Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - U.S. Geothermal Inc. - Exhibit 10.18

U.S. COBALT INC. 

STOCK OPTION PLAN 

Dated April 2, 2003 

 TABLE OF CONTENTS  

	 	Page
	 	 
	ARTICLE 1 DEFINITIONS AND INTERPRETATION	1
	1.1	Definitions	1
	1.2	Choice of Law	3
	1.3	Headings	3
	 	 	 
	ARTICLE 2 PURPOSE AND PARTICIPATION	3
	2.1	Purpose	3
	2.2	Participation	3
	2.3	Notification of Award	4
	2.4	Copy of Plan	4
	2.5	Limitation	4
	 	 	 
	ARTICLE 3 TERMS AND CONDITIONS OF OPTIONS	4
	3.1	Board to Allot Shares	4
	3.2	Number of Shares	4
	3.3	Term of Option	5
	3.4	Termination of Option	5
	3.5	Exercise Price	6
	3.6	Assignment of Options	7
	3.7	Adjustments	7
	3.8	Vesting	7
	 	 	 
	ARTICLE 4 EXERCISE OF OPTION	8
	4.1	Exercise of Option	8
	4.2	Issue of Share Certificates	8
	4.3	Condition of Issue	8
	 	 	 
	ARTICLE 5 ADMINISTRATION	8
	5.1	Administration	8
	5.2	Interpretation	9
	 	 	 
	ARTICLE 6 AMENDMENT AND TERMINATION	9
	6.1	Prospective Amendment	9
	6.2	Retrospective Amendment	9
	6.3	Termination	9
	6.4	Agreement	10
	 	 	 
	ARTICLE 7 APPROVALS REQUIRED FOR PLAN	10
	7.1	Approvals Required for Plan	10
	7.2	Substantive Amendments to Plan	10

STOCK OPTION PLAN 

 ARTICLE 1  

  DEFINITIONS AND INTERPRETATION  

 1.1                  
  Definitions  

 As used herein, unless anything in the subject matter or context is inconsistent
  therewith, the following terms shall have the meanings set forth below:

	 	(a) 	“Administrator” means, initially, the secretary
        of the Corporation and thereafter shall mean such director or other senior
        officer or employee of the Corporation as may be designated as Administrator
        by the Board from time to time; 

	 	 	 
	 	(b) 	“affiliate” has the meaning ascribed thereto
        in the Securities Act (British Columbia); 

	 	 	 
	 	(c) 	“associate” has the meaning ascribed thereto
        in the Securities Act (British Columbia); 

	 	 	 
	 	(d)	“Award Date” means the date on which the
        Board grants and announces a particular Option; 

	 	 	 
	 	(e) 	“Board” means the board of directors of
        the Corporation; 

	 	 	 
	 	(f)	“Consultant” means an individual, other than an Employee or
      a Director of the Corporation, that: 
	 	 	 

	 	 	(i)	 is engaged to provide on a bona fide basis
        consulting, technical, management or other services to the Corporation
        or to an affiliate of the Corporation, other than services provided in
        relation to a distribution and, in the case of senior-listed issuers only,
        includes an Investor Consultant; 

	 	 	 	 
	 	 	(ii)	 provides the services under a written contract between
        the Corporation or the affiliate and the individual or a Consultant Company
        or Consultant Partnership of the individual; and 

	 	 	 	 
	 	 	(iii)	 in the reasonable opinion of the Corporation, spends
        or will spend a significant amount of time and attention on the affairs
        and business of the Corporation or an affiliate of the Corporation; 

	 	 	 	 

	 	(g) 	“Consultant Company” means, for an individual
        consultant, a company which the individual consultant is an employee or
        shareholder; 

	 	 	 
	 	(h) 	“Consultant Partnership” means, for an individual consultant,
      a partnership of which the individual consultant is an employee or partner;
    

- 2 -

	 	(i) 	“Corporation” means U.S. Cobalt Inc.; 
	 	 	 
	 	(j) 	“Director” means any individual holding
        the office of director or officer of the Corporation or an affiliate of
        the Corporation; 

	 	 	 
	 	(k) 	“Employee” means an individual regularly
        employed on a full-time or part-time basis by the Corporation or an affiliate
        of the Corporation or an individual who, on a regular basis and for a
        minimum amount of time per week, performs services for the Corporation
        or an affiliate of the Corporation normally provided by an employee other
        than a Director, and for the purpose of the Plan includes a Management
        Company Employee; 

	 	 	 
	 	(l) 	“Exchange” means the TSX Venture Exchange
        or, if the Shares are no longer listed for trading on the TSX Venture
        Exchange, such other exchange or quotation system on which the Shares
        are listed or quoted for trading; 

	 	 	 
	 	(m) 	“Exercise Notice” means the notice respecting
        the exercise of an Option in the form set out as Schedule “B”
        hereto, duly executed by the Option Holder; 

	 	 	 
	 	(n)	“Exercise Period” means the period during
        which a particular Option may be exercised and is the period from and
        including the Award Date through to and including the Expiry Date, subject
        to the provisions of the Plan relating to vesting of Options; 

	 	 	 
	 	(o)	“Exercise Price” means the price at which
        an Option may be exercised as determined in accordance with paragraph
        3.5; 

