EAU TECHNOLOGIES, INC.

2007 STOCK INCENTIVE PLAN

SECTION 1
 
GENERAL
 
1.1     Purpose. The EAU Technologies, Inc. 2007 Stock Incentive Plan (the
“Plan”) has been established by EAU Technologies, Inc. (the “Company”) to
promote the interests of the Company and the stockholders of the Company by
providing directors, executive officers and other employees of, and consultants
and advisors to, the Company with appropriate incentives and rewards to
encourage them to acquire a proprietary interest in the long−term success of the
Company, as well as to reward the performance of these individuals in fulfilling
their personal responsibilities for long−range and annual achievements. The Plan
provides for the grant, in the sole discretion of the Committee, as defined
below, of options (including “incentive stock options” and “nonqualified stock
options”), stock appreciation rights, restricted stock and other stock− based
awards.

1.2     Definitions. Capitalized terms in the Plan shall be defined as set forth
below:

In addition to the other definitions contained herein, the following definitions
shall apply:
 
(a)     Affiliated Company. The term “Affiliated Company” means any company
controlled by, controlling or under common control with the Company.
 
(b)     Award. The term “Award” shall mean any award or benefit granted under
the Plan, including, without limitation, Options, SARs, Restricted Stock and
Other Stock-Based Awards.
 
(c)     Award Agreement. The term “Award Agreement” means a written employment,
consulting or similar agreement between a Grantee and the Company or a written
Award grant agreement under the Plan.
 
(d)     Board. The term “Board” shall mean the Board of Directors of the
Company.
 
(e)      Cause. The term “Cause” means, unless otherwise provided by the
Committee, (1) “Cause” as defined in any Award Agreement to which the Grantee is
a party, or (2) if there is no such Award Agreement or if it does not define
Cause: (A) conviction of the Grantee for committing a felony under federal law
or the law of the state in which such action occurred, (B) dishonesty in the
course of fulfilling the Grantee’s directorial, employment, consulting or
advisory duties or (C) willful and deliberate failure on the part of the Grantee
to perform the Grantee’s directorial, employment, consulting or advisory duties
in any material respect. The Committee shall, unless otherwise provided in an
Award Agreement with a Grantee, have the sole discretion to determine whether
“Cause” exists, and its determination shall be final.
 
(f)       Change in Control. The term “Change in Control” shall mean: (1) the
acquisition (other than from the Company) in one or more transactions by any
Person, as defined below, of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) of 50% or more of (A) the then outstanding shares of
common stock of the Company, or (B) the combined voting power of the then
outstanding securities of the Company entitled to vote generally in the election
of directors (the “Company Voting Securities”); (2) the closing of a sale or
other conveyance of all or substantially all of the assets of the Company; or
(3) the effective time of any merger, share exchange, consolidation, or other
business combination involving the Company if immediately after such transaction
persons who hold a majority of the outstanding voting securities entitled to
vote generally in the election of directors of the surviving entity (or the
entity owning 100% of such surviving entity) are not persons who, immediately
prior to such transaction, held the Company Voting Securities.  For purposes of
this definition, a “Person” means any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, other than employee
benefit plans sponsored or maintained by the Company; provided that for purposes
of the Change of Control definition, Person shall not include any party named in
a Schedule 13D with respect to the Company’s securities filed on or before the
Effective Date of this Plan.
 

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(g)     Code. The term “Code” means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference to any
successor provision of the Code.
 
(h)     Committee. The term "Committee" means the committee of the Board
described in Section 3 hereof and any sub-committee established by such
Committee pursuant to Section 2.3.
 
(i)      [omitted]
 
(j)       Eligible Grantee. The term “Eligible Grantee” shall mean any director,
executive officer or employee of, or consultant or advisor to, the Company or a
Subsidiary, as determined by the Committee in its sole discretion. Anything in
the Plan to the contrary notwithstanding, a consultant or advisor may only be
determined to be an Eligible Grantee if (i) he or she is a natural person, (ii)
he or she provides bona fide services to the Company or a Subsidiary, (iii) the
services are not in connection with the offer or sale of securities in a
capital-raising transaction, and (iv) the services do not directly or indirectly
promote or maintain a market for the Company’s securities.
 
(k)     Fair Market Value. For purposes of determining the “Fair Market Value”
of a share of Stock as of any date, the “Fair Market Value” as of that date
shall be (i) the closing sale price on the immediately preceding business day of
a share of Stock as reported on the principal securities exchange on which
shares of Stock are then listed or admitted to trading, or (ii) if not so
reported, “Fair Market Value” shall be determined by the Committee in good faith
and pursuant to a reasonable application of a reasonable valuation method in
accordance with the relevant provisions of Section 409A of the Code.

(l)       Grantee. The term "Grantee" means a director, executive officer or
employee of, or consultant or advisor to, the Company or a Subsidiary who has
been granted an Award under the Plan.
 
