Alkaline Water Company Inc.: Exhibit 10.1 - Filed by newsfilecorp.com






THE ALKALINE WATER COMPANY INC. 
2013 EQUITY INCENTIVE
PLAN

1. Purpose; Eligibility.

1.1 General Purpose. The name of this plan is The
Alkaline Water Company Inc. 2013 Equity Incentive Plan (the “Plan”). The
purposes of the Plan are to (a) enable The Alkaline Water Company Inc., a Nevada
corporation (the “Company”), and any Affiliate to attract and retain the
types of Employees, Consultants and Directors who will contribute to the
Company’s long range success; (b) provide incentives that align the interests of
Employees, Consultants and Directors with those of the shareholders of the
Company; and (c) promote the success of the Company’s business.

1.2 Eligible Award Recipients. The persons eligible to
receive Awards are the Employees, Consultants and Directors of the Company and
its Affiliates and such other individuals designated by the Committee who are
reasonably expected to become Employees, Consultants and Directors after the
receipt of Awards.

1.3 Available Awards. Awards that may be granted under
the Plan include: (a) Incentive Stock Options, (b) Non-qualified Stock Options,
(c) Stock Appreciation Rights, (d) Restricted Awards and (e) Performance
Compensation Awards.

2. Definitions.

     “Affiliate” means a
corporation or other entity that, directly or through one or more
intermediaries, controls, is controlled by or is under common control with, the
Company.

     “Applicable Laws” means
the requirements related to or implicated by the administration of the Plan
under applicable state corporate law, United States federal and state securities
laws, the Code, any stock exchange or quotation system on which the shares of
Common Stock are listed or quoted, and the applicable laws of any foreign
country or jurisdiction where Awards are granted under the Plan.

     “Award” means any right
granted under the Plan, including an Incentive Stock Option, a Non-qualified
Stock Option, a Stock Appreciation Right, a Restricted Award, or a Performance
Compensation Award.

     “Award Agreement” means a
written agreement, contract, certificate or other instrument or document
evidencing the terms and conditions of an individual Award granted under the
Plan which may, in the discretion of the Company, be transmitted electronically
to any Participant. Each Award Agreement shall be subject to the terms and
conditions of the Plan.

     “Beneficial Owner” has the
meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, except that in calculating the beneficial ownership of any particular
“person” (as that term is used in Section 13(d)(3) of the Exchange Act), such
“person” shall be deemed to have beneficial ownership of all securities that
such “person” has the right to acquire by conversion or exercise of other
securities, whether such right is currently exercisable or is exercisable only
after the passage of time. The terms “Beneficially Owns” and “Beneficially
Owned” have a corresponding meaning.

     “Board” means the Board of
Directors of the Company, as constituted at any time.




- 2 -

     “Cause” means:

     With respect to any Employee or
Consultant:

	 	(a) 	
      If the Employee or Consultant is a party to an employment
      or service agreement with the Company or its Affiliates and such agreement
      provides for a definition of Cause or other similar term, the definition
      contained therein; or

	 	 	 
	 	(b) 	
      If no such agreement exists, or if such agreement does
      not define Cause or other similar term: (i) the commission of, or plea of
      guilty or no contest to, a felony or a crime involving moral turpitude or
      the commission of any other act involving willful malfeasance or material
      fiduciary breach with respect to the Company or an Affiliate; (ii) conduct
      that results in or is reasonably likely to result in harm to the
      reputation or business of the Company or any of its Affiliates; (iii)
      gross negligence or willful misconduct with respect to the Company or an
      Affiliate; or (iv) material violation of state or federal securities
      laws.



     With respect to any Director, a
determination by a majority of the disinterested Board members that the Director
has engaged in any of the following:

	 	(a) 	
      malfeasance in office;

	 	 	 
	 	(b) 	
      gross misconduct or neglect;

	 	 	 
	 	(c) 	
      false or fraudulent misrepresentation inducing the
      director’s appointment;

	 	 	 
	 	(d) 	
      wilful conversion of corporate funds; or

	 	 	 
	 	(e) 	
      repeated failure to participate in Board meetings on a
      regular basis despite having received proper notice of the meetings in
      advance.



     The Committee, in its absolute
discretion, shall determine the effect of all matters and questions relating to
whether a Participant has been discharged for Cause.

