.  In the event the Company delivers unregistered
      ---------------------
      Plan Shares, the Company reserves the right to place the following legend
      or such other legend as it deems necessary on the share certificate or
      certificates to comply with the applicable Securities Laws being relied
      upon by the Company.

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN (1)
          REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
          (THE "SECURITIES ACT"), IN RELIANCE UPON AN EXEMPTION FROM
          REGISTRATION AFFORDED BY SUCH ACT, OR (2) REGISTERED UNDER THE
          SECURITIES LAWS OF ANY STATE OR TERRITORY OF THE UNITED STATES OR
          PROVINCE OF CANADA WHICH MAY BE APPLICABLE, IN RELIANCE UPON AN
          EXEMPTION FROM REGISTRATION AFFORDED BY SUCH STATE, TERRITORIAL AND/OR
          PROVINCIAL SECURITIES LAWS.  THESE SECURITIES HAVE BEEN ACQUIRED FOR
          THE HOLDER'S OWN ACCOUNT FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
          FOR RESALE OR DISTRIBUTION.  THESE SECURITIES MAY NOT BE SOLD OR
          TRANSFERRED UNLESS (A) THEY HAVE BEEN REGISTERED UNDER THE SECURITIES
          ACT AS WELL AS UNDER THE SECURITIES LAWS OF ANY STATE OR TERRITORY OF
          THE UNITED STATES AS MAY THEN BE APPLICABLE, OR (B) THE TRANSFER AGENT
          (OR THE COMPANY IF THEN ACTING AS ITS TRANSFER AGENT) IS PRESENTED
          WITH EITHER A WRITTEN OPINION SATISFACTORY TO COUNSEL FOR THE COMPANY
          OR A NO-ACTION OR INTERPRETIVE LETTER FROM

                                      -27-
<PAGE>

          THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND ANY
          APPLICABLE STATE, TERRITORIAL AND/OR PROVINCIAL SECURITIES REGULATORY
          AGENCY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
          CIRCUMSTANCES OF SUCH SALE OR TRANSFER.

                                  ARTICLE XIV

                        REPORTS TO RECIPIENTS OF AWARDS
                        -------------------------------

14.01 Financial Statements.   The Company shall provide each Recipient with the
      --------------------
      Company's financial statements, in the form generally distributed to its
      stockholders, at least annually.

                                  ARTICLE XV

                                  ADJUSTMENTS
                                  -----------

15.01 Common Stock Recapitalization or Reclassification; Combination or Reverse
      -------------------------------------------------------------------------
      Stock Split; Forward Stock Split.   If:
      --------------------------------

      A.  (outstanding shares of Common Stock are subdivided into a greater
          number of shares by reason of recapitalization or reclassification,

      B.  a dividend in Common Stock shall be paid or distributed in respect of
          the Common Stock,

      then the number of Plan Shares, if any, available for issuance under the
      Plan, and the Option Price of any outstanding Options in effect
      immediately prior to such subdivision or at the record date of such
      dividend shall, simultaneously with the effectiveness of such subdivision
      or immediately after the record date of such dividend, be proportionately
      increased and reduced, respectively. If outstanding shares of Common Stock
      are combined into a lesser number of shares by reason of combination or
      reverse stock split, then the number of Plan Shares, if any, available for
      issuance under the Plan, and the Option Price of any outstanding Option in
      effect immediately prior to such combination shall, simultaneously with
      the effectiveness of such combination, be proportionately reduced and
      increased, respectively.

15.02 Consolidation or Merger; Exchange of Securities; Divisive Reorganization;
      -------------------------------------------------------------------------
      Other Reorganization or Reclassification.   In case of
      ----------------------------------------

      A.  the consolidation, merger, combination or exchange of shares of
          capital stock with another entity,

      B.  the divisive reorganization of the Company (i.e., split-up, spin-off
          or split-off), or

      C.  any capital reorganization or any reclassification of Common Stock
          (other than a recapitalization or reclassification described above in
          section 15.01),
          -------------

      then the Recipient shall thereafter be entitled upon exercise of the
      Option to purchase the kind and number of shares of capital stock or other
      securities or property of the Company (or its successor{s}) receivable
      upon such event by a Recipient of the number of Option Shares which such
      Option entitles the Recipient to purchase from the Company immediately
      prior to such event. In every such case, the Company may appropriately
      adjust the number of Option Shares which may be issued under the Plan, the
      number of Option Shares subject to Options theretofore granted under the
      Plan, the Option Price of

                                      -28-
<PAGE>

      Options theretofore granted under the Plan, and any and all other matters
      deemed appropriate by the Plan Administrator.

