Exhibit 10.22
 
Appendix A
 
REED’S, INC.
2007 STOCK INCENTIVE AWARD PLAN
 
Section 1.     Purpose.
 
(a)  
The purpose of this 2007 Stock Incentive Award Plan (the “Plan”) is to enable
Reed’s, Inc. (the “Company”) and its Subsidiaries and Affiliates to attract,
retain, motivate, and reward employees, directors, and certain select service
providers of the Company and its Subsidiaries and Affiliates, to provide for
equitable and competitive compensation opportunities, to recognize individual
contributions and reward achievement of Company goals, and to promote the
creation of long-term value for stockholders by strengthening the mutuality of
interests between those employees, directors and select service providers and
the Company’s stockholders.

 
(b)  
The Plan authorizes stock-based and cash-based incentives for
Participants.  Awards may be made in the form of (i) Incentive Stock Options;
(ii) Nonqualified Stock Options; (iii) Restricted Stock; (iv) Stock Appreciation
Rights; (v) Stock Units; and (vi) any combination of the foregoing.

 
Section 2.     Definitions.  The following terms have the respective meanings,
in addition to the capitalized terms defined in Section 1 hereof or as otherwise
defined throughout this document:
 
(a)  
“Affiliate” means any entity (other than the Company and any Subsidiary) that is
designated by the Board as a participating employer under the Plan.

 
(b)  
“Award” means any Option, SAR, Restricted Stock, Stock Unit, or Stock granted as
a bonus or in lieu of another award, Dividend Equivalent, or Other Stock-Based
Award, together with any related right or interest, granted to a Participant
under the Plan.

 
(c)  
“Award Agreement” means any Option Agreement, SAR Agreement, Restricted Stock
Agreement, Stock Unit Agreement, or any other agreement under which the Company
(or a Subsidiary or Affiliate) grants an Eligible Person an Award.

 
(d)  
“Beneficiary” means the person(s) or trust(s) designated as being entitled to
receive the benefits under a Participant’s Award upon and following a
Participant’s death. Unless otherwise determined by the Committee, a Participant
may designate one or more persons or one or more trusts as his or her
Beneficiary.

 
(e)  
“Board” means the Company’s Board of Directors.

 
(f)  
“Code” means the Internal Revenue Code of 1986, as amended from time to time,
any successor thereto, and including any regulations promulgated thereunder.

 
(g)  
“Committee” means the Compensation Committee of the Board or any other committee
authorized by the Board to administer the Plan of which the majority of the
members are both Outside Directors and Non-Employee Directors.

 
(h)  
“Corporate Transaction” means the occurrence of any of the following: (i) any
person or group of persons (as defined in Section 13(d) and 14(d) of the
Exchange Act) together with its affiliates, excluding employee benefit plans of
the Company, is or becomes, directly or indirectly, the “beneficial owner” (as
defined in Rule 13d-3 of the Exchange Act) of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding securities; or (ii) a merger or consolidation of the Company with
any other corporation or entity is consummated regardless of which entity is the
survivor, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being converted into voting
securities of the surviving entity or its parent) at least 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or (iii) the Company
is completely liquidated or all or substantially all of the Company’s assets are
sold.

 
 
 
1

--------------------------------------------------------------------------------

 
 
(i)  
“Covered Employee” means an Eligible Person who is an employee of the Company, a
Subsidiary or an Affiliate.

 
(j)  
“Date of Grant” has the meaning set forth in Treasury Regulation Section
1.409A-1.

 
(k)  
“Disability” means a permanent and total disability as defined in Code Section
409A.

 
(l)  
“Dividend Equivalent” means a right, granted under this Plan, to receive cash,
Stock, other Awards or other property equal in value to all or a portion of the
dividends paid with respect to a specified number of shares of Stock.

 
(m)  
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and shall
include any successor thereto.

 
(n)  
“Fair Market Value” or “FMV” means the fair market value of Stock, Awards or
other property as determined in good faith by the Committee or under procedures
established by the Committee as follows: if on the Date of Grant or other
determination date the Stock is listed on an established securities market, the
Fair Market Value of a share of Stock shall be the closing price of the Stock on
such exchange or in such market (if there is more than one such exchange or
market the Committee shall determine the appropriate exchange or market) on the
Date of Grant or such other determination date (or if there is no such reported
closing price, the Fair Market Value shall be the mean between the highest bid
and lowest asked prices or between the high and low sale prices on such trading
day) or, if no sale of Stock is reported for such trading day, on the next
preceding day on which any sale shall have been reported. If the Stock is not
listed on such an exchange, quoted on such system or traded on such a market,
Fair Market Value shall be the value of the Stock as determined by the Committee
in good faith.  Fair Market Value relating to the exercise price or base price
of any Option or SAR shall at all times conform to the applicable requirements
of Code Section 409A.  Notwithstanding any provision of this subsection to the
contrary, the Fair Market Value of an Award shall be established by the
Committee immediately prior to the grant of such Award.

 
(o)  
“Incentive Stock Option” or “ISO” means any Option intended to be, designated
as, and that otherwise qualifies as an “Incentive Stock Option” within the
meaning of Code Section 422.

 
(p)  
“Non-Employee Director” has the meaning set forth under Section 16 of the
Exchange Act.

 
(q)  
“Nonqualified Stock Option” means any Option that is not an Incentive Stock
Option.

 
(r)  
“Option” means a right to purchase Stock granted under Section 6(b).

 
 
 
2

--------------------------------------------------------------------------------

 
 
(s)  
“Outside Director” has the meaning set forth in Code Section 162(m).

 
(t)  
“Other Stock-Based Awards” means Awards granted to a Participant that are
valued, in whole or in part, by reference to, or otherwise based on, shares of
Stock.

 
(u)  
“Participant” means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an Eligible Person.

 
(v)  
“Restricted Stock” means Stock granted under this Plan which is subject to
certain restrictions and to a risk of forfeiture.

 
(w)  
“Section 16 Participant” means a Participant under the Plan who is subject to
Section 16 of the Exchange Act.

 
(x)  
“Stock” means shares of the Company’s Common Stock, no par value per share, and
any other equity securities of the Company that may be substituted or
resubstituted for such Stock.

 
(y)  
“Stock Appreciation Rights” or “SARs” means a right granted to a Participant
under Section 6(c).

 
(z)  
“Stock Units” means a right granted under this Plan to receive Stock or other
Awards or a combination thereof at the end of a specified period.  Stock Units
subject to a risk of forfeiture may be designated as “Restricted Stock Units.”

 
(aa)  
“Subsidiary” means any corporation (other than the Company or an Affiliate) in
an unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in that chain.

