EX-10.3 20 file011.htm FORM OF EQUITY COMPENSATION PLAN

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                                     STEALTHGAS INC.

                              2005 EQUITY COMPENSATION PLAN

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    1.       Purpose of the Plan

             The purpose of this 2005 Equity Compensation Plan (the "Plan") is to
    advance the interests of the Company and its stockholders by providing a means
    (a) to attract, retain, and reward directors, officers, other employees and
    persons who provide services to the Company and its Subsidiaries, and to enable
    such persons to acquire or increase a proprietary interest in the Company in
    order to promote a closer identity of interests between such persons and the
    Company's stockholders, (b) to link compensation to measures of the Company's
    performance in order to provide additional incentives, including stock-based
    incentives and cash-based incentives, to such persons for the creation of
    stockholder value, and (c) to enable such persons to acquire or increase a
    proprietary interest in the Company in order to promote a closer identity of
    interests between such persons and the Company's stockholders.

    2.       Definitions

             Capitalized terms used in the Plan and not defined elsewhere in the
    Plan shall have the meaning set forth in this Section.

             2.1 "Award" means a compensatory award made pursuant to the Plan
    pursuant to which a Participant receives, or has the opportunity to receive
    Shares or cash.

             2.2 "Award Agreement" means a written document prescribed by the
    Committee and provided to a Participant evidencing the grant of an Award under
    the Plan.

             2.3 "Beneficiary" means the person(s) or trust(s) entitled by will or
    the laws of descent and distribution to receive any rights with respect to an
    Award that survive such Participant's death provided that if at the time of a
    Participant's death, the Participant had on file with the Committee a written
    designation of a person(s) or trust(s) to receive such rights, then such
    person(s) (if still living at the time of the Participant's death) or trust(s)
    shall be the "Beneficiary" for purposes of the Plan.

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

             2.5 "Committee" means the committee appointed by the Board to
    administer the Plan or the Board, where the Board is acting as the Committee or
    performing the functions of the Committee, as set forth in Section 3.

             2.6 "Company" means StealthGas Inc., a corporation organized under the
    laws of the Republic of the Marshall Islands.

             2.7 "Participant" means any employee or director who has been granted
    an Award under the Plan.

             2.8 "Shares" means common shares of the Company and such other
    securities as may be substituted or resubstituted for Shares pursuant to Section
    6.

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             2.9 "Subsidiary" means an entity that is, either directly or through
    one or more intermediaries, controlled by the Company.

    3.       Administration

             3.1 Committee. The Plan shall be administered by the Compensation
    Committee of the Board, unless the Board shall appoint a different committee.
    Other provisions of the Plan notwithstanding, the Board may perform any function
    of the Committee under the Plan, and that authority specifically reserved to the
    Board under the terms of the Plan, the Company's Articles of Incorporation,
    By-Laws, or applicable law shall be exercised by the Board and not by the
    Committee. The Board shall serve as the Committee in respect of any Awards made
    to any director of the Company who is not otherwise employed by the Company.

             3.2 Powers and Duties of Committee. In addition to the powers and
    duties specified elsewhere in the Plan, the Committee shall have full authority
    and discretion to:

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

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

                 (c) make determinations relating to eligibility for and
    entitlements in respect of Awards, and to make all factual findings related
    thereto; and

                 (d) make all other decisions and determinations as may be required
    under the terms of the Plan or as the Committee may deem necessary or advisable
    for the administration of the Plan. All determination and decisions of the
    Committee shall be final and binding upon a Participant or any person claiming
    any rights under the Plan from or through any Participant, and the Participant
    or such other person may not further pursue his or her claim in any court of law
    or equity or other arbitral proceeding.

                 (e) Delegation by Committee. Except to the extent prohibited by
    applicable law or the applicable rules of a stock exchange, the Committee may
    delegate, on such terms and conditions as it determines in its sole and absolute
    discretion, to one or more senior executives of the Company (i) the authority to
    make grants of Awards to officers (other than executive officers) and employees
    of the Company and any Subsidiary and (ii) other administrative
    responsibilities. Any such allocation or delegation may be revoked by the
    Committee at any time.