	 	 	 
	 	(p) 	“Expiry Date” means the date determined
        in accordance with paragraph 3.3 and after which a particular Option cannot
        be exercised;

	 	 	 
	 	(q) 	“insider” has meaning ascribed thereto
        in the Securities Act (British Columbia); 

	 	 	 
	 	(r) 	“Investor Consultant” means, a Consultant
        that is a registrant or provides to the Corporation or an affiliate of
        the Corporation services provided by a registrant or services that include
        investor relations activities; 

	 	 	 
	 	(s) 	“Management Company Employee” means an
        individual employed by a person providing management services to the Corporation,
        which are required for the ongoing successful operation of the business
        enterprise of the Corporation, but excluding a person involved in investor
        relations activities; 

	 	 	 
	 	(t) 	“Option” means an option to acquire Shares,
        awarded to a Director, Employee or Consultant pursuant to the Plan; 

	 	 	 
	 	(u)	“Option Certificate” means the certificate,
        substantially in the form set out as Schedule “A” hereto, evidencing
        an Option; 

 - 3 - 

	 	(v) 	“Option Holder” means a Director, Employee
        or Consultant, or a former Director, Employee or Consultant, who holds
        an unexercised and unexpired Option or, where applicable, the Personal
        Representative of such person; 

	 	 	 
	 	(w)	“Plan” means this U.S. Cobalt Inc. stock option plan; 

	 	 	 
	 	(x) 	“Personal Representative” means: 
	 	 	 

	 	 	(i) 	in the case of a deceased Option Holder, the executor
        or administrator of the deceased duly appointed by a court or public authority
        having jurisdiction to do so; and 

	 	 	 	 
	 	 	(ii)	 in the case of an Option Holder who for any reason
        is unable to manage his or her affairs, the person entitled by law to
        act on behalf of such Option Holder; and 

	 	 	 	 

	 	(y) 	“Share” or “Shares” means, as
        the case may be, one or more common shares without par value in the capital
        of the Corporation. 

1.2                  
  Choice of Law  

 The Plan is established under and the provisions of the Plan
  shall be interpreted and construed in accordance with the laws of the Province
  of British Columbia. 

 1.3                  
  Headings  

 The headings used herein are for convenience only and are
  not to affect the interpretation of the Plan. 

 ARTICLE 2  

  PURPOSE AND PARTICIPATION  

 2.1                   Purpose
   

 The purpose of the Plan is to provide the Corporation with
  a share-related mechanism to attract, retain and motivate qualified Directors,
  Employees and Consultants, to reward such of those Directors, Employees and
  Consultants as may be awarded Options under the Plan by the Board from time
  to time for their contributions toward the long term goals of the Corporation
  and to enable and encourage such Directors, Employees and Consultants to acquire
  Shares as long term investments. 

 2.2                   Participation
   

 The Board shall, from time to time, in its sole discretion
  determine those Directors, Employees and Consultants, if any, to whom Options
  are to be awarded. If the Board elects to award an Option to a Director, the
  Board shall, in its sole discretion but subject to paragraph 3.2, determine
  the number of Shares to be acquired on the exercise of such Option. If the Board
  elects to award an Option to 

 - 4 - 

 an Employee or Consultant, the number of Shares to be acquired
  on the exercise of such Option shall be determined by the Board in its sole
  discretion, and in so doing the Board may take into account the following criteria:

	 	(a) 	the remuneration paid to the Employee or Consultant
        as at the Award Date in relation to the total remuneration payable by
        the Corporation to all of its Employees and Consultants as at the Award
        Date; 

	 	 	 
	 	(b)	 the length of time that the Employee or Consultant
        has been employed or engaged by the Corporation; and 

	 	 	 
	 	(c) 	the quality of work performed by the Employee or
        Consultant. 

2.3                  
  Notification of Award  

 Following the approval by the Board of the awarding of an
  Option, the Administrator shall notify the Option Holder in writing of the award
  and shall enclose with such notice the Option Certificate representing the Option
  so awarded. 

 2.4                   Copy
  of Plan  

 Each Option Holder, concurrently with the notice of the award
  of the Option, shall be provided with a copy of the Plan. A copy of any amendment
  to the Plan shall be promptly provided by the Administrator to each Option Holder.

 2.5                  
  Limitation  

 The Plan does not give any Option Holder that is a Director
  the right to serve or continue to serve as a Director of the Corporation nor
  does it give any Option Holder that is an Employee or Consultant the right to
  be or to continue to be employed or engaged by the Corporation. 

 ARTICLE 3  

  TERMS AND CONDITIONS OF OPTIONS  

 3.1                  
  Board to Allot Shares  

 The Shares to be issued to Option Holders upon the exercise
  of Options shall be allotted and authorized for issuance by the Board prior
  to the exercise thereof. 

 3.2                   Number
  of Shares  

 The maximum number of Shares issuable under the Plan, together
  with the number of Shares issuable under outstanding options granted otherwise
  than under the Plan, shall not exceed 2,200,000 Shares of the Corporation. Additionally,
  the Corporation shall not grant Options:

	 	(a) 	to any one person in any 12 month period which could, when exercised,
      result in the issuance of Shares exceeding five percent (5%) of the issued
      and outstanding Shares of the Corporation; or 

 - 5 - 

	 	(b)	 to all Consultants or to all persons employed by
        the Corporation who perform investor relations activities which could,
        when exercised, result in the issuance of Shares exceeding two percent
        (2%) of the issued and outstanding Shares of the Corporation. 