 
Section 3.     Administration.
 
(a)  
Authority of the Committee.  The Plan shall be administered by the
Committee.  Any interpretation or administration of the Plan by the Committee,
and all actions and determinations of the Committee, shall be final, binding and
conclusive on the Company, its stockholders, Subsidiaries, Affiliates, all
Participants in the Plan, their respective legal representatives, successors and
assigns, and all persons claiming under or through any of them.

 
(b)  
Composition of the Committee.  The Committee shall consist of not less than
three directors, all of whom shall be Outside Directors and Non-Employee
Directors.  Those Directors shall be appointed by the Board and shall serve as
the Committee at the pleasure of the Board.  The function of the Committee
specified in the Plan shall be exercised by the entire Board if, and to the
extent that, no Committee exists that has the authority to so administer the
Plan.

 
(c)  
Manner of Exercise of Committee Authority.  The Committee shall have the full
power and authority to interpret and administer the Plan in its sole discretion,
including exercising all the powers and authorities either specifically granted
to it under the Plan or necessary or advisable in the administration of the
Plan.  The Committee’s powers and authorities include, without limitation, the
sole ability to determine: eligibility criteria for Awards; persons to whom, and
the time or times at which, Awards shall be granted; number of shares of Stock
to be covered by each Award; interpretation of Plan provisions; amendments,
rules, and regulations relating to the Plan; consideration, if any, to be paid
for Awards; specific terms and conditions of individual Awards; and Awards that
qualify as performance-based compensation under Code Section 162(m).  The
Committee shall have the power and authority to make all other determinations
deemed necessary or advisable for the administration of the Plan.

 
 
 
3

--------------------------------------------------------------------------------

 
 
(d)  
Delegation of Authority.  The Committee may delegate to one or more of its
members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan; provided,
that such delegation may not include the selection or grant of Awards to
Participants or Eligible Persons who are executive officers of the Company or
any Subsidiary or Affiliate, or Section 16 Participants.

 
(e)  
Committee Vacancies.  The Board shall fill all vacancies in the Committee.  The
Board may from time to time appoint additional members to the Committee and may
at any time remove one or more Committee members and substitute others.  One
member of the Committee shall be selected by the Board as chairman.  The
Committee shall hold its meetings at such times and places as it shall deem
advisable.  All determinations of the Committee shall be made by not less than a
majority of its members either present in person or participating by conference
telephone at a meeting or by written consent.  The Committee shall keep minutes
of its meetings.  The Committee may appoint a secretary to keep such minutes and
may make such rules and regulations for the conduct of its business as it shall
deem advisable, but in accordance with the written charter prepared by the Board
and which may be amended from time to time by the Board.  The secretary shall
not need to be a member of the Committee or a member of the Board.

 
(f)  
Limitation of Liability.  The Committee and each member thereof, and any person
acting pursuant to authority delegated by the Committee, shall be entitled, in
good faith, to rely or act upon any report or other information furnished by any
executive officer, other officer or employee of the Company or a Subsidiary or
Affiliate, the Company’s independent auditors, consultants or any other agents
assisting in the administration of the Plan.  Members of the Committee, any
person acting pursuant to authority delegated by the Committee, and any officer
or employee of the Company or a Subsidiary or Affiliate acting at the direction
or on behalf of the Committee or a delegee shall not be personally liable for
any action or determination taken or made in good faith with respect to the
Plan, and shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action or determination.

 
Section 4.     Stock Subject to Plan.
 
(a)  
Overall Number of Shares Available.  Subject to adjustment as provided under
Section 11(c), the total number of shares of Stock reserved and available for
delivery in connection with Awards under the Plan shall be 1,500,000.  Any
shares of Stock issued under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares.

 
(b)  
Accounting Procedures.  The Committee may adopt reasonable accounting procedures
to ensure appropriate counting of Stock subject to the Plan, avoid double
counting (as, for example, in the case of tandem or substitute Awards), and make
adjustments in accordance with this Section 4(b).  Shares shall be counted
against those reserved to the extent such shares have been delivered and are no
longer subject to a risk of forfeiture.  Accordingly, (i) to the extent that an
Award under the Plan is canceled, expired, forfeited, settled in cash, settled
by delivery of fewer shares than the number underlying the Award, or otherwise
terminated without delivery of Stock to the Participant, the Stock retained by
or returned to the Company will not be deemed to have been delivered under the
Plan; and (ii) Stock that is withheld from such Award or separately surrendered
by the Participant in payment of the exercise price or taxes relating to such
Award shall be deemed to constitute Stock not delivered and will be available
under the Plan.  The Committee may determine that Awards may be outstanding that
relate to more Stock than the aggregate shares of Stock remaining available
under the Plan so long as Awards will not in fact result in delivery and vesting
of shares of Stock in excess of the number then available under the Plan.  In
addition, in the case of any Award granted in assumption of or in substitution
for an award of a company or business acquired by the Company or a Subsidiary or
Affiliate or with which the Company or a Subsidiary or Affiliate combines,
shares delivered or deliverable in connection with such assumed or substitute
Award shall not be counted against the number of shares of Stock reserved under
the Plan.

 
 
 
4

--------------------------------------------------------------------------------

 
 
(c)  
Individual Annual Award Limits.  No Participant may be granted Options or other
Awards under the Plan with respect to an aggregate of more than 75,000 shares of
Stock (subject to adjustment as otherwise may be provided for throughout this
Plan) during any calendar year.

 
Section 5.     Eligibility.
 
(a)  
Eligibility.  Grants of Awards may be made from time to time to those officers,
employees and directors of the Company or any Subsidiary or Affiliate who are
designated by the Committee in its sole and exclusive discretion as eligible to
receive such Awards (“Eligible Persons”).  Eligible Persons may include, but
shall not necessarily be limited to, employees, officers, and directors of the
Company and any Subsidiary or Affiliate; however, Options intended to qualify as
ISOs shall be granted only to Eligible Persons while actually employed by the
Company, a Subsidiary or an Affiliate.  The Committee may grant more than one
Award to the same Eligible Person.  No Award shall be granted to any Eligible
Person during any period of time when such Eligible Person is on a leave of
absence.  Awards to be granted to directors, which may include members of the
Committee, must be approved and granted by a majority of the disinterested
members of the Board.

 
(b)  
Substitutions/Acquisitions.  Holders of awards granted by a company or business
acquired by the Company or a Subsidiary or Affiliate, or with which the Company
or a Subsidiary or Affiliate combines, may be eligible for substitute Awards
under this Plan that will be granted in assumption of or in substitution for
such outstanding awards in connection with such acquisition or combination
transaction.  In such cases, holders of the assumed or substituted awards will
become Participants in the Plan; provided, however, that such assumption or
substitution in no way causes an Award under this Plan to become subject to the
terms and conditions of Code Section 409A.