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

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    4.       Limitations on Awards

             4.1 Aggregate Number of Shares Available for Awards. The aggregate
    number of Shares for which Awards may be granted under this Plan shall not
    exceed 10% of the number of Shares issued and outstanding at the time any Award
    is granted. Awards made under this Plan which are forfeited (including a
    repurchase or cancellation of Shares subject thereto by the Company in exchange
    for the price, if any, paid to the Company for such Shares, or for their par or
    other nominal value), cancelled or have expired, shall be disregarded for
    purposes of the preceding sentence.

             4.2 Type of Shares Deliverable. The Shares delivered in connection with
    Awards may consist, in whole or in part, of authorized and unissued Shares, or
    Shares acquired in the market for the account of a Participant.

    5.       Awards

             5.1 Eligibility. The Committee shall have the discretion to select
    Award recipients from among the following categories of eligible recipients: (i)
    individuals who are employees (including officers) of the Company or any
    Subsidiary, (ii) individuals who are members of the Board and not otherwise
    employed by the Company or any Subsidiary, (iii) any other individual or entity
    who provides substantial personal services to the Company or any Subsidiary,
    (iv) any individual who has agreed to become an employee of the Company or a
    Subsidiary, provided that no such person may receive any payment or exercise any
    right relating to an Award until such person has commenced employment, and (v)
    individuals formerly employed by the Company or any Subsidiary as compensation
    in respect of their employment with the Company or any Subsidiary.

             5.2 Type of Awards. The Committee shall have the discretion to
    determine the type of Awards to be granted under the Plan. Such Awards may be in
    a form payable in either Shares or cash, including, but not limited to, options
    to purchase Shares, restricted Shares, bonus Shares, appreciation rights, share
    units, performance units and dividend equivalents. The Committee is authorized
    to grant Awards as a bonus, or to grant Awards in lieu of obligations of the
    Company or any Subsidiary to pay cash or grant other awards under other plans or
    compensatory arrangements, to the extent permitted by such other plans or
    arrangements. Shares issued pursuant to an Award in the nature of a purchase
    right (e.g., options) shall be purchased for such consideration, paid for at
    such times, by such methods, and in such forms, including cash, Shares, other
    Awards, or other consideration, as the Committee shall determine.

             5.3 Terms and Conditions of Awards. The Committee shall determine the
    size of each Award to be granted (including, where applicable, the number of
    Shares to which an Award will relate), and all other terms and conditions of
    each such Award (including, but not limited to, any exercise price, grant price,
    or purchase price, any restrictions or conditions relating to transferability,
    forfeiture, exercisability, or settlement of an Award, and any schedule or
    performance conditions for the lapse of such restrictions or conditions, and
    accelerations or modifications thereof, based in each case on such
    considerations as the Committee shall determine). The Committee may determine
    whether, to what extent, and under what circumstances an Award may be settled,
    or the exercise price of an Award may be paid, in cash, Shares, other Awards, or
    other consideration, or an Award may be canceled, forfeited, or surrendered.

             5.4 Option Repricing. As to any Award granted as an option to purchase
    Shares or an appreciation right payable in Shares, the Committee is authorized
    to subsequently reduce the applicable exercise price relating to such Award, or
    take such other action as may be considered a repricing of such Award under
    generally accepted accounting principles.

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             5.5 Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
    granted under the Plan may, in the discretion of the Committee, be granted
    either alone or in addition to, in tandem with, or in substitution or exchange
    for, any other Award or any award granted under another plan of the Company, any
    Subsidiary, or any business entity to be acquired by the Company or a
    Subsidiary, or any other right of a Participant to receive payment from the
    Company or any Subsidiary and in granting a new Award, the Committee may
    determine that the value of any surrendered Award or award may be applied to
    reduce the exercise price of any option or appreciation right or purchase price
    of any other Award.