(m)     ISO. The term "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
 
(n)      NQSO. The term "NQSO" means any Option that is not designated as an
ISO, or which is designated by the Committee as an ISO but which subsequently
fails or ceases to qualify as an ISO.
 
(o)     Option. The term "Option" means a right, granted to an Eligible Grantee
under Section 4.2(a), to purchase shares of Stock. An Option may be either an
ISO or an NQSO.
 
(q)     Other Stock-Based Award. The term "Other Stock-Based Award" means a
right or other interest granted to an Eligible Grantee under Section 4.2(e) of
the Plan that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Stock, including but not
limited to (i) unrestricted Stock awarded as a bonus or upon the attainment of
performance goals or otherwise as permitted under the Plan, and (ii) a right
granted to an Eligible Grantee to acquire Stock from the Company containing
terms and conditions prescribed by the Committee.
 
(r)     [omitted]
 
(s)     Restricted Stock. The term "Restricted Stock" means an Award of shares
of Stock to an Eligible Grantee under Section 4.2(c) that may be subject to
certain restrictions and to a risk of forfeiture. Stock issued upon the exercise
of Options or SARs is not "Restricted Stock" for purposes of the plan, even if
subject to post-issuance transfer restrictions or forfeiture conditions. When
Restricted Stock vests, it ceases to be "Restricted Stock" for purposes of the
Plan.
 
(t)     [omitted]
 
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(u)     Rule 16b-3. The term "Rule 16b-3" means Rule 16b-3, as from time to time
in effect promulgated by the Securities and Exchange Commission under Section 16
of the Securities Exchange Act of 1934, as amended, including any successor to
such Rule.
 
(v)     Stock. The term "Stock" means shares of the common stock, par value
$0.0001 per share, of the Company.
 
(w)      Stock Appreciation Right or SAR. The term "Stock Appreciation Right" or
"SAR" means the right, granted to an Eligible Grantee under Section 4.2(b), to
be paid an amount measured by the appreciation in the Fair Market Value of Stock
from the date of grant to the date of exercise of the right.
 
(x)     Subsidiary. The term “Subsidiary” means any present or future subsidiary
corporation of the Company within the meaning of Section 424(f) of the Code, and
any present or future business venture designated by the Committee in which the
Company has a significant interest, including, without limitation, any
subsidiary corporation in which the Company has at least a 80% ownership
interest, as determined in the discretion of the Committee.
 
SECTION 2
 
ADMINISTRATION
 
2.1     Committee. The authority to manage the operation of and administer the
Plan shall be vested in a committee (the “Committee”) in accordance with this
Section 2. The Committee shall be selected by the Board, and shall consist
solely of two or more members of the Board who are non-employee directors within
the meaning of Rule 16b-3 and are outside directors within the meaning of Code
Section 162(m). Unless otherwise determined by the Board, the Company’s
Compensation Committee shall be designated as the “Committee” hereunder.
 
2.2     Powers of Committee. The Committee’s administration of the Plan shall be
subject to the following:
 
(a)     Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Grantees those
persons who shall receive Awards, to determine the time or times of receipt, to
determine the types of Awards and the number of shares covered by the Awards,
and to establish the terms, conditions, performance criteria, restrictions, and
other provisions of such Awards.
 
(b)     The Committee will have the authority and discretion to interpret the
Plan, to establish, amend, and rescind any rules and regulations relating to the
Plan, to determine the terms and provisions of any Award Agreement made pursuant
to the Plan, and to make all other determinations that may be necessary or
advisable for the administration of the Plan.
 
(c)     Any interpretation of the Plan by the Committee and any decision made by
it under the Plan are final and binding on all persons.
 
(d)     In managing the operation of and administering the Plan, the Committee
shall take action in a manner that conforms to the certificate of incorporation
and by-laws of the Company, and applicable state corporate law.
 
(e)     Subject to Section 3.2 hereof, neither the Board, the Committee nor
their respective delegates shall have the authority to (i) reprice (or cancel
and regrant) any Option, SAR or, if applicable, other Award at a lower exercise,
base or purchase price without first obtaining the approval of the Company’s
stockholders, (ii) take any other action (whether in the form of an amendment,
cancellation or replacement grant, or a cash-out of underwater options) that has
the effect of repricing an Option, SAR or other Award, or (iii) grant any
Option, SAR or other Award that contains a so-called “reload” feature under
which additional Options, SARs or other Awards are granted automatically to the
Grantee upon exercise of the original Option, SAR or Award.
 
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(f)     Anything in the Plan to the contrary notwithstanding, the Committee’s
authority to modify outstanding Awards shall be limited to the extent necessary
so that the existence of such authority does not (i) cause an Award that is not
otherwise deferred compensation subject to Section 409A of the Code to become
deferred compensation subject to Section 409A of the Code or (ii) cause an Award
that is otherwise deferred compensation subject to Section 409A of the Code to
fail to meet the requirements prescribed by Section 409A of the Code.
 