15.03 Adjustments Determined in Sole Discretion of Board.   All adjustments to
      --------------------------------------------------
      be made pursuant to the foregoing subsections shall be made in such manner
      as the Plan Administrator shall deem equitable and appropriate, the
      determination of the Plan Administrator shall be final, binding and
      conclusive.

15.04 No Other Rights to Recipient.   Except as expressly provided in this
      ----------------------------
      Article XV:
      ----------

      A.  the Recipient shall have no rights by reason of any subdivision or
          consolidation of shares of capital stock of any class or the payment
          of any stock dividend or any other increase or decrease in the number
          of shares of stock of any class, and

      B.  the dissolution, liquidation, merger, consolidation or divisive
          reorganization or sale of assets or stock to another corporation
          (including any Approved Corporate Transactions), or any issue by the
          Company of shares of capital stock of any class, or warrants or
          options or rights to purchase securities (including securities
          convertible into shares of capital stock of any class), shall not
          affect, and no adjustment by reason thereof shall be made with respect
          to, the number of, or the Option Price for, the Option Shares.

      The grant of an Award pursuant to the Plan shall not in any way affect or
      impede the right or power of the Company to make adjustments,
      reclassifications, reorganizations or changes of its capital or business
      structure or to merge, consolidate, dissolve or liquidate, or to sell or
      transfer all or any part of its business or assets.

                                ARTICLE XVI

              APPROVED CORPORATE TRANSACTIONS -- AFFECT ON OPTIONS
              ----------------------------------------------------

16.01 General.   Notwithstanding Article XV above, in the event of the
      -------                    ----------
      occurrence of any Approved Corporate Transaction, or in the event of any
      change in applicable laws, regulations or accounting principles, the Plan
      Administrator in its discretion is hereby authorized to take any one or
      more of the following actions whenever the Plan Administrator determines
      that such action is appropriate in order to facilitate such Approved
      Corporate Transactions or to give effect to changes in laws, regulations
      or principles:

      A.  Purchase or Replacement of Option.   In its sole and absolute
          ---------------------------------
          discretion, and on such terms and conditions as it deems appropriate,
          the Plan Administrator may provide, either by the terms of the
          underlying Award Agreement or by action taken prior to the occurrence
          of such transaction or event and either automatically or upon the
          Recipient's request, for any one or combination of the following:

          (1)  the purchase of any such Option for an amount of cash equal to
               the amount that could have been attained upon the exercise of
               such Option, or realization of the Recipient's rights had such
               Option been currently exercisable or payable or fully vested;
               and/or

          (2)  the replacement of such Option with other rights or property
               (which may or may not be securities) selected by the Plan
               Administrator in its sole discretion.

                                      -29-
<PAGE>

      B.  Acceleration of Vesting and Exercise.   In its sole and absolute
          ------------------------------------
          discretion, and on such terms and conditions as it deems appropriate,
          the Plan Administrator may provide, either by the terms of the
          underlying Award Agreement or by action taken prior to the occurrence
          of such transaction or event, that such Option may not be exercised
          after the occurrence of such event; provided, however, the Recipient
          must be given the opportunity, for a specified period of time prior to
          the consummation of such transaction, to exercise the Option as to all
          Option Shares (i.e., both fully vested and unvested) covered thereby.

      C.  Assumption or Substitution.   In its sole and absolute discretion,
          --------------------------
          and on such terms and conditions as it deems appropriate, the Plan
          Administrator may provide, either by the terms of the underlying Award
          Agreement or by action taken prior to the occurrence of such
          transaction or event, that such Option be assumed by the successor or
          survivor corporation, or a parent or subsidiary thereof, or shall be
          substituted for by similar options covering the capital stock of the
          successor or survivor corporation, or a parent or subsidiary thereof,
          with appropriate adjustments as to the number and kind of shares and
          prices.

