1999 Restricted Stock Plan

10/13/99


EXHIBIT 10.2


CARBON ENERGY CORPORATION
1999 RESTRICTED STOCK PLAN


SECTION 1: Purpose
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The purpose of the Carbon Energy Corporation 1999 Restricted Stock Plan (the "Plan") is to further the growth and development of Carbon Energy Corporation, a Colorado corporation (the "Company"), by affording an opportunity for stock ownership to selected employees, directors and consultants of the Company and its Subsidiaries who are responsible for the conduct and management of its business or who are involved in endeavors significant to its success.


SECTION 2: Definitions
-----------------------


Unless otherwise indicated, the following words when used herein shall have the following meanings:


(a) "Affiliate" shall mean, with respect to any person or entity, a
person or entity that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such person or entity.


(b) "Board of Directors" shall mean the Board of Directors of the
Company.


(c) "Change in Control" shall be deemed to have occurred:


(1) At such time as a third person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, becomes the beneficial owner of shares of the Company having
50% or more of the total number of votes that may be cast for the
election of Directors of the Company; or


(2) On the date on which the stockholders of the Company
approve: (A) any agreement for a merger or consolidation of the
Company with another entity, provided that there shall be no Change in
Control if the persons and entities who were the stockholders of the
Company immediately before such merger or consolidation continue to
own directly more than two-thirds of the outstanding voting securities
of the corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the voting
securities of the Company outstanding immediately before such merger
or consolidation; or (B) any sale, exchange or other disposition of
all or substantially all of the Company's assets; or


(3) On the effective date of any sale, exchange or other
disposition of greater than 50% in fair market value of the Company's
assets, other than in the ordinary course of business, whether in a
single transaction or a series of related transactions; or


(4) At such time that there is a change in more than a majority
of the Company's Board of Directors as a result of a proxy contest,
except this clause (4) will not apply to any Common Stock of a Grantee
who, or an Affiliate of whom, has waged the proxy contest or has
endorsed the change in the Board of Directors.


In determining whether clause (1) of the preceding sentence has been
satisfied, the third person owning shares must be someone other than
Yorktown Energy Partners III, L.P., Yorktown Partners LLC, or entities
controlled by Yorktown Partners LLC. For this purpose, the term
"controlled" means possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a person, whether
(1) through the ownership of more than 50% of the outstanding voting
securities of the person, (2) by contract or (3) by a position such as a
general partner or manager. The Plan Administrator's reasonable
determination as to whether such an event has occurred shall be final and
conclusive.


(d) "Common Stock" shall mean the Company's common stock (no par
value) and any share or shares of the Company's capital stock hereafter
issued or issuable in substitution for such shares.


(e) "Director" shall mean a member of the Board of Directors.


(f) "Plan Administrator" shall mean the body which is responsible for
the administration of the Plan, as determined pursuant to Section 4.1.


(g) "Recipient" shall mean the employee, director, or consultant of
the Company or its Subsidiaries who has been granted Restricted Stock under
this Plan.


(h) "Restricted Stock" shall mean shares of Common Stock granted to
an employee, director, or consultant of the Company or its Subsidiaries,
which are subject to restrictions set forth in a Stock Restriction
Agreement in such form as the Plan Administrator in its sole discretion
shall specify at the time that the shares are granted.


(i) "Stock Restriction Agreement" shall mean the agreement between
the Company and a Recipient pursuant to which Restricted Stock is granted
to the Recipient and which sets forth the restrictions on such Restricted
Stock.


(j) "Subsidiary" shall mean a subsidiary corporation of the Company
as defined in Section 424(f) of the Internal Revenue Code of 1986, as
amended.


SECTION 3: EFFECTIVE DATE
--------------------------


The effective date of the Plan is October 14, 1999.


SECTION 4: ADMINISTRATION
--------------------------


4.1 Plan Administrator. The Plan shall be administered by the Board of
------------------ Directors, unless and until such time as the Board of Directors delegates the administration of the Plan to a


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