(g)     Anything in the Plan to the contrary notwithstanding, neither the Board
nor the Committee may accelerate the payment or vesting of any Option, SAR or
other Award except in the event of death, disability, retirement or a Change in
Control.
 
2.3     Delegation by Committee. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange, the Committee may allocate all
or any portion of its responsibilities and powers to any one or more of its
members, including without limitation, the power to designate Grantees hereunder
and determine the amount, timing and terms of Awards hereunder. Any such
allocation or delegation may be revoked by the Committee at any time.
 
2.4     Information to be Furnished to Committee. The Company and its
Subsidiaries and Affiliated Companies shall furnish the Committee with such data
and information as it determines may be required for it to discharge its duties.
The records of the Company and its Subsidiaries and Affiliated Companies as to
an employee’s or Grantee’s service or employment, termination of employment,
cessation of service, leave of absence, reemployment and compensation shall be
conclusive unless the Committee determines such records to be incorrect.
Grantees and other persons entitled to benefits under the Plan must furnish the
Committee such evidence, data or information as the Committee considers
desirable to carry out the terms of the Plan.

2.5     Indemnification. Each person who is or shall have been a member of the
Committee, or the Board, shall be indemnified and held harmless by the Company
against and from any loss, cost, liability or expense that may be imposed upon
or reasonably incurred by him or her in connection with or resulting from any
claim, action, suit or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such action, suit or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
be in addition to any other rights of indemnification or elimination of
liability to which such persons may be entitled under the Company’s Certificate
of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.

SECTION 3

STOCK SUBJECT TO PLAN

3.1     Shares Available for Awards; Individual Limitations. Subject to the
adjustments described below, the maximum number of shares of Stock reserved for
the grant of Awards under the Plan shall be 2,250,000 shares of Stock. Up to
2,250,000 shares of Stock may be issued in the aggregate pursuant to Options,
which may be either ISOs or NQSOs, and SARs. No more than 500,000 shares of
Stock may be made subject to Awards granted to an individual in a single
calendar year. Shares of Stock issuable hereunder may, in whole or in part, be
authorized but unissued shares or shares of Stock that shall have been or may be
reacquired by the Company in the open market, in private transactions or
otherwise. If any shares of Stock subject to an Award are forfeited or
cancelled, or if an Award terminates or expires without a distribution of shares
to the Grantee, the shares of Stock with respect to such Award shall, to the
extent of any such forfeiture or cancellation, again be available for Awards
under the Plan; provided, however, that with respect to SARs that are settled in
Stock, the aggregate number of shares of Stock subject to the SAR grant shall be
counted against the shares available for issuance under the Plan as one share
for every share subject thereto, regardless of the number of shares used to
settle the SAR upon exercise. Shares of Stock shall not again be available if
such shares are surrendered or withheld as payment of either the exercise price
of an Award and/or withholding taxes in respect of an Award. Awards that are
settled solely in cash shall not reduce the number of shares of Stock available
for Awards. Upon the exercise of any Award granted in tandem with any Award
pursuant to Section 4.2(b)(i), such related Awards shall be cancelled to the
extent of the number of shares of Stock as to which the Award is exercised and,
notwithstanding the foregoing, such number of shares shall no longer be
available for Awards under the Plan.
 
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3.2     Adjustments for Changes in Capitalization. If the outstanding shares of
Stock are changed into or exchanged for a different number or kind of shares or
other securities of the Company by reason of any recapitalization,
reclassification, stock split, stock dividend, combination, subdivision or
similar transaction, or if the Company makes an extraordinary dividend or
distribution to its stockholders (including without limitation to implement a
spinoff) (each, a “Corporate Transaction”) then, subject to any required action
by the stockholders of the Company, the number and kind of shares of Stock
available under the Plan or subject to any limit or maximum hereunder shall
automatically be proportionately adjusted, with no action required on the part
of the Committee or otherwise. Subject to any required action by the
stockholders, the number and kind of shares covered by each outstanding Award,
and the price per share in each such Award, to the extent applicable, shall be
automatically proportionately adjusted for any increase or decrease in the
number of issued shares of the Company resulting from a Corporate Transaction to
the extent necessary to prevent dilution or enlargement of the rights of
Grantees under the Plan.