 
(c)  
Participation.  An Eligible Person shall become a Participant in the Plan and
shall perfect his or her Award only after he or she has completed the applicable
Award Agreement in a manner that is satisfactory to the Committee and has
delivered said Award Agreement to the Committee.  A Participant shall continue
his or her participation in the Plan, even if no longer an Eligible Person,
until any and all of his or her interests that are held under the Plan expire or
are paid.

 
Section 6.     Specific Terms of Awards Granted Under the Plan.
 
(a)  
General Terms of All Awards.  All Awards granted under the Plan, including
Awards of any Stock Units, shall be evidenced by individual agreements between
the Company (or Subsidiary or Affiliate) and the applicable Eligible Person (an
“Award Agreement”).  Award Agreements may provide for grants of Awards on the
specific terms and conditions set forth in this Section 6.  Alternatively, the
Committee may impose on any individual Award, as specified in the individual
Award Agreement, such additional terms and conditions, not inconsistent with the
provisions of the Plan, or applicable law, as the Committee shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment or service by the Participant and terms permitting a Participant to
make elections relating to his or her Award.  The Committee shall retain full
power and discretion with respect to any term or condition of an Award that is
not mandatory under the Plan and the terms of the Award Agreement; provided,
that the exercise of such discretion shall in no event cause an Award that is
not otherwise subject to the terms and conditions of Code Section 409A to become
“subject to the terms and conditions of Code Section 409A” unless otherwise
agreed upon between the Company (or Subsidiary or Affiliate) and the Eligible
Person; provided further, that, to the extent an Award is subject to the terms
and conditions of Code Section 409A, the Committee shall provide the Award in
the form and manner required by Code Section 409A, unless otherwise agreed upon
by the Company (or Subsidiary or Affiliate) and Eligible Person.  For purposes
of the Plan, “subject to the terms and conditions of Code Section 409A,” means
the applicable Award or compensation subject to said Award provides for a
deferral of compensation as determined under Code Section 409A.  The Committee
shall require the payment of lawful consideration for an Award to the extent
necessary to satisfy the requirements of the Delaware General Company Law, and
may otherwise require payment of consideration for an Award except as limited by
the Plan and as otherwise required by applicable law.

 
 
5

--------------------------------------------------------------------------------

 
 
(b)  
Option Awards.  Options granted under the Plan shall be evidenced by an
agreement (“Option Agreements”).  Options that are awarded may be of one of two
types which shall be indicated on the face of the Option Agreement: (i) ISOs or
(ii) Nonqualified Stock Options.  The Committee is authorized to grant Options
to Participants on the following terms and conditions:

 
(i)  
Option Term; Time and Method of Exercise.  The Committee shall determine the
term of each Option; provided that in no event shall the term of any Option
exceed a period of ten years from the Date of Grant.  The Committee shall
determine the time or times at which or the circumstances under which an Option
may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the methods by which such
exercise price may be paid or deemed to be paid and the form of such payment
(including, without limitation, cash, Stock (including by withholding Stock
deliverable upon exercise), other Awards or awards granted under other plans of
the Company or any Subsidiary or Affiliate, or other property), and the methods
by or forms in which Stock will be delivered or deemed to be delivered in
satisfaction of Options to Participants.

 
(ii)  
Exercise Price.  The option price per share of Stock purchasable under a
Nonqualified Stock Option or an Incentive Stock Option shall be determined by
the Committee at the time of grant, shall be set forth on the applicable Option
Agreement, and shall be not less than 100% of the Fair Market Value of the Stock
at the Date of Grant (or, with respect to an Incentive Stock Option, 110% of the
Fair Market Value of the Stock at the Date of Grant in the case of a Participant
who at the Date of Grant owns Stock possessing more than 10% of the total
combined voting power of all classes of Stock of the Company or its parent or
subsidiary corporations (as determined under Code Sections 424(d), (e) and
(f))).

 
(iii)  
Non-Transferability of Options.  No Option shall be transferable by any
Participant other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order (as defined in the Code or the
Employment Retirement Income Security Act of 1974, as amended) except that, if
so provided in the Option Agreement, the Participant may transfer the Option,
other than an ISO, during the Participant’s lifetime to one or more members of
the Participant’s family, to one or more trusts for the benefit of one or more
of the Participant’s family, or to a partnership or partnerships of members of
the Participant’s family, or to a charitable organization as defined in Code
Section 501(c)(3), provided that the transfer would not result in the loss of
any exemption under Rule 16b-3 of the Exchange Act with respect to any
Option.  The transferee of an Option will be subject to all restrictions, terms
and conditions applicable to the Option prior to its transfer, except that the
Option will not be further transferable by the transferee other than by will or
by the laws of descent and distribution.

 
 
6

--------------------------------------------------------------------------------

 
 
(iv)  
Disposition upon Termination of Employment.

 
(A)  
Termination by Death.  Subject to Sections 6(b)(i) and 6(b)(v), if any
Participant’s employment with the Company or any Subsidiary or Affiliate
terminates by reason of death, any Option held by that Participant shall become
immediately and automatically vested and exercisable.  If termination of a
Participant’s employment is due to death, then any Option held by that
Participant may thereafter be exercised for a period of two years (or with
respect to an ISO, for a period of one year) (or such other period as the
Committee may specify at or after grant) from the date of
death.  Notwithstanding the foregoing, in no event will any Option be
exercisable after the expiration of the option period of Option.  The balance of
the Option shall be forfeited if not exercised within two years (or one year
with respect to ISOs).

 
(B)  
Termination by Reason of Disability.  Subject to Sections 6(b)(i) and 6(b)(v),
if a Participant’s employment with the Company or any Subsidiary or Affiliate
terminates by reason of Disability, any Option held by that Participant shall
become immediately and automatically vested and exercisable.  If termination of
a Participant’s employment is due to Disability, then any Option held by that
Participant may thereafter be exercised by the Participant or by the
Participant’s duly authorized legal representative if the Participant is unable
to exercise the Option as a result of the Participant’s Disability, for a period
of two years (or with respect to an ISO, for a period of one year) (or such
other period as the Committee may specify at or after grant) from the date of
such termination of employment; and if the Participant dies within that two-year
period (or such other period as the Committee may specify at or after grant),
any unexercised Option held by that Participant shall thereafter be exercisable
by the estate of the Participant (acting through its fiduciary) for the duration
of the two-year period from the date of that termination of
employment.  Notwithstanding the foregoing, in no event will any Option be
exercisable after the expiration of the option period of such Option.  The
balance of the Option shall be forfeited if not exercised within two years (or
one year with respect to ISOs).