                                 ARTICLE XVII

                     CERTAIN TRANSACTIONS WITHOUT CHANGE IN
                   BENEFICIAL OWNERSHIP --  AFFECT ON OPTIONS
                   ------------------------------------------

17.01 General.   Notwithstanding Article XV above, in the event of a transaction
      -------                    ----------
      whose principal purpose is to change the State in which the Company is
      incorporated, or to form a holding company, or to effect a similar
      reorganization as to form of entity without change of beneficial
      ownership, including, without limitation, through:

      A.  a merger or consolidation or stock exchange or divisive reorganization
          (i.e., spin-off, split-off or split-up) or other reorganization with
          respect to the Company and/or its stockholders, or

      B.  the sale, transfer, exchange or other disposition by the Company of
          its assets in a single or series of related transactions,

      then the Plan Administrator may provide, in its sole and absolute
      discretion, and on such terms and conditions as it deems appropriate,
      either by the terms of the underlying Award Agreement or by action taken
      prior to the occurrence of such transaction or event, that such Option
      shall be assumed by the successor or survivor corporation, or a parent or
      subsidiary thereof, or shall be substituted for by similar options
      covering the capital stock of the successor or survivor corporation, or a
      parent or subsidiary thereof, with appropriate adjustments as to the
      number and kind of shares and prices.

                                 ARTICLE XVIII

                               DRAG-ALONG RIGHTS
                               -----------------

18.01 General.   In the event the Board and, to the extent required by law, the
      -------
      stockholders of the Company, approve the sale, transfer, exchange or
      other disposition of fifty percent (50%) or more of the capital stock of
      the Company in a single or series of related transactions (an "Approved
      Stock Sale Transaction"), the Company shall have the right (the "Drag-
      Along Right") to require the Recipient and/or his, her or its permitted
      successors, to sell, transfer, exchange or otherwise dispose of any Plan
      Shares held by such Persons as part of such Approved Stock Sale
      Transaction, notwithstanding that such Persons did not approve of such
      Approved Stock Sale Transaction and/or did not otherwise consent to the
      sale, transfer, exchange or other disposition of their Plan Shares

                                      -30-
<PAGE>

      in accordance with the terms of such Approved Stock Sale Transaction;
      provided, however, in the event less than all of the shares of Common
      Stock are to be sold, transferred, exchanged or otherwise disposed as part
      of the Approved Stock Sale Transaction, the Recipient and/or his, her or
      its permitted successors will not be required to sell, transfer, exchange
      or otherwise dispose of a number of Plan Shares which exceeds the
      aggregate number of Plan Shares held by such Person multiplied by a
      fraction, the numerator of which is the number of Plan Shares held by such
      Persons and the denominator of which is the total number of share of
      Common Stock then issued and outstanding.

18.02 Legend on Shares.  To facilitate compliance with the terms of this
      ----------------
      Article XVIII, the Company shall have the right to place the following
      -------------
      legend on the certificates representing the Plan Shares:

          "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
          DRAG-ALONG RIGHTS SET FORTH IN FULL IN THAT CERTAIN 2000 PINNACLE OIL
          INTERNATIONAL. INC. DIRECTORS' STOCK PLAN DATED FEBRUARY 15, 2000, AS
          IT MAY BE AMENDED OR RESTATED FROM TIME TO TIME, A COPY OF WHICH MAY
          BE INSPECTED BY AUTHORIZED PERSONS AT THE PRINCIPAL OFFICE OF THE
          COMPANY, AND ALL THE PROVISIONS OF WHICH ARE INCORPORATED BY REFERENCE
          IN THIS CERTIFICATE."