If any Option expires or otherwise terminates for any reason
  without having been exercised in full, the number of Shares in respect of which
  Option expired or terminated shall again be available for the purposes of the
  Plan. 

 3.3                   Term
  of Option  

Subject to paragraph 3.4, the Expiry Date of an Option shall be the date so fixed by the Board at the time the particular Option is awarded, provided that such date shall not be later than:

	 	(a) 	for so long as the Corporation is classified as a
        Tier 2 issuer or equivalent designation of the Exchange, the fifth anniversary
        of the later of the date the Shares are listed on the Exchange and the
        Award Date of the Option; or 

	 	 	 
	 	(b)	 if the classification of the Corporation on the
        Exchange is upgraded from that of a Tier 2 issuer, or the Shares are no
        longer listed on the Exchange, the tenth anniversary of the Award Date
        of the Option. 

3.4                  
  Termination of Option  

 An Option Holder may, subject to any vesting provisions applicable
  to Options hereunder, exercise an Option in whole or in part at any time or
  from time to time during the Exercise Period provided that, with respect to
  the exercise of part of an Option, the Board may at any time and from time to
  time fix a minimum or maximum number of Shares in respect of which an Option
  Holder may exercise part of any Option held by such Option Holder. Any Option
  or part thereof not exercised within the Exercise Period shall terminate and
  become null, void and of no effect as of 5:00 p.m. local time in Vancouver,
  British Columbia, on the Expiry Date. The Expiry Date of an Option shall be
  the earlier of the date so fixed by the Board at the time the Option is awarded
  and the date established, if applicable, in sub-paragraphs (a) to (c) below:

	 	(a)	Death  

       In the event that the Option Holder should die while
        he or she is still a Director (if he or she holds his or her Option as
        Director) or Employee or Consultant (if he or she holds his or her Option
        as Employee or Consultant), the Expiry Date shall be six (6) months from
        the date of death of the Option Holder; or 

	 	 	 
	 	(b) 	Ceasing to Hold Office  

       In the event that the Option Holder holds his or her
        Option as Director of the Corporation and such Option Holder ceases to
        be a Director of the Corporation other than by reason of death, the Expiry
        Date of the Option shall be the 90th day following the date the Option
        Holder ceases to be a Director of the Corporation unless the Option Holder
        ceases to be a Director of the Corporation but continues to 

 - 6 - 

	 	 	be engaged by the Corporation as an Employee, in
        which case the Expiry Date shall remain unchanged, or unless the Option
        Holder ceases to be a Director of the Corporation as a result of: 

	 	 	 	 
	 	 	(i) 	ceasing to meet the qualifications set forth in the
        Company Act (British Columbia); or 

	 	 	 	 
	 	 	(ii) 	a resolution having been passed by the members of
        the Corporation pursuant to the Company Act (British Columbia);
        or 

	 	 	 	 
	 	 	(iii) 	by order of the British Columbia Registrar of Companies,
        British Columbia Securities Commission, the Exchange or any other regulatory
        body having jurisdiction to so order, in which case the Expiry Date shall
        be the date the Option Holder ceases to be a Director of the Corporation.
      

	 	 	 
	 	(c) 	Ceasing to be Employed or a Consultant  

       In the event that the Option Holder holds his or her
        Option as an Employee or Consultant of the Corporation and such Option
        Holder ceases to be an Employee or Consultant of the Corporation other
        than by reason of death, the Expiry Date of the Option shall be the 90th
        day following the date the Option Holder ceases to be an Employee or Consultant
        of the Corporation unless the Option Holder ceases to be an Employee or
        Consultant of the Corporation as a result of: 

	 	 	 

	 	 	(i)	 termination for cause or, in the case of a Consultant,
        breach of contract; or 

	 	 	 	 
	 	 	(ii)	 by order of the British Columbia Registrar of Companies,
        British Columbia Securities Commission, the Exchange or any other regulatory
        body having jurisdiction to so order, 

	 	 	 	 

	 	 	in which case the Expiry Date shall be the date the Option Holder ceases
      to be an Employee or Consultant of the Corporation. 
	 	 	 
	 	 	Notwithstanding the foregoing, the Expiry Date for
        Options granted to any Option Holder engaged in investor relations activities
        shall be the 30th day following the date that the Option Holder ceases
        to be employed in such capacity. 

3.5                   Exercise
  Price  

 The Exercise Price shall be that price per share, as determined
  by the Board in its sole discretion and announced as of the Award Date, at which
  an Option Holder may purchase a Share upon the exercise of an Option, and shall
  not be less than the closing price of the Corporation’s Shares traded through
  the facilities of the Exchange (or, if the Shares are no longer listed for trading
  on the Exchange, then such other exchange or quotation system on which the Shares
  are listed or quoted for trading) on the day preceding the Award Date, less
  any discount permitted by the Exchange, or such other price as may be required
  by the Exchange. 