3.3      Certain Mergers and Other Extraordinary Events. If the Company merges
or consolidates with another corporation, whether or not the Company is a
surviving corporation, or if the Company is liquidated or sells or otherwise
disposes of substantially all of its assets while unexercised Options or other
Awards remain outstanding under the plan, (A) subject to the provisions of
clause (C) below, after the effective date of the merger, consolidation,
liquidation, sale or other disposition, as the case may be, each holder of an
outstanding Option or other Award shall be entitled, upon exercise of that
Option or Award or in place of it, as the case may be, to receive, at the option
of the Committee and in lieu of shares of Stock, (i) the number and class or
classes of shares of stock or other securities or property to which the holder
would have been entitled if, immediately prior to the merger, consolidation,
liquidation, sale or other disposition, the holder had been the holder of record
of a number of shares of Stock equal to the number of shares of Stock as to
which that Option may be exercised or are subject to the Award or (ii) shares of
stock of the company that is the surviving corporation in such merger,
consolidation, liquidation, sale or other disposition having a value, as of the
date of payment under (i) above, as determined by the Committee in its sole
discretion, equal to the value of the shares of stock or other securities or
property otherwise payable under (i) above; (B) if Options or other Awards have
not already become exercisable or vested under Section 4.2(g) hereof, the
Committee may waive any limitations set forth in or imposed pursuant to the Plan
so that all Options or other Awards, from and after a date prior to the
effective date of that merger, consolidation, liquidation, sale or other
disposition, as the case may be, specified by the Committee, shall be
exercisable in full and/or fully vested; and (C) all outstanding Options or SARs
may be cancelled by the Committee as of the effective date of any merger,
consolidation, liquidation, sale or other disposition, provided that any such
cancellation pursuant to this Section 3.3 shall be contingent upon the payment
to the affected Grantees, in the case of an in-the-money Option or SAR, cash,
property or a combination thereof having an aggregate value equal to the excess
of the value of the per-share amount of consideration paid pursuant to the
merger, consolidation, liquidation, sale or other disposition, as the case may
be, giving rise to such cancellation, over the exercise price of such Option or
SAR multiplied by the number of shares of Stock subject to the Option or SAR.
Any adjustments pursuant to this Section 3.3 shall be made by the Committee in
its sole discretion, and its determination in that respect shall be final,
binding and conclusive, regardless of whether or not any such adjustment shall
have the result of causing an ISO to cease to qualify as an ISO.
 
3.4     Limitation on Grantees’ Rights. Except as hereinbefore expressly
provided in this Section 3, a Grantee shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class or by reason of any dissolution, liquidation, merger, or
consolidation or spin-off of assets or stock of another corporation, and any
issue by the Company of shares of stock of any class shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Stock subject to an Award, unless the Committee shall otherwise
determine.
 
3.5     Company Right and Power. The grant of any Award pursuant to the Plan
shall not affect in any way the right or power of the Company (A) to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure, (B) to merge or consolidate, (C) to dissolve, liquidate,
sell, or transfer all or any part of its business or assets or (D) to issue any
bonds, debentures, or preferred or other preference stock ahead of or affecting
the Stock.
 
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3.6     Fractional Shares. Notwithstanding anything contained in this Section 3,
if any action described in this Section 3 results in a fractional share for any
Grantee under any Award hereunder, such fraction shall be completely disregarded
and the Grantee shall only be entitled to the whole number of shares resulting
from such adjustment. All adjustments made by the Committee to effect the terms
of this Section 3 shall be final, conclusive and binding upon the holders of
Options, SARS and other Awards.

SECTION 4

AWARDS
 
4.1     General. The term of each Award shall be for such period as may be
determined by the Committee, subject to the limitations set forth below. Subject
to the terms of the Plan and any applicable Award Agreement, payments to be made
by the Company or any Subsidiary of the Company upon the grant, maturation, or
exercise of an Award may be made in such forms as the Committee shall determine
at the date of grant or thereafter, including, without limitation, cash, Stock,
or other property. In addition to the foregoing, the Committee may impose on any
Award or the exercise thereof, at the date of grant, such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine; provided, however, that any such terms and conditions shall not
be inconsistent with Section 409A of the Code.
 
4.2     Types of Awards. The Committee is authorized to grant the Awards
described in this Section 4.2, under such terms and conditions as deemed by the
Committee to be consistent with the purposes of the Plan. Such Awards may be
granted with value and payment contingent upon performance goals, as determined
in the discretion of the Committee. Each Award shall be evidenced by an Award
Agreement containing such terms and conditions applicable to such Award as the
Committee shall determine.
 
(a)     Options. The Committee is authorized to grant Options to Grantees on the
following terms and conditions:
 
(i)     Type of Award. The Award Agreement evidencing an Option shall designate
the Option as either an ISO or an NQO, as determined in the discretion of the
Committee. Notwithstanding the foregoing, the Committee may not designate an
Option as an ISO if the Grantee is not an employee of the Company or any
Subsidiary.

(ii)     Exercise Price. The exercise price of each Option granted under this
Section 4.2 shall be established by the Committee or shall be determined by a
method established by the Committee at the time the Option is granted; provided,
however, that the exercise price shall not be less than 100% of the Fair Market
Value of a share of Stock on the date of grant of the Award.

(iii)     Exercise.