18.03 Escrow; Irrevocable Power Of Attorney.   For purposes of facilitating the
      -------------------------------------
      obligation to transfer set forth in this Article XVIII, the Company, in
                                               -------------
      its sole discretion, may require each Recipient and/or his, her or its
      permitted successors, at the Company's cost, to deliver the share
      certificate(s) representing the Plan Shares held by such Recipient and/or
      his, her or its permitted successors (the "Stock Certificate") with a
      stock power executed by such Recipient and/or his, her or its permitted
      successors in blank, to the Secretary of the Company or the Company's
      designee, to hold the Stock Certificate and stock power in escrow and to
      take all such actions and to effectuate all such transfers or releases as
      are in accordance with the terms of this Article XVIII. The Stock
                                               -------------
      Certificate may be held in escrow so long as the Plan Shares represented
      by the Stock Certificate are subject to the terms of this Article XVIII.
                                                                -------------
      The Recipient and/or his, her or its permitted successors each hereby
      irrevocably constitutes and appoints the Secretary of the Company, with
      full power of substitution, as the true and lawful attorney to act as
      escrow holder for such Persons under this Article XVIII, and any
                                                -------------
      amendments to it. The power of attorney hereby granted is irrevocable and
      shall be deemed to be coupled with an interest, and it shall survive
      death, disability, dissolution or termination of the Recipient and/or his,
      her or its permitted successors. The escrow holder will not be liable to
      any party for any act or omission unless the escrow holder is grossly
      negligent in performing such act or omission. The escrow holder may rely
      upon any letter, notice or other document executed by any signature
      purported to be genuine.

                                  ARTICLE XIX

         AMENDMENT AND DISCONTINUATION OF PLAN; MODIFICATION OF AWARDS
         -------------------------------------------------------------

19.01 Amendment, Modification or Termination of Plan.   The Board may amend or
      ----------------------------------------------
      modify the Plan or suspend or discontinue the Plan at any time or from
      time-to-time; provided, however, no such action may adversely alter or
      impair any Award previously granted under the Plan without the consent of
      each Recipient affected thereby.

19.02 Modification of Terms of Outstanding Options.   Subject to the terms and
      --------------------------------------------
      conditions and within the limitations of the Plan, the Plan Administrator
      may modify the terms and conditions of any outstanding Options granted
      under the Plan, including extending the

                                      -31-
<PAGE>

      expiration date of such Options or renewing such Options or repricing such
      options or modifying any vesting conditions, or accept the surrender of
      outstanding Options (to the extent not theretofore exercised) and
      authorize the granting of new Options in substitution therefor (to the
      extent not theretofore exercised); provided, however, no modification of
      any outstanding Option may, without the consent of the Recipient affected
      thereby, adversely alter or impair such Recipients rights under such
      Option.

19.03 Modification of Vesting Conditions Placed on Forfeitable Grant Shares.
      ---------------------------------------------------------------------
      Subject to the terms and conditions and within the limitations of the
      Plan, including vesting conditions, the Plan Administrator may modify the
      terms and conditions placed upon the grant of any Forfeitable Grant
      Shares; provided, however, no modification of any conditions placed upon
      Forfeitable Grant Shares may, without the consent of the Recipient
      thereof, adversely alter or impair such Recipient's rights with respect to
      such Forfeitable Grant Shares.

19.04 Compliance with Laws.   The Plan Administrator may, at any time or from
      --------------------
      time-to-time, without receiving further consideration from, or paying any
      consideration to, any Person who may become entitled to receive or who has
      received the grant of an Award hereunder, modify or amend Awards granted
      under the Plan as required to:

      A.  comport with changes in securities, tax or other laws or rules,
          regulations or regulatory interpretations thereof applicable to the
          Plan or Awards thereunder or to comply with the rules or requirements
          of any stock exchange or Nasdaq and/or

      B.  ensure that the Plan is and remains exempt from the application of any
          participation, vesting, benefit accrual, funding, fiduciary,
          reporting, disclosure, administration or enforcement requirement of
          either the Employee Retirement Income Security Act of 1974, as amended
          ("ERISA"), or the corresponding provisions of the Internal Revenue
          Code of 1986, as amended (Subchapter D of Title A, Chapter 1 of the
          Code {encompassing Sections 400 to 420 of the Code}).

                                  ARTICLE XX

                                 MISCELLANEOUS
                                 -------------

20.01 Performance on Business Day.   In the event the date on which a party to
      ---------------------------
      the Plan is required to take any action under the terms of the Plan is not
      a business day, the action shall, unless otherwise provided herein, be
      deemed to be required to be taken on the next succeeding business day.