 
(C)  
Termination for Cause.  Unless otherwise determined by the Committee at or after
the time of granting any Option, if a Participant’s employment with the Company
or any Subsidiary or Affiliate terminates for Cause, any unvested Options will
be forfeited and terminated immediately upon termination and any vested Options
held by that Participant shall terminate 30 days after the date employment
terminates.  Notwithstanding the foregoing, in no event will any Option be
exercisable after the expiration of the option period of such Option.  The
balance of the Option shall be forfeited.

 
(D)  
Other Termination/Retirement.  Unless otherwise determined by the Committee at
or after the time of granting any Option, if a Participant retires from
employment with the Company (or a Subsidiary or Affiliate) or a Participant’s
employment with the Company (or a Subsidiary or Affiliate) terminates for any
reason other than death, Disability, or for Cause, all Options held by that
Participant shall terminate three months after the date employment
terminates.  Notwithstanding the foregoing, in no event will any Option be
exercisable after the expiration of the option period (which shall be
established in the Option Agreement) of such Option.  The balance of the Option
shall be forfeited.

 
 
 
7

--------------------------------------------------------------------------------

 
 
(E)  
Leave of Absence.  In the event a Participant is granted a leave of absence by
the Company or any Subsidiary or Affiliate to enter military service or because
of sickness, the Participant’s employment with the Company or such Subsidiary or
Affiliate will not be considered terminated, and the Participant shall be deemed
an employee of the Company or such Subsidiary or Affiliate during such leave of
absence or any extension thereof granted by the Company or such Subsidiary or
Affiliate.  Notwithstanding the foregoing, in the case of an ISO, a leave of
absence of more than 90 days will be viewed as a termination of employment
unless continued employment is guaranteed by contract or statute.

 
(v)  
Incentive Stock Options.  Notwithstanding Sections 6(b)(iii) and 6(b)(iv), an
ISO shall be exercisable by (A) a Participant’s authorized legal representative
(if the Participant is unable to exercise the ISO as a result of the
Participant’s Disability) only if, and to the extent, permitted by Section 422
of the Code and (B) by the Participant’s estate, in the case of death, or
authorized legal representative, in the case of Disability, no later than ten
years from the date the ISO was granted (in addition to any other restrictions
or limitations that may apply).  Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to ISOs shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be exercised, so as to disqualify the Plan under Code Section 422
of the Code, or, without the consent of the Participants affected, to disqualify
any ISO under Code Section 422.

 
(c)  
Stock Appreciation Rights.  SARs granted under the Plan shall be evidenced by an
agreement (“SAR Agreements”).  The Committee is authorized to grant SARs to
Participants on the following terms and conditions:

 
(i)  
Right to Payment.  An SAR shall confer on the Participant to whom it is granted
a right to receive, upon exercise thereof, the excess of (A) the Fair Market
Value of one share of Stock on the date of exercise over (B) the grant price of
the SAR as determined by the Committee.  The grant price of each SAR shall be
not less than the Fair Market Value of a share of Stock on the Date of Grant of
such SAR.

 
(ii)  
Other Terms.  The Committee shall determine the term of each SAR, provided that
in no event shall the term of an SAR exceed a period of ten years from the Date
of Grant.  The Committee shall determine at the Date of Grant or thereafter, the
time or times at which and the circumstances under which an SAR may be exercised
in whole or in part (including based on achievement of performance goals and/or
future service requirements), the method of exercise, method of settlement, form
of consideration payable in settlement, method by or forms in which Stock will
be delivered or deemed to be delivered to Participants, whether or not an SAR
shall be free-standing or in tandem or combination with any other Award.  The
Committee may require that an outstanding Option be exchanged for an SAR
exercisable for Stock having vesting, expiration, and other terms substantially
the same as the Option, so long as such exchange will not result in additional
accounting expense to the Company.

 
(d)  
Restricted Stock.  Restricted Stock granted under the Plan shall be evidenced by
an agreement (“Restricted Stock Agreements”).  The Committee is authorized to
grant Restricted Stock to Participants on the following terms and conditions:

 
 
 
8

--------------------------------------------------------------------------------

 
 
(i)  
Grant and Restrictions.  Restricted Stock shall be subject to such restrictions
on transferability, risk of forfeiture and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in combination
at such times, under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such installments or
otherwise and under such other circumstances as the Committee may determine at
the Date of Grant, and which shall be set forth on the applicable Restricted
Stock Agreement, or thereafter.  Except to the extent restricted under the terms
of the Plan and any Restricted Stock Agreement, a Participant granted Restricted
Stock shall have all of the rights of a stockholder, including the right to vote
the Restricted Stock and the right to receive dividends thereon; provided,
however, that the Committee may require mandatory reinvestment of dividends in
additional Restricted Stock, may provide that no dividends will be paid on
Restricted Stock or retained by the Participant, or may impose other
restrictions on the rights attached to Restricted Stock.

 
(ii)  
Forfeiture.  Except as otherwise determined by the Committee, upon termination
of employment or service during the applicable restriction period, Restricted
Stock that is at that time subject to restrictions shall be forfeited and
reacquired by the Company; provided that the Committee may provide, by rule or
regulation or in any Restricted Stock Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to
Restricted Stock will lapse in whole or in part, including in the event of
terminations resulting from specified causes.

 
(iii)  
Certificates for Stock.  Restricted Stock granted under the Plan shall be
evidenced in such manner as the Committee shall determine.  Certificates
representing Restricted Stock shall be registered in the name of the Participant
and shall bear an appropriate legend referring to the terms, conditions and
restrictions applicable to the Award of such Restricted Stock.  The Company
shall retain physical possession of the stock certificates until the time that
the restrictions thereon have lapsed, and the Participant shall have delivered a
stock power to the Company, endorsed in blank, relating to the Stock covered by
such Restricted Stock.

 
(iv)  
Dividends and Splits.  As a condition to the grant of an Award of Restricted
Stock, the Committee may require that any dividends paid on a share of
Restricted Stock shall be either (A) paid with respect to such Restricted Stock
at the dividend payment date in cash, in kind, or in a number of shares of
unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) automatically reinvested in additional Restricted Stock or
held in kind, which shall be subject to the same terms as applied to the
original Restricted Stock to which it relates, or (C) deferred as to payment,
either as a cash deferral or with the amount or value thereof automatically
deemed reinvested in Stock Units, other Awards or other investment vehicles,
subject to such terms as the Committee shall determine or permit a Participant
to elect.  Unless otherwise determined by the Committee, Stock distributed in
connection with a Stock split or Stock dividend, and other property distributed
as a dividend, shall be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which such Stock or other
property has been distributed.