(A)     Subject to the provisions of the Plan, Options shall be exercisable in
accordance with such terms and conditions and during such periods as may be
established by the Committee; provided, however, that no Option may be exercised
more than ten years after its grant date and; provided, further, that to the
extent a NQSO cannot be exercised because such exercise would violate Federal,
state, or local laws, then the term of such NQSO shall be tolled for the period
of time during which such exercise would violate applicable law, but not more
than 30 days.

(B)     Except as set forth below in Section 4.2(g) and Section 5.11, no Option
granted hereunder may be exercised after the earlier of (I) the expiration of
the Option, (II) in the case of an Option granted to an employee of the Company
or any Subsidiary, ninety days after the severance of an Option holder's
employment with the Company or any Subsidiary, or (III) in the case of an Option
granted to a director of the Company or any Subsidiary who was not also an
employee of the Company or any Subsidiary at the time of grant, ninety days
after cessation of service as a director of the Company or any Subsidiary;
provided, however, that, if the Grantee leaves the board of directors of the
Company or any Subsidiary in “good standing,” such Grantee’s Option shall remain
in effect, vest, become exercisable and expire as if the Grantee had remained a
director of the Company or any Subsidiary; whether or not the Grantee left the
board of directors of the Company or any Subsidiary in “good standing” shall be
determined by the Board in its sole discretion; provided, however, that any
director who serves out his/her term but does not stand for re-election at the
end thereof shall be deemed to have left the board of directors of the Company
or any Subsidiary in “good standing. At the time of the grant of Options, the
Committee may place restrictions on the exercisability or vesting of Options
that shall lapse, in whole or in part, only upon the attainment of performance
goals, as determined in the discretion of the Committee.
 
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(C)     Whether an authorized leave of absence, or an absence for military or
government service, constitutes (I) in the case of an employee, severance of an
Option holder's employment relationship with the Company or a Subsidiary or (II)
in the case of a director, cessation of the Option holder’s service as a
director of the Company or any Subsidiary will be determined by the Committee at
the time of the event, in its sole discretion.

(iv)     Payment of Option Exercise Price. The payment of the exercise price of
an Option granted under this Section 4 shall be subject to the following:
 
(A)     Subject to the following provisions of this Section 4.2(a)(iv), the full
exercise price for shares of Stock purchased upon the exercise of any Option
shall be paid at the time of such exercise (except that, in the case of an
exercise arrangement approved by the Committee and described in paragraph
4.2(a)(iv)(C) payment may be made as soon as practicable after the exercise).
 
(B)     The exercise price shall be payable in cash or by tendering (either by
actual delivery of shares or by attestation) shares of Stock that are acceptable
to the Committee and were valued at Fair Market Value as of the day the shares
are tendered, or in any combination of cash, shares, or attested shares, as
determined by the Committee.
 
(C)     To the extent permitted by applicable law and the policies adopted from
time to time by the Committee, a Grantee may elect to pay the exercise price
upon the exercise of an Option by irrevocably authorizing a third party to sell
shares of Stock (or a sufficient portion of the shares) acquired upon exercise
of the Option and remit to the Company a sufficient portion of the sale proceeds
to pay the entire exercise price and any tax withholding resulting from such
exercise.
 
(b)     SARs. The Committee is authorized to grant SARs to Grantees on the
following terms and conditions:
 
(i)     In General. SARs may be granted independently or in tandem with an
Option at the time of grant of the related Option. An SAR granted in tandem with
an Option shall be exercisable only to the extent the underlying Option is
exercisable. Payment of an SAR may be made in cash, Stock, property, or a
combination of the foregoing, as specified in the Award Agreement or determined
in the sole discretion of the Committee. At the time of the grant of SARs, the
Committee may place restrictions on the exercisability or vesting of SARs that
shall lapse, in whole or in part, only upon the attainment of performance goals,
as determined in the discretion of the Committee.
 
(ii)     Term and Exercisability of SARs. SARs shall be exercisable over the
exercise period at such times and upon such conditions as the Committee may
determine, as reflected in the Award Agreement; provided, however, that no SAR
may be exercised more than 10 years after its grant date. Except as set forth
below in Section 4.2(g) and Section 5.11, no SAR granted hereunder may be
exercised after the earlier of (A) the expiration of the SAR, (B) in the case of
an SAR granted to an employee of the Company or any Subsidiary, ninety days
after the severance of an SAR holder's employment with the Company or any
Subsidiary, or (C) in the case of an SAR granted to a director of the Company or
any Subsidiary who was not also an employee of the Company or any Subsidiary at
the time of grant, ninety days after cessation of service as a director of the
Company or any Subsidiary; provided, however, that, if the Grantee leaves the
board of directors of the Company or any Subsidiary in “good standing,” such
Grantee’s Option shall remain in effect, vest, become exercisable and expire as
if the Grantee had remained a director of the Company or any Subsidiary; whether
or not the Grantee left the board of directors of the Company or any Subsidiary
in “good standing” shall be determined by the Board in its sole discretion;
provided, however, that any director who serves out his/her term but does not
stand for re-election at the end thereof shall be deemed to have left the board
of directors of the Company or any Subsidiary in “good standing.
 