    6.       Adjustments

             In the event of any change in the outstanding Shares by reason of any
    Share dividend or split, reorganization, recapitalization, merger, amalgamation,
    consolidation, spin-off, combination or exchange of Shares, repurchase,
    liquidation, dissolution or other corporate exchange, any large, special and
    non-recurring dividend or distribution to stockholders, or other similar
    corporate transaction, the Committee may make such substitution or adjustment,
    if any, as it deems to be equitable and in order to preserve, without enlarging,
    the rights of Participants, as to (i) the number and kind of Shares which may be
    delivered in connection with Awards granted thereafter, (ii) the number and kind
    of Shares subject to or deliverable in respect of outstanding Awards, and (iii)
    the exercise price, grant price or purchase price relating to any Award. In
    addition, the Committee is authorized to make adjustments in the terms and
    conditions of, and the criteria included in, Awards (including cancellation of
    Awards in exchange for the intrinsic (i.e., in-the-money) value, if any, of the
    vested portion thereof, substitution of Awards using securities or other
    obligations of a successor or other entity, acceleration of the expiration date
    for Awards, or adjustment to performance goals in respect of Awards) in
    recognition of unusual or nonrecurring events (including events described in the
    preceding sentence, as well as acquisitions and dispositions of businesses and
    assets) affecting the Company, any Subsidiary or any business unit, or the
    financial statements of the Company or any Subsidiary, or in response to changes
    in applicable laws, regulations, or accounting principles. Notwithstanding the
    foregoing, if any such event will result in the acquisition of all or
    substantially all of the Company's outstanding Shares, then if the document
    governing such acquisition (e.g., merger agreement) specifies the treatment of
    outstanding Awards, such treatment shall govern without the need for any action
    by the Committee.

    7.       General Provisions

             7.1 Compliance with Laws and Obligations. The Company shall not be
    obligated to issue or deliver Shares in connection with any Award or take any
    other action under the Plan in a transaction subject to the registration
    requirements of any applicable securities law, any requirement under any listing
    agreement between the Company and any securities exchange or automated quotation
    system, or any other law, regulation, or contractual obligation of the Company,
    until the Company is satisfied that such laws, regulations, and other
    obligations of the Company have been complied with in full. Certificates
    representing Shares issued under the Plan will be subject to such stop-transfer
    orders and other restrictions as may be applicable under such laws, regulations,
    and other obligations of the Company, including any requirement that a legend or
    legends be placed thereon.

             7.2 Limitations on Transferability. Awards and other rights under the
    Plan will not be transferable by a Participant except to a Beneficiary in the
    event of the Participant's death (to the extent any such Award, by its terms,
    survives the Participant's death), and, if exercisable, shall be exercisable
    during the lifetime of a Participant only by such Participant or his guardian or
    legal representative; provided, however, that such Awards and other rights may
    be transferred during the lifetime of the Participant, for purposes of the
    Participant's estate planning or other purposes consistent with the purposes of
    the Plan (as determined by the Committee), and may be exercised by such
    transferees in accordance with the terms of such Award, but only if and to the
    extent permitted by the Committee. Awards and other rights under the Plan may
    not be pledged,

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    mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to
    the claims of creditors. A Beneficiary, transferee, or other person claiming any
    rights under the Plan from or through any Participant shall be subject to all
    terms and conditions of the Plan and any Award Agreement applicable to such
    Participant, except as otherwise determined by the Committee, and to any
    additional terms and conditions deemed necessary or appropriate by the
    Committee.

             7.3 No Right to Continued Employment; Leaves of Absence. Neither the
    Plan, the grant of any Award, nor any other action taken hereunder shall be
    construed as giving any employee, consultant, director, or other person the
    right to be retained in the employ or service of the Company or any of its
    Subsidiaries (for the vesting period or any other period of time), nor shall it
    interfere in any way with the right of the Company or any of its Subsidiaries to
    terminate any person's employment or service at any time. Unless otherwise
    specified in the applicable Award Agreement, (i) an approved leave of absence
    shall not be considered a termination of employment or service for purposes of
    an Award under the Plan, and (ii) any Participant who is employed by or performs
    services for a Subsidiary shall be considered to have terminated employment or
    service for purposes of an Award under the Plan if such Subsidiary is sold or no
    longer qualifies as a Subsidiary of the Company, unless such Participant remains
    employed by the Company or another Subsidiary.

             7.4 Taxes. The Company and any Subsidiary is authorized to withhold
    from any delivery of Shares in connection with an Award, any other payment
    relating to an Award, or any payroll or other payment to a Participant, amounts
    of withholding and other taxes due or potentially payable in connection with any
    transaction involving an Award, and to take such other action as the Committee
    may deem advisable to enable the Company, its Subsidiaries and Participants to
    satisfy obligations for the payment of withholding taxes and other tax
    obligations relating to any Award. This authority shall include authority to
    withhold Shares or receive or accept Shares by way of repurchase, Participant
    services, or other consideration and to make cash payments in respect thereof in
    satisfaction of withholding tax obligations.