 
(e)  
Stock Units.  Stock Units granted under the Plan, whether or not subject to
restrictions, shall be evidenced by an agreement (“Stock Unit Agreement”).  The
Committee is authorized to grant Stock Units to Participants, subject to the
following terms and conditions:

 
(i)  
Award and Restrictions.  Issuance of Stock will occur upon expiration of the
holding period, if any, specified for the Stock Units by the Committee.  In
addition, Stock Units shall be subject to such restrictions on transferability,
risk of forfeiture and other restrictions, if any, as the Committee may impose,
which restrictions may lapse at the expiration of the holding period or at
earlier specified times (including based on achievement of performance goals
and/or future service requirements), separately or in combination, in
installments or otherwise, and under such other circumstances as the Committee
may determine at the Date of Grant or thereafter.  Stock Units may be settled by
delivery of Stock, other Awards, or a combination thereof, as determined by the
Committee at the Date of Grant or thereafter.

 
 
 
9

--------------------------------------------------------------------------------

 
 
(ii)  
Forfeiture.  Except as otherwise determined by the Committee, upon termination
of employment or service during the applicable deferral period or portion
thereof to which forfeiture conditions apply (as provided in the Award document
evidencing the Stock Units), all Stock Units that are at that time subject to
such forfeiture conditions shall be forfeited; provided that the Committee may
provide, by rule or regulation or in any Award document, or may determine in any
individual case, that restrictions or forfeiture conditions relating to Stock
Units will lapse in whole or in part, including in the event of terminations
resulting from specified causes. Stock Units subject to a risk of forfeiture
shall be designated as “Restricted Stock Units” unless otherwise determined by
the Committee.

 
(iii)  
Dividend Equivalents.  Unless otherwise determined by the Committee, Dividend
Equivalents on the specified number of shares of Stock underlying Stock Units
shall be either (A) paid with respect to such Stock Units at the dividend
payment date in cash or in shares of unrestricted Stock having a Fair Market
Value equal to the amount of such dividends, or (B) deferred with respect to
such Stock Units, either as a cash deferral or as a number of additional Stock
Units with a value equal to the value of the Dividend Equivalents or with such
value otherwise deemed reinvested in additional Stock Units, other Awards or
other investment vehicles having a Fair Market Value equal to the amount of such
dividends, as the Committee shall determine or permit a Participant to elect;
provided, however, that the Committee may provide that no Dividend Equivalents
will be paid on a given Award of Stock Units.

 
(f)  
Bonus Stock and Awards in Lieu of Obligations.  The Committee is authorized to
grant to Participants Stock as a bonus, or to grant Stock or other Awards in
lieu of obligations of the Company or a Subsidiary or Affiliate to pay cash or
deliver other property under the Plan or under other plans or compensatory
arrangements, subject to such terms as shall be determined by the Committee;
provided, that such grants shall not be in lieu of prior promises to pay
deferrals of compensation so that any Award under this Plan that would not
otherwise be subject to Code Section 409A does not become subject to Code
Section 409A due to a grant in lieu of other obligation of the Company, a
Subsidiary or an Affiliate; provided further, that any payment of such Stock as
a bonus shall be paid or transferred to the Participant on the March 15 of the
calendar year following the calendar year in which the Participant earned the
bonus.

 
(g)  
Other Stock-Based Awards.  The Committee is authorized, subject to limitations
under applicable law, to grant to Participants such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock or factors that may influence the value
of Stock, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or business units thereof or any other factors designated by the
Committee, and Awards valued by reference to the book value of Stock or the
value of securities of or the performance of specified subsidiaries or
affiliates or other business units.  The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the nature of
a purchase right granted under this Section shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards, or other property, as
the Committee shall determine. Cash awards, as an element of or supplement to
any other Award under the Plan, may also be granted pursuant to this Section.

 
 
 
10

--------------------------------------------------------------------------------

 
 
Section 7.     Additional Provisions Applicable to Awards.
 
(a)  
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
Affiliate, or any business entity to be acquired by the Company or a Subsidiary
or Affiliate, or any other right of a Participant to receive payment from the
Company or any Subsidiary or Affiliate.  Awards granted in addition to or in
tandem with other Awards or awards may be granted either as of the same time as
or a different time from the grant of such other Awards.  Subject to the Plan’s
terms, the Committee may determine that, in granting a new Award, the
in-the-money value or fair value of any surrendered Award or award or the value
of any other right to payment surrendered by the Participant may be applied to
the purchase of any other Award; provided, that such surrender does not result
in a “modification,” “extension,” or “renewal,” of a Stock right, as determined
under Code Section 409A, so that such Stock rights thereby become subject to the
terms and conditions of Code Section 409A.  Any transaction otherwise authorized
under this Section 7(a) remains subject to all applicable restrictions under the
Plan and may not result in an Award that is not otherwise subject to the terms
and conditions of Code Section 409A becoming subject to the terms and conditions
of Code Section 409A by virtue of such transaction; in such event, any
transaction that would otherwise be permissible under this Section 7(a) shall be
prohibited unless the Participant and the Company mutually agree in writing to
subject an Award to Code Section 409A under this Section 7(a).

 
(b)  
Form and Timing of Payment Under Awards; Deferrals.  Subject to the terms of the
Plan and any applicable Award Agreement, payments to be made by the Company or a
Subsidiary or Affiliate upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, or in installments.

 
(c)  
Certain Limitations on Awards to Ensure Compliance with Code Section 409A.