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(iii)     Payment. An SAR shall confer on the Grantee a right to receive an
amount with respect to each share of Stock subject thereto, upon exercise
thereof, equal to 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 (which in the case
of an SAR granted in tandem with an Option shall be equal to the exercise price
of the underlying Option, and which in the case of any other SAR shall be such
price as the Committee may determine but in no event shall be less than the Fair
Market Value of a share of Stock on the date of grant of such SAR). An SAR may
be exercised by giving written notice of such exercise to the Committee or its
designated agent.
 
(c)     Restricted Stock. The Committee is authorized to grant Restricted Stock
to Grantees on the following terms and conditions: 
 
(i)     Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions, if any, as the Committee
may impose at the date of grant, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such installments, or
otherwise, as the Committee may determine. The Committee may place restrictions
on Restricted Stock that shall lapse, in whole or in part, only upon the
attainment of performance goals, as determined in the discretion of the
Committee. Except to the extent restricted under the Award Agreement relating to
the Restricted Stock, a Grantee granted Restricted Stock shall have all of the
rights of a stockholder including, without limitation, the right to vote
Restricted Stock and the right to receive dividends thereon.
 
(ii)     Certificates for Stock. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Grantee, such
certificates shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock, and the
Company may retain physical possession of the certificate.
 
(iii)     Dividends. Except to the extent restricted under the applicable Award
Agreement, dividends paid on Restricted Stock shall be either paid 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. Unless otherwise determined
by the Committee, Stock distributed in connection with a stock split or stock
dividend, and all cash and other property distributed as a dividend, shall be
subject to the transfer restrictions, forfeiture risks and vesting conditions to
the same extent as the Restricted Stock with respect to which such Stock or
other property has been distributed.
 
(d)     [omitted]
 
(e)     Other Stock-Based Awards. The Committee is authorized to grant Awards to
Grantees in the form of Other Stock-Based Awards, as deemed by the Committee to
be consistent with the purposes of the Plan. At the time of the grant of Other
Stock-Based Awards, the Committee may place restrictions on the payout or
vesting of Other Stock-Based Awards that shall lapse, in whole or in part, only
upon the attainment of performance goals, as determined in the discretion of the
Committee.
 
The Committee shall determine the terms and conditions of such Awards at the
date of grant. Other Stock-Based Awards may not be granted with the right to
receive dividend equivalent payments.
 
(f)     Settlement of Options and SARs. Shares of Stock delivered pursuant to
the exercise of an Option or SAR shall be subject to such conditions,
restrictions and contingencies as the Committee may establish in the applicable
Award Agreement. Settlement of SARs may be made in shares of Stock (valued at
their Fair Market Value at the time of exercise), in cash, or in a combination
thereof, as determined in the discretion of the Committee. The Committee, in its
discretion, may impose such conditions, restrictions and contingencies with
respect to shares of Stock acquired pursuant to the exercise of an Option or an
SAR as the Committee determines to be desirable.
 
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(g)     Vesting; Additional Terms. The vesting for each Award shall be
determined by the Committee. Unless the Committee determines otherwise, the date
on which the Committee adopts a resolution expressly granting an Award shall be
considered the day on which such Award is granted. The term of any Award granted
under the Plan will not exceed ten years from the date of grant. Notwithstanding
the foregoing, if before the expiration of an Option or SAR, the holder's
employment relationship with the Company or a Subsidiary terminates as a result
of retirement in good standing or disability under the established rules of the
Company then in effect, the Option or SAR will remain in effect, vest and be
exercisable in accordance with its terms as if the holder remained an employee
of the Company or Subsidiary. In the event of an Option or SAR holder's death
during the term of his or her Option or SAR, all unvested Options and SARs will
vest immediately and may be exercised by the holder's estate, or by the person
to whom such right devolves from the holder by reason of his or her death, at
any time within three years after the date of the holder's death but in no event
later than the original termination date of the Option or SAR. In no event may
an Option or SAR be exercised after three years following the holder's death.
With respect to all other Awards, any unvested Awards shall immediately vest,
and all restrictions pertaining to such other Awards shall lapse and have no
further effect, upon the holder’s death or retirement in good standing or
disability under the established rules of the Company then in effect. Upon the
occurrence of a Change in Control, all outstanding Options and SARs shall vest
and become exercisable and all other outstanding Awards shall vest and all
restrictions pertaining to such other Awards shall lapse and have no further
effect.