             7.5 Changes to the Plan and Awards. The Board may amend, suspend,
    discontinue, or terminate the Plan or the Committee's authority to grant Awards
    under the Plan without the consent of stockholders or Participants, except that
    any amendment shall be subject to the approval of the Company's stockholders at
    or before the next annual meeting of stockholders for which the record date is
    after the date of such Board action if such stockholders approval is required by
    any applicable law, regulation or stock exchange rule, and the Board may
    otherwise, in its discretion, determine to submit other such amendments to
    stockholders for approval; provided, however, that, without the consent of an
    affected Participant, no such action may materially impair the rights of such
    Participant under any Award theretofore granted. The Committee may amend,
    suspend, discontinue, or terminate any Award theretofore granted and any Award
    Agreement relating thereto; provided, however, that, without the consent of an
    affected Participant, no such action may materially impair the rights of such
    Participant under such Award. Any action taken by the Committee pursuant to
    Section 6 shall not be treated as an action described in this Section 7.5.

             7.6 No Right to Awards; No Shareholder Rights. No Participant or other
    person shall have any claim to be granted any Award under the Plan, and there is
    no obligation for uniformity of treatment of Participants, employees,
    consultants, or directors. No Award shall confer on any Participant any of the
    rights of a shareholder of the Company unless and until Shares are duly issued
    or transferred and delivered to the Participant in accordance with the terms of
    the Award.

             7.7 Unfunded Status of Awards; Creation of Trusts. The Plan is intended
    to constitute an "unfunded" plan for incentive and deferred compensation. With
    respect to any payments not yet made to a Participant pursuant to an Award,
    nothing contained in the Plan or any Award shall give any such Participant any
    rights that are greater than those of a general creditor of the Company;
    provided, however, that the Committee may authorize the creation of trusts or
    make other arrangements to meet the Company's obligations

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    under the Plan to deliver cash, Shares, other Awards, or other consideration
    pursuant to any Award, which trusts or other arrangements shall be consistent
    with the "unfunded" status of the Plan unless the Committee otherwise
    determines.

             7.8 Nonexclusivity of the Plan. Neither the adoption of the Plan by the
    Board nor the submission of the Plan or of any amendment to stockholders for
    approval shall be construed as creating any limitations on the power of the
    Board to adopt such other compensatory arrangements as it may deem desirable,
    including the granting of awards otherwise than under the Plan, and such
    arrangements may be either applicable generally or only in specific cases.

             7.9 Successors and Assigns. The Plan and Award Agreements may be
    assigned by the Company to any successor to the Company's business. The Plan and
    any applicable Award Agreement shall be binding on all successors and assigns of
    the Company and a Participant, including any permitted transferee of a
    Participant, the Beneficiary or estate of such Participant and the executor,
    administrator or trustee of such estate, or any receiver or trustee in
    bankruptcy or representative of the Participant's creditors.

             7.10 Governing Law. The Plan and all Award Agreements shall be governed
    by and construed in accordance with the laws of the Republic of the Marshall
    Islands, without giving effect to any choice of law or conflict of law provision
    or rule that would cause the application of the laws of any jurisdiction other
    than the Republic of the Marshall Islands.

             7.11 Severability of Provisions. If any provision of the Plan shall be
    held invalid or unenforceable, such invalidity or unenforceability shall not
    affect any other provisions hereof, and the Plan shall be construed and enforced
    as if such provisions had not been included.

             7.12 Plan Termination. Unless earlier terminated by the Board, the Plan
    shall terminate on the day before the tenth anniversary of the later of the date
    the Company's stockholders originally approved the Plan (August __, 2005) or the
    date of any subsequent shareholder approval of the Plan. Upon any such
    termination of the Plan, no new authorizations of grants of Awards may be made,
    but then-outstanding Awards shall remain outstanding in accordance with their
    terms, and the Committee otherwise shall retain its full powers under the Plan
    with respect to such Awards.

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