 - 7 - 

 3.6                   Assignment
  of Options  

 Options may not be assigned or transferred, provided however
  that the Personal Representative of an Option Holder may, to the extent permitted
  by paragraph 4.1, exercise the Option within the Exercise Period. 

 3.7                   Adjustments
   

 If prior to the complete exercise of any Option the Shares
  are consolidated, subdivided, converted, exchanged or reclassified or in any
  way substituted for (collectively the “Event”), an Option, to the
  extent that it has not been exercised, shall be adjusted by the Board in accordance
  with such Event in the manner the Board deems appropriate. No fractional Shares
  shall be issued upon the exercise of any Option and accordingly, if as a result
  of the Event, an Option Holder would become entitled to a fractional Share,
  such Option Holder shall have the right to purchase only the next lowest whole
  number of Shares and no payment or other adjustment will be made with respect
  to the fractional interest so disregarded. Additionally, no lots of Shares in
  an amount less than 500 Shares shall be issued upon the exercise of the Option
  unless such amount of Shares represents the balance left to be exercised under
  the Option. 

 3.8                  
  Vesting  

 All Options granted pursuant to the Plan will be subject to
  such vesting requirements as may be prescribed by the Exchange, if applicable,
  or as may be imposed by the Board. At any time the Corporation is classified
  as a Tier 2 company or equivalent designation on the Exchange, all Options granted
  pursuant to the Plan must contain conditions relating to the vesting of the
  right to exercise an Option granted to any Option Holder, which will provide
  that the right to purchase Shares under the Option may not be exercised any
  earlier than the following times (although the Board may impose longer vesting
  periods):  

	Number of Shares	Date After Which the Shares may be
        Purchased

	 	 
	One Quarter	Award Date
	 	 
	One Quarter	Six Months Following Award Date
	 	 
	One Quarter	One Year Following Award Date
	 	 
	One Quarter	Eighteen Months Following Award Date
	 	 
	The Option Certificate representing any such Option will disclose
      any vesting conditions.

 - 8 - 

 ARTICLE 4 

  EXERCISE OF OPTION  

 4.1                  
  Exercise of Option  

 An Option may be exercised only by the Option Holder or the
  Personal Representative of any Option Holder. An Option Holder or the Personal
  Representative of any Option Holder may exercise an Option in whole or in part
  at any time or from time to time during the Exercise Period up to 5:00 p.m.
  local time in Vancouver, British Columbia on the Expiry Date by delivering to
  the Administrator an Exercise Notice, the applicable Option Certificate and
  a certified cheque or bank draft payable to the Corporation in an amount equal
  to the aggregate Exercise Price of the Shares to be purchased pursuant to the
  exercise of the Option. 

 4.2                  
  Issue of Share Certificates  

 As soon as practicable following the receipt of the Exercise
  Notice, the Administrator shall cause to be delivered to the Option Holder a
  certificate for the Shares purchased pursuant to the exercise of the Option.
  If the number of Shares purchased is less than the number of Shares subject
  to the Option Certificate surrendered, the Administrator shall forward a new
  Option Certificate to the Option Holder concurrently with delivery of the aforesaid
  share certificate for the balance of Shares available under the Option. 

 4.3                  
  Condition of Issue  

 The issue of Shares by the Corporation pursuant to the exercise
  of an Option is subject to this Plan and compliance with the laws, rules and
  regulations of all regulatory bodies applicable to the issuance and distribution
  of such Shares and to the listing requirements of any stock exchange or exchanges
  on which the Shares may be listed. The Option Holder agrees to comply with all
  such laws, rules and regulations and agrees to furnish to the Corporation any
  information, report and/or undertakings required to comply with and to fully
  co-operate with the Corporation in complying with such laws, rules and regulations.

 ARTICLE 5 

  ADMINISTRATION  

 5.1                  
  Administration  

 The Plan shall be administered by the Administrator on the
  instructions of the Board. The Board may make, amend and repeal at any time
  and from time to time such regulations not inconsistent with the Plan as it
  may deem necessary or advisable for the proper administration and operation
  of the Plan and such regulations shall form part of the Plan. The Board may
  delegate to the Administrator or any Director, officer or employee of the Corporation
  such administrative duties and powers as it may see fit. 

 - 9 - 

 5.2                  
  Interpretation  

 The interpretation by the Board of any of the provisions of
  the Plan and any determination by it pursuant thereto shall be final and conclusive
  and shall not be subject to any dispute by any Option Holder. No member of the
  Board or any person acting pursuant to authority delegated by it hereunder shall
  be liable for any action or determination in connection with the Plan made or
  taken in good faith and each member of the Board and each such person shall
  be entitled to indemnification with respect to any such action or determination
  in the manner provided for by the Corporation. 