SECTION 5
 
OPERATION
 
5.1     Effective Date; Duration. The Plan shall be effective as of the date of
its approval by the stockholders of the Company (the “Effective Date”). The Plan
shall have a duration of ten years from the Effective Date; provided that in the
event of Plan termination, the Plan shall remain in effect as long as any Awards
under it are outstanding, although no further grants may be made following Plan
termination.
 
5.2     Uncertificated Stock. Nothing contained in the Plan shall prohibit the
issuance of Stock on an uncertificated basis, to the extent allowed by the
Company’s Certificate of Incorporation and Bylaws, by applicable law and by the
applicable rules of any stock exchange.
 
5.3     Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence
of such withholding, may permit such withholding obligations to be satisfied
through cash payment by the Grantee, through the surrender of shares of Stock
which the Grantee already owns, or through the surrender of unrestricted shares
of Stock to which the Grantee is otherwise entitled under the Plan, but only to
the extent of the minimum amount required to be withheld under applicable law.
 
5.4     Use of Shares. Subject to the limitations on the number of shares of
Stock that may be delivered under the Plan, the Committee may use available
shares of Stock as the form of payment for compensation, grants or rights earned
or due under any other compensation plans or arrangements of the Company or a
Subsidiary, including the plans and arrangements of the Company or a Subsidiary
assumed in business combinations.
 
5.5     Transferability. Except as otherwise provided by the Committee, Options,
SARs and any other unvested Awards or Awards subject to any restrictions
hereunder are not transferable except as designated by the Grantee by will or by
the laws of descent and distribution. Notwithstanding the foregoing, in no event
may any such Award be transferred to a third party for consideration at any
time.
 
5.6     Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Grantee or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
 
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5.7     Agreement With Company. An Award under the Plan shall be subject to such
terms and conditions, not inconsistent with the Plan, as the Committee shall, in
its sole discretion, prescribe. The terms and conditions of any Award to any
Grantee shall be reflected in such form of written document as is determined by
the Committee. A copy of such document shall be provided to the Grantee, and the
Committee may, but need not, require that the Grantee shall sign a copy of such
document. Such document is referred to in the Plan as an “Award Agreement”
regardless of whether any Grantee signature is required.
 
5.8     Gender and Number. Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and the
plural shall include the singular.
 
5.9     Limitation of Implied Rights.
 
(a)     Neither a Grantee nor any other person shall, by reason of participation
in the Plan, acquire any right in or title to any assets, funds or property of
the Company or any Subsidiary whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company or any Subsidiary,
in its sole discretion, may set aside in anticipation of a liability under the
Plan. A Grantee shall have only a contractual right to the Stock or amounts, if
any, payable under the Plan, unsecured by any assets of the Company or any
Subsidiary, and nothing contained in the Plan shall constitute a guarantee that
the assets of the Company or any Subsidiary shall be sufficient to pay any
benefits to any person.
 
(b)     The Plan does not constitute a contract of employment, and selection as
a Grantee will not give any participating employee the right to be retained in
the employ of the Company or any Subsidiary, nor any right or claim to any
benefit under the Plan, unless such right or claim has specifically accrued
under the terms of the Plan. Except as otherwise provided in the Plan or the
Award Agreement, no Award under the Plan shall confer upon the holder thereof
any rights as a stockholder of the Company prior to the date on which the
individual fulfills all conditions for receipt of such rights.
 
5.10     Forfeiture; Non-Competition Agreements. Notwithstanding any other
provision of the Plan, except as provided in Section 5.11 below, if the
Committee finds by a majority vote that: (i) the Grantee, before or after
termination of his or her employment or advisory or consulting relationship with
the Company or a Subsidiary (as used in this Section 5.10, an "Employer"), or in
the case of a Grantee who is a director of the Employer, before or after
cessation of his or her service as a director of the Employer, for any reason,
(a) committed fraud, embezzlement, theft, a felony, or proven dishonesty in the
course of his or her employment or other engagement by Employer, and by such act
damaged Employer, or (b) disclosed trade secrets of Employer; or (ii) the
Grantee, before or after termination of his or her employment or other
engagement with Employer for any reason, participated, engaged or had a
financial or other interest (whether as an employee, officer, director,
consultant, contractor, stockholder, owner, or otherwise) in any commercial
endeavor in the United States competitive with the business of Employer (a) in
violation of the EAU Technologies, Inc. Code of Ethics, as in effect on the date
of such participation or other engagement, or (b) in such a manner that would
have violated the Code of Ethics had Grantee been employed by Employer at the
time of the activity in question, then any outstanding Awards which, in the case
of Options or SARs, have not been exercised and, in the case of Awards other
than Options or SARs, have not vested, will be forfeited. The decision of the
Committee as to the nature of a Grantee's conduct, the damage done to Employer
and the extent of the Grantee's competitive activity will be final. No decision
of the Committee, however, will affect the finality of the discharge of the
Grantee by Employer in any manner. The Committee may, in its discretion, include
a form of non-compete, non-solicitation and/or non-disparagement agreement in
any Award Agreement, and such non-compete, non-solicitation or non-disparagement
agreement may be personalized, in the Committee’s discretion, to fit the
circumstances of any specific Grantee.