 
(i)  
409A Awards and Deferrals.  Other provisions of the Plan notwithstanding, the
terms of any “409A Award” (which for this purpose means only such an Award held
by a Participant subject to United States federal income tax and which is
subject to the terms and conditions of Code Section 409A), including any
authority of the Company and rights of the Participant with respect to the 409A
Award, shall be limited to those terms permitted under Code Section 409A, and
any terms or conditions not permitted under Code Section 409A shall be
automatically modified and limited to the extent necessary to conform said Award
with Code Section 409A.  The following rules will apply to 409A Awards:

 
(A)  
If a Participant is permitted to elect to defer an Award or any payment under an
Award, such election shall be permitted only at times in compliance with Code
Section 409A (including transition rules thereunder);

 
(B)  
The Company shall have no authority to accelerate or delay distributions
relating to 409A Awards in excess of the authority permitted under Code Section
409A;

 
 
 
11

--------------------------------------------------------------------------------

 
 
(C)  
Any distribution of a 409A Award triggered by a Participant’s termination of
employment shall be made only at the time that the Participant has had a
“Separation from Service” within the meaning of Code Section 409A (or at such
earlier time preceding a termination of employment that there occurs another
event triggering a distribution under the Plan or the applicable Award Agreement
in compliance with Code Section 409A);

 
(D)  
Any distribution of a 409A Award to a “Specified Employee,” as determined under
Code Section 409A, after Separation from Service, shall occur at the expiration
of the six-month period following said Specified Employee’s Separation from
Service.  In the case of installment payments, this six-month delay shall not
affect the timing of any installment otherwise payable after the six-month delay
period;

 
(E)  
In the case of any distribution of a 409A Award, the time and form of payment
for such distribution will be specified in the Award Agreement, which will be
provided to the Participant in the manner provided for under Code Section 409A;
provided that, if the time and form of payment for such distribution is not
otherwise specified in the Plan or an Award Agreement or other governing
document, the distribution shall be made in one lump sum amount on March 15 in
the calendar year following the calendar year at which the settlement of the
Award is specified to occur, any applicable restriction lapses, or there is no
longer a substantial risk of forfeiture applicable to such amounts;

 
(ii)  
Distribution upon Vesting.  In the case of any Award providing for a
distribution upon the lapse of a substantial risk of forfeiture, the time and
form of payment for such distribution will be specified in the Award Agreement,
which will be provided to the Participant in the manner provided for under Code
Section 409A; provided that, if the timing and form of payment of such
distribution is not otherwise specified in the Plan or an Award Agreement or
other governing document, the distribution shall be made in one lump sum amount
on March 15 of the calendar year following the calendar year in which the
substantial risk of forfeiture lapses.

 
(iii)  
Scope and Application of This Provision.  For purposes of the Plan, references
to a term or event (including any authority or right of the Company or a
Participant) being “permitted” under Code Section 409A mean that the term or
event will not cause the Participant to be deemed to be in constructive receipt
of compensation relating to the 409A Award prior to the distribution of cash,
shares or other property or to be liable for payment of interest or a tax
penalty under Code Section 409A.

 
Section 8.     Corporate Transactions.
 
(a)  
Corporate Transaction in which Awards are not Assumed. Upon the occurrence of a
Corporate Transaction in which outstanding Options, Share Appreciation Rights,
Restricted Stock Awards, Stock Units, and Other Stock-Based Awards are not being
assumed or continued:

 
(i)  
All outstanding shares of Restricted Stock shall be deemed to have vested, and
all Stock Units shall be deemed to have vested and the shares of Stock subject
thereto shall be delivered, immediately prior to the occurrence of such
Corporate Transaction, and

 
(ii)  
Either of the following two actions shall be taken:

 
 
 
12

--------------------------------------------------------------------------------

 
 
(A)  
fifteen days prior to the scheduled consummation of a Corporate Transaction, all
Options and Share Appreciation Rights outstanding hereunder shall become
immediately exercisable and shall remain exercisable for a period of fifteen
days, or

 
(B)  
the Committee may elect, in its sole discretion, to cancel any outstanding
Awards of Options, Restricted Stock, Stock Units, and/or Share Appreciation
Rights and pay or deliver, or cause to be paid or delivered, to the holder
thereof an amount in cash or securities having a value (as determined by the
Committee acting in good faith), in the case of Restricted Stock or Stock Units,
equal to the formula or fixed price per share paid to holders of shares of Stock
and, in the case of Options or Share Appreciation Rights, equal to the product
of the number of shares of Stock subject to the Option or Share Appreciation
Right (the “Award Shares”) multiplied by the amount, if any, by which (I) the
formula or fixed price per share paid to holders of shares of Stock pursuant to
such transaction exceeds (II) the Option Price or Share Appreciation Right
Exercise Price applicable to such Award Shares.

 
With respect to the Company’s establishment of an exercise window, (i) any
exercise of an Option or Share Appreciation Right during such fifteen-day period
shall be conditioned upon the consummation of the event and shall be effective
only immediately before the consummation of the event, and (ii) upon
consummation of any Corporate Transaction, the Plan and all outstanding but
unexercised Options and Share Appreciation Rights shall terminate. The Committee
shall send notice of an event that will result in such a termination to all
individuals who hold Options and Share Appreciation Rights not later than the
time at which the Company gives notice thereof to its stockholders.
 
(b)  
Corporate Transaction in which Awards are Assumed. The Plan, Options, Share
Appreciation Rights, Restricted Stock Awards, Stock Units, and Other Stock-Based
Awards theretofore granted shall continue in the manner and under the terms so
provided in the event of any Corporate Transaction to the extent that provision
is made in writing in connection with such Corporate Transaction for the
assumption or continuation of the Options, Share Appreciation Rights, Restricted
Stock Awards, Stock Units, and Other Stock-Based Awards theretofore granted, or
for the substitution for such Options, Share Appreciation Rights, Restricted
Stock Awards, Stock Units, and Other Stock-Based Awards for new common stock
options and stock appreciation rights and new common stock units and restricted
stock relating to the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number of shares (disregarding
any consideration that is not common stock) and option and stock appreciation
right exercise prices in accordance with the provisions of Sections 5(b) and
10(c).

 
Section 9.     Additional Award Forfeiture Provisions.
 
The Committee may condition a Participant’s right to receive a grant of an
Award, to exercise the Award, to receive a settlement or distribution with
respect to the Award or to retain cash, Stock, other Awards, or other property
acquired in connection with an Award, upon compliance by the Participant with
specified conditions that protect the business interests of the Company and its
Subsidiaries and Affiliates from harmful actions of the Participant, including
conditions relating to non-competition, confidentiality of information relating
to or possessed by the Company, non-solicitation of customers, suppliers, and
employees of the Company, cooperation in litigation, non-disparagement of the
Company and its Subsidiaries and Affiliates and the officers and directors of
the Company and its Subsidiaries and Affiliates, and other restrictions upon or
covenants of the Participant, including during specified periods following
termination of employment or service to the Company.  Accordingly, an Award
Agreement may include terms providing for a “clawback” or forfeiture from the
Participant of the profit or gain realized by a Participant in connection with
an Award, including cash or other proceeds received upon sale of Stock acquired
in connection with an Award.
 
 
13

--------------------------------------------------------------------------------

 
 
 
Section 10.     General Provisions.
 
(a)  
Compliance with Legal and Other Requirements.