 ARTICLE 6  

  AMENDMENT AND TERMINATION  

 6.1                   Prospective
  Amendment  

 Subject to applicable regulatory and, if required by any relevant
  law, rule or regulation applicable to the Plan, to shareholder approval, the
  Board may from time to time amend the Plan and the terms and conditions of any
  Option thereafter to be granted and, without limiting the generality of the
  foregoing, may make such amendment for the purpose of meeting any changes in
  any relevant law, rule or regulation applicable to the Plan, any Option or the
  Shares or for any other purpose which may be permitted by all relevant laws,
  rules and regulations provided always that any such amendment shall not alter
  the terms or conditions of any Option or impair any right of any Option Holder
  pursuant to any Option awarded prior to such amendment. Notwithstanding the
  foregoing, the Board may, subject to section 3.8 hereof, amend the terms upon
  which each Option shall become vested with respect to Shares without further
  approval of the Exchange, other regulatory bodies having authority over the
  Company or the Plan or the shareholders. 

 6.2                   Retrospective
  Amendment  

 Subject to applicable regulatory and, if required by any relevant
  law, rule or regulation applicable to the Plan, to shareholder approval, the
  Board may from time to time retrospectively amend the Plan and, with the consent
  of the affected Option Holders, retrospectively amend the terms and conditions
  of any Options which have been previously granted. For greater certainty, the
  policies of the Exchange currently require that disinterested shareholder approval
  be obtained for any reduction in the Exercise Price of any Option held by an
  insider of the Corporation. 

 6.3                   Termination
   

 The Board may terminate the Plan at any time provided that
  such termination shall not alter the terms or conditions of any Option or impair
  any right of any Option Holder pursuant to any Option awarded prior to the date
  of such termination. Notwithstanding the termination of the Plan, the Corporation,
  Options awarded under the Plan, Option Holders and Shares issuable under Options
  awarded under the Plan shall continue to be governed by the provisions of the
  Plan. 

 - 10 - 

 6.4                  
  Agreement  

 The Corporation and every person to whom an Option is awarded
  hereunder shall be bound by and subject to the terms and conditions of the Plan.

 ARTICLE 7  

  APPROVALS REQUIRED FOR PLAN  

 7.1                   Approvals
  Required for Plan  

 Prior to its implementation by the Corporation, the Plan is
  subject to approval by the Exchange. 

 7.2                   Substantive
  Amendments to Plan  

 Any substantive amendments to the Plan shall be subject to
  the Corporation first obtaining the approvals of:

	 	(a)	 the shareholders or disinterested shareholders,
        as the case may be, of the Corporation at general meeting where required
        by the rules and policies of any stock exchange on which the Shares may
        be listed for trading; and 

	 	 	 
	 	(b) 	any stock exchange on which the Shares may be listed
        for trading.

SCHEDULE “A” 

 U.S. COBALT INC.  

  STOCK OPTION PLAN OPTION CERTIFICATE  

 This Certificate is issued pursuant to the provisions of U.S.
  Cobalt Inc. (the “Corporation”) Stock Option Plan (the “Plan”)
  and evidences that ____________ (the “Holder”) is the holder of an
  option (the “Option”) to purchase up to ______________ common shares
  (the “Shares”) in the capital stock of the Corporation at a purchase
  price of $ ______________ per Share. Subject to the provisions of the Plan:

	 	(a) 	the Award Date of this Option is _______________________; and 
	 	 	 
	 	(b) 	the Expiry Date of this Option is ________________________. 

The right to purchase Shares under the Option will vest in
  the Holder in increments over the term of the Option as follows: 

	Date	Cumulative Number of Shares which may be Purchased
	 	 
	 	 
	 	 
	 	 

 This Option may be exercised in accordance with its terms
  at any time and from time to time from and including the Award Date through
  to and including up to 5:00 local time in Vancouver, British Columbia on the
  Expiry Date, by delivery to the Administrator of the Plan an Exercise Notice,
  in the form provided in the Plan, together with this Certificate and a certified
  cheque or bank draft payable to “U.S. Cobalt Inc.” in an amount equal
  to the aggregate of the Exercise Price of the Shares in respect of which the
  Option is being exercised. 

 This Certificate and the Option evidenced hereby is not assignable,
  transferable or negotiable and is subject to the detailed terms and conditions
  contained in the Plan. This Certificate is issued for convenience only and in
  the case of any dispute with regard to any matter in respect hereof, the provisions
  of the Plan and the records of the Corporation shall prevail. 

 The foregoing Option has been awarded this ______________
  day of ___________________. 

 Without prior written consent of the TSX Venture Exchange
  and compliance with all applicable securities legislation, the securities represented
  by this certificate and the shares issuable upon the exercise thereof my not
  be sold, transferred, hypothecated or otherwise traded on or through the facilities
  of the TSX Venture Exchange or otherwise in Canada or to or for the benefit
  of a Canadian resident until _____________________ . 

	 	U.S. COBALT INC.  

       Per: ____________________________ 

SCHEDULE “B” 

EXERCISE NOTICE 

	TO: 	The Administrator, Stock Option Plan

      U.S. Cobalt Inc.

      • [ADDRESS] 

1.                   Exercise
  of Option  

 The undersigned hereby irrevocably gives notice, pursuant
  to the U.S. Cobalt Inc. (the “Corporation”) Stock Option Plan (the
  “Plan”), of the exercise of the Option to acquire and hereby subscribes
  for (cross out inapplicable item): 

	 	(a) 	all of the Shares; or 
	 	 	 
	 	(b) 	_________________ of the Shares which are the subject of the option certificate
      attached hereto. 