5.11     Termination of Employment Following Change In Control. In the event
that the employment of a Grantee who is an employee of the Company or a
Subsidiary is terminated by the Company other than for Cause during the 24-month
period following a Change in Control, all of such Grantee’s outstanding Options
and SARs may thereafter be exercised by the Grantee, to the extent that such
Options and SARs were exercisable as of the date of such termination of
employment (a) for a period of 24 months from such date of termination or (b)
until expiration of the stated term of such Option or SAR, whichever period is
the shorter. The provisions of clause (ii) of Section 5.10 of the Plan shall not
apply to any Grantee who incurs a termination of employment pursuant to this
Section 5.11 with respect to activity after such termination of employment.
 
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5.12      Section 409A. It is intended that all Options and SARs granted under
the Plan shall be exempt from the provisions of Section 409A of the Code and
that all other Awards under the Plan, to the extent that they constitute
“non-qualified deferred compensation” within the meaning of Section 409A of the
Code, will comply with Section 409A of the Code (and any regulations and
guidelines issued thereunder). The Plan and any Award Agreements issued
hereunder may be amended in any respect deemed by the Board or the Committee to
be necessary in order to preserve compliance with Section 409A of the Code.
 
5.14     Regulations and Other Approvals.
 
(a)     The obligation of the Company to sell or deliver Stock with respect to
any Award granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.
 
(b)     Each Award is subject to the requirement that, if at any time the
Committee determines, in its absolute discretion, that the listing, registration
or qualification of Stock issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Award or the issuance of
Stock, no such Award shall be granted or payment made or Stock issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions not acceptable to the
Committee.
 
(c)     In the event that the disposition of Stock acquired pursuant to the Plan
is not covered by a then current registration statement under the Securities Act
and is not otherwise exempt from such registration, such Stock shall be
restricted against transfer to the extent required by the Securities Act of
1933, as amended, or regulations thereunder, and applicable state securities
laws, and the Committee may require a Grantee receiving Stock pursuant to the
Plan, as a condition precedent to receipt of such Stock, to represent to the
Company in writing that the Stock acquired by such Grantee is acquired for
investment only and not with a view to distribution.
 
(d)     With respect to persons subject to section 16 of the Securities and
Exchange Act of 1934, as amended, it is the intent of the Company that the Plan
and all transactions under the Plan comply with all applicable provisions of
Rule 16b-3.
 
5.15      Awards to Employees Subject to Taxation Outside of the United States.
Without amending the plan, Awards may be granted to Grantees who are foreign
nationals or who are employed outside the United States or both, on such terms
and conditions different from those specified in the Plan as may, in the
judgment of the Committee, be necessary or desirable to further the purposes of
the Plan. Such different terms and conditions may be reflected in Addenda to the
Plan or in the applicable Award Agreement. However, no such different terms or
conditions shall be employed if such terms or conditions constitute, or in
effect result in, an increase in the aggregate number of shares which may be
issued under the Plan or a change in the definition of Eligible Grantee.
 
SECTION 6
 
AMENDMENT AND TERMINATION
 
(a)     The Plan may be terminated or amended by the Board of Directors at any
time, except that the following actions may not be taken without stockholder
approval:
 
(i)     any increase in the number of shares that may be issued under the Plan
(except by certain adjustments provided for under the Plan);
 
(ii)     any change in the class of persons eligible to receive ISOs under the
Plan;
 
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(iii)     any change in the requirements of Sections 4.2(a)(ii) and 4.2(b)(iii)
hereof regarding the exercise price of Options and the grant price of SARs; or
 
(iv)     any repricing or cancellation and regrant of any Option or, if
applicable, other Award at a lower exercise, base or purchase price, whether in
the form of an amendment, cancellation or replacement grant, or a cash-out of
underwater options or any action that provides for Awards that contain a
so-called “reload” feature under which additional Options or other Awards are
granted automatically to the Grantee upon exercise of the original Option or
Award.
 
(v)     any other amendment to the Plan that would require approval of the
Company’s stockholders under applicable law, regulation or rule or stock
exchange listing requirement.
 
Notwithstanding any of the foregoing, adjustments pursuant to Section 3 shall
not be subject to the foregoing limitations of this Section 6.
 
(b)     Awards may not be granted under the Plan after the date of termination
of the Plan, but Awards granted prior to that date shall continue to be
exercisable according to their terms.
 
SECTION 7
 
GOVERNING LAW
 
The plan shall be governed by, and construed in accordance with, the laws of the
State of Georgia, except to the extent that the General Corporation Law of the
State of Delaware shall be applicable.
 
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