 
(i)  
The Company may, to the extent deemed necessary or advisable by the Committee,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other securities of the Company are
listed or quoted, or compliance with any other obligation of the Company, as the
Committee may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations.  The
foregoing notwithstanding, in connection with a Corporate Transaction, the
Company shall take or cause to be taken no action, and shall undertake or permit
to arise no legal or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of benefits under
any Award or the imposition of any other conditions on such issuance, delivery
or payment, to the extent that such postponement or other condition would
represent a greater burden on a Participant than existed on the 90th day
preceding the Corporate Transaction.

 
(ii)  
If the Participant is subject to the reporting requirements of Section 16(a) of
the Securities Exchange Act of 1934, as amended, the grant of this Option shall
not be effective until such person complies with the reporting requirement of
Section 16(a).

 
(b)  
Limits on Transferability; Beneficiaries.

 
(i)  
Awards granted under the Plan shall not be transferable other than by will or by
the laws of descent, and Options may be exercised as provided for under Section
6(b).  A Beneficiary, transferee, or other person claiming any rights under the
Plan from or through any Participant (except in the case of an Option which is
governed by Section 6(b)) 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.  Any attempted sale, pledge,
assignment, hypothecation or other transfer of an Award contrary to the
provisions hereof and the levy of any execution, attachment or similar process
upon an Award shall be null and void and without force or effect and shall
result in automatic termination of the Award.

 
(ii)  
(A) As a condition to the transfer of any shares of Stock issued upon exercise
of an Award granted under this Plan, the Company may require an opinion of
counsel, satisfactory to the Company, to the effect that such transfer will not
be in violation of the Securities Act of 1933 or any other applicable securities
laws or that such transfer has been registered under federal and all applicable
state securities laws; (B) further, the Company shall be authorized to refrain
from delivering or transferring shares of Stock issued under this Plan until the
Board determines that such delivery or transfer will not violate applicable
securities laws and the Participant has tendered to the Company any federal,
state or local tax owed by the Participant as a result of exercising the Award,
or disposing of any Stock, when the Company has a legal liability to satisfy
such tax; (C) the Company shall not be liable for damages due to delay in the
delivery or issuance of any stock certificate for any reason whatsoever,
including, but not limited to, a delay caused by listing requirements of any
securities exchange or any registration requirements under the Securities Act of
1933, the Securities Exchange Act of 1934, or under any other state or federal
law, rule or regulations; (D) the Company is under no obligation to take any
action or incur any expense in order to register or qualify the delivery or
transfer of shares of Stock under applicable securities laws or to perfect any
exemption from such registration or qualification; and (E) furthermore, the
Company will have no liability to any Participant for refusing to deliver or
transfer shares of Stock if such refusal is based upon the foregoing provisions
of this Paragraph.

 
 
 
14

--------------------------------------------------------------------------------

 
 
(c)  
Effect of Certain Changes.  In the event of any merger, reorganization,
consolidation, recapitalization, share dividend, share split, combination of
shares or other change in corporate structure of the Company affecting the
Stock, such substitution or adjustment shall be made in the aggregate number of
Stock reserved for issuance under the Plan, in the number and option price of
Stock subject to outstanding Options granted under the Plan, in the number and
purchase price of Stock subject to outstanding Award Agreements granted under
the Plan, including the number of SARs, the number of shares of Restricted
Stock, and any other outstanding Awards granted under the Plan as may be
approved by the Committee, in its sole discretion, but the number of Stock
subject to any Award shall always be a whole number.  Any fractional shares
shall be eliminated.  Notwithstanding the foregoing, any event that results in a
reorganization, consolidation, recapitalization, share dividend, share split,
combination of shares or other change in corporate structure of the Company that
affects the Company’s Stock, any substitution or adjustment of the number of
shares of Stock underlying the applicable Award shall be done in accordance with
Treasury Regulation Section 1.409A-1(b)(5), so that such Award does not result
in an extension, modification, or renewal, as such terms are defined under Code
Section 409A.

 
(d)  
Tax Provisions.

 
(i)  
Withholding.  The Committee shall so require, as a condition of exercise, each
Participant to agree that:  (A) no later than the date of exercise of any Option
granted hereunder, the optionee will pay to the Company or make arrangements
satisfactory to the Committee regarding payment of any federal, state or local
taxes of any kind required by law to be withheld upon the exercise of such
Option; and (B) the Company shall, to the extent permitted or required by law,
have the right to deduct federal, state and local taxes of any kind required by
law to be withheld upon the exercise of such Option from any payment of any kind
otherwise due to the optionee.  For withholding tax purposes, the shares of
Stock shall be valued on the date the withholding obligations are incurred.  The
Company shall not be obligated to advise any optionee of the existence of any
such tax or the amount that the Company will be so required to withhold.

 
(ii)  
Required Consent to and Notification of Code Section 83(b) Election.  No
election under Code Section 83(b) or under a similar provision of the laws of a
jurisdiction outside the United States may be made unless expressly permitted by
the terms of the Award Agreement or by action of the Committee in writing prior
to the making of such election.  In any case in which a Participant is permitted
to make such an election in connection with an Award, the Participant shall
notify the Company of such election within ten days of filing notice of the
election with the Internal Revenue Service or other governmental authority, in
addition to any filing and notification required pursuant to regulations issued
under Code Section 83(b) or other applicable provision.

 
 
 
15

--------------------------------------------------------------------------------

 
 
(iii)  
Requirement of Notification upon Disqualifying Disposition under Code Section
421(b).  If any Participant shall make any disposition of shares of Stock
delivered pursuant to the exercise of an ISO under the circumstances described
in Code Section 421(b) (i.e., a disqualifying disposition), such Participant
shall notify the Company of such disposition within ten days thereof.

 
(iv)  
Right to Contest.  The Company shall have the right, but not the obligation, to
contest, at its expense, any tax ruling or decision, administrative or judicial,
on any issue which is related to the Plan and which the Board believes to be
important to holders of Options issued under the Plan and to conduct any such
contest or any litigation arising therefrom to a final decision.

 
(e)  
Changes to the Plan.  The Board at any time and from time to time may suspend,
terminate, modify or amend the Plan; provided, however, that any amendment that
would:  (i) materially increase the benefits accruing to Participants under the
Plan, or (ii) increase the number of shares of Stock as to which Awards may be
granted under the Plan or materially modify the requirements as to eligibility
for participation in the Plan shall be subject to the approval of a majority of
the stockholders of the Company presented or represented and entitled to vote at
a duly constituted and held meeting of stockholders.  Any such increase or
modification that may result from adjustments authorized by Section 10(c) hereof
shall not require such approval.  Except as otherwise provided, no suspension,
termination, modification or amendment of the Plan may adversely affect any
Award previously granted, unless the written consent of the Participant is
obtained.