Calculation of total Exercise Price:

	 	(a)	number of Shares to be acquired on exercise:	 	 	shares
	 	 	 	 	 	 
	 	(b)	times the Exercise Price per Share:	$	  	 
	 	 	 	 	 	 
	 	 	Total Exercise Price, as enclosed herewith:	$	 	 

 The undersigned tenders herewith a cheque or bank draft (circle one) in the
  amount of $___________ , payable to “U.S. Cobalt Inc.” in an amount
  equal to the total Exercise Price of the Shares, as calculated above, and directs
  the Corporation to issue the share certificate evidencing the Shares in the
  name of the undersigned to be mailed to the undersigned at the following address:

	 	 	 
	 	 	 
	 	 	 

DATED the _____________ day of __________________. 

	__________________________________________	__________________________________________
	Witness	Signature of Option Holder 
	__________________________________________	__________________________________________
	Name of Witness (Print)	Name of Option Holder (Print)Exhibit 4.2

 

K-SEA TRANSPORTATION
PARTNERS L.P.

 

EMPLOYEE UNIT
PURCHASE PLAN

 

(As Amended June 30,
2004)

 

1.             Purpose of the Plan.

 

The K-Sea
Transportation Partners Employee Unit Purchase Plan (the “Plan”) is intended to
(i) promote the interests of K-Sea Transportation Partners L.P., a Delaware
limited partnership (the “Partnership”), by providing to Employees of the
Partnership and its Affiliates the opportunity to acquire or increase their
ownership of Units, (ii) provide a means whereby such individuals may develop a
sense of proprietorship and personal involvement in the development and
financial success of the Partnership and (iii) encourage such individuals to
devote their best efforts to the business of the Partnership, thereby advancing
the interests of the Partnership.

 

2.             Definitions.

 

(a)           As
used in the Plan, the following terms shall
have the meanings set forth below:

 

“Affiliates” means with respect to any
Person, any other Person that directly or indirectly through one or more
intermediaries controls, is controlled by or is under common control with, the
Person in question.  As used herein, the
term “control” means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.

 

“Board” means the Board of Directors of K-Sea
General Partner GP LLC, a Delaware limited liability company.

 

“Committee” means the Compensation Committee
of the Board appointed to administer the Plan pursuant to Section 8.

 

“Employee” means any individual who is a
United States citizen for maritime law purposes and a full-time employee of the
Partnership or one of its Affiliates, but,
until the Committee decides otherwise, excluding any employee covered by a
collective bargaining agreement unless such bargaining agreement provides for
his or her participation in the Plan.

 

“Employer” means the Partnership and/or one
of its Affiliates, as the case may be.

 

“Fair Market Value” means the closing sales
price of a Unit on the applicable date (or if there is no trading in the Units
on such date, on the next preceding date on which there was trading) as
reported in The Wall Street Journal (or other reporting service approved by the
Committee).  In the event Units are not
publicly traded at the time a determination of Fair Market Value is required to
be made hereunder, the determination of Fair Market Value shall be made in good
faith by the Committee.

 

1

 

“Offering Period” means each calendar quarter
or other period as designated by the Committee from time to time.

 

“Person” means an individual or a
corporation, limited liability company, partnership, joint venture, trust,
unincorporated organization, association, governmental agency or political
subdivision thereof or other entity.

 

“Purchase Period” means the 10-day period
following the end of each Offering Period; provided, however, the Purchase
Period shall include such other periods, if any, as may be designated by the
Committee from time to time.

 

“Unit” means a Common Unit of the
Partnership.

 

(b)           Gender and Number.  Except
when otherwise indicated by the context, the masculine gender shall also
include the feminine gender, and the definition of any term herein in the
singular shall also include the plural.

 

3.             Eligibility.

 

(a)           Eligibility and Plan Entry Date.  All
Employees shall be eligible to participate in the Plan.  An Employee is eligible to enter the Plan
beginning on the first day of the month following 180 days after such
individual’s employment commencement date.

 

(b)           Prior Service Credit.  The
Committee, in it is discretion, may grant prior service credit to individuals
that become Employees pursuant to a corporate merger or acquisition.

 

4.             Units Available Under the Plan.

 

Unless otherwise increased by the Board, the
maximum number of Units that may be purchased for Employees under the Plan is
200,000.  Units to be delivered under
the Plan may be Units acquired by the Partnership in the open market, Units
already owned by the Partnership, authorized but unissued Units, Units acquired
directly from any Person or any combination of the foregoing.  Upon an Employee’s termination of employment
with his or her Employer, all amounts then credited to his or her notional
account under the Plan, if any, shall be paid to the terminated Employee as
soon as practicable.  In the event that
any change is made to the Units deliverable under the Plan, the Committee may
make appropriate adjustments in the maximum number of Units deliverable under
the Plan.  The adjustments determined by
the Committee shall be final, binding and conclusive.