20.02 Employment Status.   In no event shall the granting of an Award be
      -----------------
      construed to:

      A.  grant a continued right of employment to a Recipient if such Person is
          employed by the Company and/or by the Parent and/or any Subsidiary, or

      B.  affect, restrict or interfere with in any way any right the Company
          and/or Parent and/or any Subsidiary may have to terminate or otherwise
          discharge the employment and/or engagement of such Person, at any
          time, with or without cause, except to the extent that such Person and
          the Company and/or Parent and/or any Subsidiary may have otherwise
          expressly agreed in writing.

20.03 Non-Liability For Debts; Restrictions Against Transfer.   No Options or
      ------------------------------------------------------
      unvested Forfeitable Grant Shares granted hereunder, or any part
      --------
      thereof, shall:

                                      -32-
<PAGE>

      A.  be liable for the debts, contracts, or engagements of a Recipient, or
          such Recipient's successors in interest as permitted under this Plan,
          or

      B.  be subject to disposition by transfer, alienation, or any other means
          whether such disposition be voluntary or involuntary or by operation
          of law, by judgment, levy, attachment, garnishment, or any other legal
          or equitable proceeding (including bankruptcy), and any attempted
          disposition thereof shall be null and void ab initio and of no further
          force and effect.

20.04 Relationship Of Plan To Other Options And Compensation Plans.   The
      ------------------------------------------------------------
      adoption of this Plan shall not affect any other compensation or incentive
      plans in effect for the Company or any Parent or Subsidiary.  Nothing in
      this Plan shall be construed to limit the right of the Company to:

      A.  establish any other forms of incentives or compensation for Directors
          of the Company and/or of any Parent and/or any Subsidiary; or

      B.  to grant options to purchase shares of Common Stock or to award shares
          of Common Stock or grant any other securities or rights otherwise
          under this Plan in connection with any proper corporate purpose
          including but not by way of limitation, in connection with the
          acquisition by purchase, lease, merger, consolidation or otherwise, of
          the business, stock or assets of any corporation, partnership, firm or
          association.

20.05 Severability.   If any term or provision of this Plan or the application
      ------------
      thereof to any person or circumstance shall, to any extent, be determined
      to be invalid, illegal or unenforceable under present or future laws,
      then, and in that event:

      A.  the performance of the offending term or provision (but only to the
          extent its application is invalid, illegal or unenforceable) shall be
          excused as if it had never been incorporated into this Plan, and, in
          lieu of such excused provision, there shall be added a provision as
          similar in terms and amount to such excused provision as may be
          possible and be legal, valid and enforceable; and

      B.  the remaining part of this Plan (including the application of the
          offending term or provision to persons or circumstances other than
          those as to which it is held invalid, illegal or unenforceable) shall
          not be affected thereby, and shall continue in full force and effect
          to the fullest extent provided by law.

20.06 Headings; References; Incorporation; Gender; Statutory References.
      -----------------------------------------------------------------
      The headings used in this Plan are for convenience and reference purposes
      only, and shall not be used in construing or interpreting the scope or
      intent of this Plan or any provision hereof. References to this Plan shall
      include all amendments or renewals thereof. All cross-references in this
      Plan, unless specifically directed to another agreement or document, shall
      be construed only to refer to provisions within this Plan, and shall not
      be construed to be referenced to the overall transaction or to any other
      agreement or document. Any Exhibit referenced in Plan shall be construed
      to be incorporated in this Plan by such reference. As used in this Plan,
      each gender shall be deemed to include the other gender, including neutral
      genders appropriate for entities, if applicable, and the singular shall be
      deemed to include the plural, and vice versa, as the context requires. Any
      reference to statutes or laws will include all amendments, modifications,
      or replacements of the specific sections and provisions concerned.

20.07 Applicable Law.   This Plan and the rights and remedies of each party
      --------------
      arising out of or relating to this Plan (including, without limitation,
      equitable remedies) shall (with the

                                      -33-
<PAGE>

      exception of the Securities Laws) be solely governed by, interpreted
      under, and construed and enforced in accordance with the laws (without
      regard to the conflicts of law principles) of the State of Nevada, as if
      this Plan were made, and as if its obligations are to be performed, wholly
      within the State of Nevada.

                                      -34-