 
(f)  
Unfunded Status of Awards, Creation of Trusts.  The Plan is intended to
constitute an “unfunded” plan for equity incentive compensation. With respect to
any payments not yet made to a Participant or obligations to deliver Stock
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 that the Committee may authorize the creation of trusts
and deposit therein cash, Stock, other Awards or other property, or make other
arrangements to meet the Company’s obligations under the Plan. Such trusts or
other arrangements shall be consistent with the “unfunded” status of the Plan
unless the Committee otherwise determines.

 
(g)  
Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board nor
its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive or compensation arrangements, apart from
the Plan, as it may deem desirable, including incentive or compensation
arrangements and awards that do not qualify under Code Section 162(m) or to
which Code Section 409A does apply, and such other arrangements may be either
applicable generally or only in specific cases.

 
(h)  
Payments in the Event of Forfeitures; Fractional Shares.  Unless otherwise
determined by the Committee, in the event of a forfeiture of an Award with
respect to which a Participant paid cash consideration, the Participant shall be
repaid the amount of such cash consideration.  No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any Award.  The Committee
shall determine whether cash, other Awards or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.

 

 
16

--------------------------------------------------------------------------------

 
 
(i)  
Compliance with Code Section 162(m).

 
(i)  
It is the intent of the Company that Options and SARs granted to Covered
Employees and other Awards designated as Awards to Covered Employees shall
constitute qualified “performance-based compensation” within the meaning of Code
Section 162(m) unless otherwise determined by the Committee at the time of the
Award grant.  The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee as
likely to be a Covered Employee with respect to a specified fiscal year. If any
provision of the Plan or any Award Agreement relating to an Award that is
designated as intended to comply with Code Section 162(m) does not comply or is
inconsistent with the requirements of Code Section 162(m), such provision shall
be construed or deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon the Committee or
any other person discretion to increase the amount of compensation otherwise
payable in connection with any such Award upon attainment of the applicable
performance objectives.

 
(ii)  
Notwithstanding any other provision of this Plan to the contrary, the Company
may delay the payment of any amount otherwise due to the Participant under this
Plan if the Company reasonably anticipates that its deduction resulting from
such payment, either alone or in combination with any other amounts to be paid
or provided to under any section of this Plan or any Award Agreement associated
with the Plan, would be reduced or eliminated by the Code Section 162(m)
deduction limitation; provided, however, that the Company shall make payments to
the Participant at the earliest date at which the Company believes the Code
Section 162(m) deduction limitation will no longer reduce or eliminate the
Company’s deduction for such payments.

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

 
(k)  
Limitation on Rights Conferred Under Plan.  Neither the Plan nor any action
taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Company or a Subsidiary or Affiliate, (ii) interfering
in any way with the right of the Company or a Subsidiary or Affiliate to
terminate any Eligible Person’s or Participant’s employment or service at any
time (subject to the terms and provisions of any separate written agreements),
(iii) giving an Eligible Person or Participant any claim to be granted any Award
under the Plan or to be treated uniformly with other Participants and employees,
or (iv) conferring on a Participant any of the rights of a stockholder of the
Company unless and until the Participant is duly issued or transferred shares of
Stock in accordance with the terms of an Award.  Any Award shall not be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or any Subsidiary or Affiliate and shall not affect any benefits under
any other benefit plan under which the availability or amount of benefits is
related to the level of compensation (unless required by any such other plan or
arrangement with specific reference to Awards under this Plan).

 
(l)  
Termination of Right of Action.  Every right of action arising out of or in
connection with the Plan by or on behalf of the Company or of any Subsidiary or
Affiliate, or by any stockholder of the Company or of any Subsidiary or
Affiliate against any past, present or future member of the Board, or against
any employer, or by an employee (past, present or future) against the Company or
any Subsidiary or Affiliate will, irrespective of the place where an action may
be brought and irrespective of the place of residence of any such stockholder,
director or employee, cease and be barred as of the expiration of three years
from the date of the act or omission in respect of which such right of action is
alleged to have risen.

 
 
 
17

--------------------------------------------------------------------------------

 
 
(m)  
Assumption.  The terms and conditions of any outstanding Awards granted pursuant
to this Plan shall be assumed by, be binding upon and inure to the benefit of
any successor company to the Company and shall continue to be governed by, to
the extent applicable, the terms and conditions of this Plan.  Such successor
Company shall not be otherwise obligated to assume this Plan.

 
(n)  
Severability; Entire Agreement.  If any of the provisions of this Plan or any
Award document is finally held to be invalid, illegal or unenforceable (whether
in whole or in part), such provision shall be deemed modified to the extent, but
only to the extent, of such invalidity, illegality or unenforceability, and the
remaining provisions shall not be affected thereby; provided, that, if any of
such provisions is finally held to be invalid, illegal, or unenforceable because
it exceeds the maximum scope determined to be acceptable to permit such
provision to be enforceable, such provision shall be deemed to be modified to
the minimum extent necessary to modify such scope in order to make such
provision enforceable hereunder.  The Plan and any Award Agreements contain the
entire agreement of the parties with respect to the subject matter thereof and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, whether written or
oral with respect to the subject matter thereof.  No rule of strict construction
shall be applied against the Company, the Committee, or any other person in the
interpretation of any terms of the Plan, Award, or agreement or other document
relating thereto.

 
(o)  
Plan Effective Date.  The Plan will become effective if, and at such time as,
the stockholders of the Company have approved it by the affirmative votes of the
holders of a majority of the voting securities of the Company present, or
represented, and entitled to vote on the subject matter at a duly held meeting
of stockholders, provided that the total vote cast on the proposal represents
over 50 percent in interest of all securities entitled to vote on the
proposal.  The date of such stockholder approval will be the Effective
Date.  Unless earlier terminated by action of the Board, the authority of the
Committee to make grants under the Plan will terminate on the date that is ten
years after the latest date upon which stockholders of the Company have approved
the Plan and the Plan will remain in effect until such time as the Company has
no further rights or obligations with respect to outstanding Awards or otherwise
under the Plan.

 
(p)  
Adoption.

 
 
(i)
This Plan was approved by the Board of Directors of the Company at a meeting on
October 9, 2007.

 
 
(ii)
This Plan was approved by the stockholders of the Company at a meeting on
November 19, 2007.

 
 
 
REEDS, INC.
 
By: /Christopher J. Reed/        
Christopher J. Reed
Chief Executive Officer
 
 
 
 
18