 

5.             Purchase of Units.

 

(a)           Employee Withholding Elections.  The
Committee shall provide an Employee with the ability to purchase Units under
the Plan upon the following terms and conditions:

 

(i)            Effective as of the
beginning of any month or, if administratively feasible, the beginning of the
next payroll period, an Employee may elect to have his Employer withhold from
the Employee’s cash base salary or cash base wages each future pay period, for
the purchase of Units hereunder, a designated whole percentage of the

 

2

 

Employee’s
cash base payor wages (in whole percentages only, not to exceed 10%).  An
Employee may change (within the above limitations) or, subject to Section
5(a)(vi), stop his withholding election at any time; however, only two such
changes may be made during any calendar year. 
All Employee elections and any changes to an election shall be in such
written form as the Committee or its delegate may establish from time to time.

 

(ii)           Each withholding election made by an Employee hereunder shall be an
ongoing election until the earlier of the date changed by the Employee or the
date the Employee ceases to be eligible to participate in the Plan.

 

(iii)          The Employer shall maintain for each electing Employee a separate
notional or ledger account reflecting the aggregate amount of his cash base
payor wages that has been withheld and not yet applied to the purchase of Units
for such Employee.  An Employer, other
than the Partnership, shall remit to the Partnership all amounts of base pay or
wages withheld by the Employer promptly upon request by the Partnership in order
to permit the Partnership to fulfill its obligations under this Plan with
respect to the purchase of Units for Employees.  Amounts of base pay or wages withheld by the Employer and
remitted to the Partnership shall not be segregated from the general assets of
the Partnership and shall not bear interest.

 

(iv)          During each Purchase Period, the Partnership shall use, to the fullest
extent practicable, all amounts then credited to the notional accounts of the
electing Employees to purchase Units for such Employees.  Purchases of Units may be made at any time
or times during the Purchase Period on any securities exchange on which the
Units are traded, in the over-the-counter market and/or in negotiated
transactions as the Committee shall determine.

 

(v)           Upon an Employee’s termination of Employment with his or her Employer,
all amounts then credited to his or her notional account under the Plan, if
any, shall be paid to the terminated Employee as soon as reasonably
practicable.

 

(vi)          Provided an Employee submits his or her election to stop withholding
prior to the fourteen business day period before the beginning of an
immediately upcoming Purchase Period, all amounts then credited to such
Employee’s notional account shall be returned to the Employee as soon as administratively
practicable.  Unless otherwise
administratively feasible, to the extent an Employee submits his or her
election to stop withholding within the fourteen business day period before the
beginning of the immediately upcoming Purchase Period, all amounts credited to
such Employee’s notional account will be applied toward the purchase of

 

3

 

Units in the immediately following Purchase Period and the Employee’s
election to stop withholding shall become effective as of the commencement of
the next following Offering Period.  All
requests to withdraw from the Plan submitted during a Purchase Period will
become effective as of the commencement of the next following Offering Period.

 

(b)           Purchase
of Units and Plan Expenses.
During each Purchase Period, the Partnership, using funds withheld from
Employees’ wages pursuant to this Section 5, shall purchase for the electing
Employees the maximum number of Units (including fractional Units) that can be
acquired (using the Unit’s Fair Market Value on the date of purchase) based on
amounts then credited to the electing Employees’ notional accounts.  The Partnership shall pay, other than from
the notional accounts, all brokerage fees and other costs and expenses of the
Plan.  To the extent that Units are
purchased on multiple days or at multiple times during a single Purchase
Period, the Partnership shall use the average of the Units’ Fair Market Value
at the times of purchase as the applicable Unit price upon which Units are
allocated to the participating Employees.

 

(c)           Withholding
of Taxes.  To the extent that the Employer is required
to withhold any taxes in connection with the purchase of Units, it will be a
condition to the ownership of such Units that the Employee make arrangements
satisfactory to the Employer for the payment of such taxes, which may include,
but not be limited to, a reduction in the Employee’s notional account.

 

6.             Restrictions on
Units.

 

(a)           Holding Period.  Subject to the exception
provided below under Section 6(b), all Units purchased under the Plan shall be
subject to a “Holding Period” which shall expire on the first anniversary of
the date the Units were purchased under the Plan.  During such Holding Period, each Employee shall be prohibited
from pledging, transferring, selling or otherwise disposing of the restricted
Units.  Upon the expiration of such
Holding Period, the Employee may, if he or she desires, make a request to the
Partnership (or its designated third party plan administrator, if any) to
receive certificates for all of such unrestricted whole Units.  Otherwise, such Units shall be held without
restriction (1) by the Partnership or (2) in the name of the third party
administrator (or its designee), if any, for the benefit of the Employee. Upon
payment during the Holding Period of any distribution with respect to Units,
each Employee shall receive an amount in cash equal to, and at the same time
as, the amount of such distribution multiplied by the number of Units allocated
to such Employee.

 

(b)           Holding Period Exception. 
Notwithstanding the Holding Period imposed above under Section 6(a) and
subject to the conditions imposed pursuant to this Section 6(b), an Employee
will be permitted to pledge, transfer, sell or otherwise dispose of his or her
restricted whole Units during the one-year Holding Period (a “Restricted
Transfer”) by notifying the Employer (or its designated third party plan
administrator) of his or her intention to engage in a Restricted Transfer.  If a Restricted Transfer occurs, the
Employee shall be prohibited from participating in the Plan again until the
first Purchase Period following the first anniversary of the date of the
Restricted Transfer.  During this period
of prohibition, no amounts shall be withheld from the Employee’s cash base
salary

 

4

 

or cash
base wages.  Such withholding shall not
be allowed to resume, at the earliest, until the first pay period following the
first anniversary of the date of the Restricted Transfer.  To the extent an Employee has amounts
credited to his or her notional account under the Plan on the date of a
Restricted Transfer, all such amounts will be returned to the Participant.  To the extent a Participant has a fractional
Unit credited to his or her notional account under the Plan on the date of a
Restricted Transfer, such fractional Unit will be liquidated and the
Participant will receive his pro rata portion of the proceeds from such
liquidation.

 

(c)           Investment Representation.  Unless
the Units subject to purchase under the Plan have been registered under the
Securities Act of 1933, as amended (the “1933 Act”), and, in the case of any
Employee who may be deemed an affiliate (for securities law purposes) of the
Partnership, such Units have been registered under the 1933 Act for resale by
such Participant, or the Partnership has determined that an exemption from
registration is available, the Partnership may require prior to and as a
condition of the delivery of any Units that the person purchasing such Units
hereunder furnish the Partnership with a written representation in a form
prescribed by the Committee to the effect that such person is acquiring such
Units solely with a view to investment for his or her own account and not with
a view to the resale or distribution of all or any part thereof, and that such
person will not dispose of any of such Units otherwise than in accordance with
the provisions of Rule 144 under the 1933 Act unless and until either the Units
are registered under the 1933 Act or the Partnership is satisfied that an
exemption from such registration is available.

 

(d)           Compliance with Securities Laws. 
Notwithstanding anything herein or in any other agreement to the
contrary, the Partnership shall not be obligated to sell or issue any Units to
an Employee under the Plan unless and until the Partnership is satisfied that
such sale or issuance complies with (i) all applicable requirements of the
securities exchange on which the Units are traded (or the governing body of the
principal market in which such Units are traded, if such Units are not then
listed on an exchange), (ii) all applicable provisions of the 1933 Act, and
(iii) all other laws or regulations by which the Partnership is bound or to
which the Partnership is subject.

 

7.             Rights of Employees; Participants.

 

(a)           Employment.  The Plan will not confer upon
any Employee any right with respect to continuance of employment or other
service with the Employer, nor will it interfere in any way with any right the
Employer would otherwise have to terminate such Employee’s employment or other
service at any time.

 

(b)           Nontransferability.  No
right to purchase Units or be reimbursed for the purchase of Units granted
under the Plan shall be assignable or transferable during the lifetime of any
Employee either voluntarily or involuntarily, or be subjected to any lien,
directly or indirectly, by operation of law, or otherwise, including execution,
levy, garnishment, attachment, pledge or bankruptcy.

 

8.             Plan Administration.

 

(a)           Authority of Committee.  The
Plan shall be administered by the Committee. 
Subject to the terms of the Plan and applicable law, and in addition to
other

 

5

 

express
powers and authorizations conferred on the Committee by the Plan, the Committee
shall have full power and authority to: (i) determine which persons are
Employees who may participate; (ii) determine the number of Units to be
purchased by an Employee; (iii) determine the time and manner for purchasing
Units; (iv) interpret, construe and administer the Plan; (v) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; (vi) make a
determination as to the right of any person to receive Units under the Plan;
(vii) correct any defect, supply any omission, or reconcile an inconsistency in
the Plan; and (viii) make any other determinations and take any other actions
that the Committee deems necessary or desirable for the administration of the
Plan.

 

(b)           Determination Under the Plan.  Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive, and binding upon all persons, including the Partnership,
the Employer or any Employee.  No member
of the Committee shall be liable for any action, determination or
interpretation made in good faith, and all members of the Committee shall, in
addition to their rights as directors, be fully protected by the Partnership
with respect to any such action, determination or interpretation.

 

9.             Plan Amendment,
Modification and Termination.

 

The Plan may be amended from time to time by
the Committee.  The Plan may be
terminated at any time by the Committee and, unless Board approval is obtained
for an increase in the maximum number of available Units, shall automatically terminate
when all Units authorized for purchase pursuant to the Plan have been
purchased.  On termination of the Plan,
all amounts then remaining credited to the notional accounts for Employees
shall be returned to the affected Employees.

 

10.          Nonexclusivity of the
Plan.

 

The adoption of the Plan by the Partnership
shall not be construed as creating any limitations on the power or authority of
the Partnership or any of its Affiliates to adopt such other or additional
incentive or other compensation arrangements of whatever nature as the
Partnership or any of its Affiliates may deem necessary or desirable or to
preclude or limit the continuation of any other plan, practice or arrangement
for the payment of compensation or fringe benefits to employees, non-employee
directors, or consultants generally, or to any class or group of employees,
directors, or consultants, which the Partnership or any of its Affiliates now
has lawfully put into effect, including, without limitation, any  long-term incentive plan.

 

11.          Requirements of Law.

 

(a)           Requirements of Law.  The
issuance of Units pursuant to the Plan shall be subject to all applicable laws,
rules and regulations.

 

(b)           Governing Law.  The validity, construction and
effect of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with applicable Federal law, and to the extent not
preempted thereby, with the laws of the State of Delaware, without regard to
conflicts of laws principles.

 

6

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