     “Change in Control”

	 	(a) 	
      The direct or indirect sale, transfer, conveyance or
      other disposition (other than by way of merger or consolidation), in one
      or a series of related transactions, of all or substantially all of the
      properties or assets of the Company and its subsidiaries, taken as a
      whole, to any Person that is not a subsidiary of the Company;

	 	 	 
	 	(b) 	
      The Incumbent Directors cease for any reason to
      constitute at least a majority of the Board;

	 	 	 
	 	(c) 	
      The date which is 10 business days prior to the
      consummation of a complete liquidation or dissolution of the
    Company;

	 	 	 
	 	(d) 	
      The acquisition by any Person of Beneficial Ownership of
      50% or more (on a fully diluted basis) of either (i) the then outstanding
      shares of Common Stock of the Company, taking into account as outstanding for this purpose such Common
      Stock issuable upon the exercise of options or warrants, the conversion of
      convertible stock or debt, and the exercise of any similar right to
      acquire such Common Stock (the “Outstanding Company Common Stock”)
      or (ii) the combined voting power of the then outstanding voting
      securities of the Company entitled to vote generally in the election of
      directors (the “Outstanding Company Voting Securities”); provided,
      however, that for purposes of this Plan, the following acquisitions shall
      not constitute a Change in Control: (A) any acquisition by the Company or
      any Affiliate, (B) any acquisition by any employee benefit plan sponsored
      or maintained by the Company or any subsidiary, (C) any acquisition which
      complies with clauses, (i), (ii) and (iii) of subsection (e) of this
      definition or (D) in respect of an Award held by a particular Participant,
      any acquisition by the Participant or any group of persons including the
      Participant (or any entity controlled by the Participant or any group of
  persons including the Participant); or








- 3 -

	 	(e) 	
      The consummation of a reorganization, merger,
      consolidation, statutory share exchange or similar form of corporate
      transaction involving the Company that requires the approval of the
      Company’s shareholders, whether for such transaction or the issuance of
      securities in the transaction (a “Business Combination”), unless
      immediately following such Business Combination: (i) more than 50% of the
      total voting power of (A) the entity resulting from such Business
      Combination (the “Surviving Company”), or (B) if applicable, the
      ultimate parent entity that directly or indirectly has beneficial
      ownership of sufficient voting securities eligible to elect a majority of
      the members of the board of directors (or the analogous governing body) of
      the Surviving Company (the “Parent Company”), is represented by the
      Outstanding Company Voting Securities that were outstanding immediately
      prior to such Business Combination (or, if applicable, is represented by
      shares into which the Outstanding Company Voting Securities were converted
      pursuant to such Business Combination), and such voting power among the
      holders thereof is in substantially the same proportion as the voting
      power of the Outstanding Company Voting Securities among the holders
      thereof immediately prior to the Business Combination; (ii) no Person
      (other than any employee benefit plan sponsored or maintained by the
      Surviving Company or the Parent Company) is or becomes the Beneficial
      Owner, directly or indirectly, of 50% or more of the total voting power of
      the outstanding voting securities eligible to elect members of the board
      of directors of the Parent Company (or the analogous governing body) (or,
      if there is no Parent Company, the Surviving Company); and (iii) at least
      a majority of the members of the board of directors (or the analogous
      governing body) of the Parent Company (or, if there is no Parent Company,
      the Surviving Company) following the consummation of the Business
      Combination were Board members at the time of the Board’s approval of the
      execution of the initial agreement providing for such Business
      Combination.



     “Code” means the Internal
Revenue Code of 1986, as it may be amended from time to time. Any reference to a
section of the Code shall be deemed to include a reference to any regulations
promulgated thereunder.

     “Committee” means the
Board or a committee of one or more members of the Board appointed by the Board
to administer the Plan in accordance with Section 3.3 and Section 3.4.




- 4 -

     “Common Stock” means the
common stock, $0.001 par value per share, of the Company, the preferred stock,
$0.001 par value per share, of the Company, or such other securities of the
Company as may be designated by the Committee from time to time in substitution
thereof.

     “Company” means The
Alkaline Water Company Inc., a Nevada corporation, and any successor
thereto.

     “Consultant” means any
individual who is engaged by the Company or any Affiliate to render consulting
or advisory services.

     “Continuous Service” means
that the Participant’s service with the Company or an Affiliate, whether as an
Employee, Consultant or Director, is not interrupted or terminated. The
Participant’s Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant renders service to
the Company or an Affiliate as an Employee, Consultant or Director or a change
in the entity for which the Participant renders such service, provided that
there is no interruption or termination of the Participant’s Continuous Service;
provided further that if any Award is subject to Section 409A of the Code, this
sentence shall only be given effect to the extent consistent with Section 409A
of the Code. For example, a change in status from an Employee of the Company to
a Director of an Affiliate will not constitute an interruption of Continuous
Service. The Committee or its delegate, in its sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal or family leave of absence.

     “Covered Employee” has the
same meaning as set forth in Section 162(m)(3) of the Code, as interpreted by
Internal Revenue Service.

     “Director” means a member
of the Board.

     “Disability” means that
the Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment; provided,
however, for purposes of determining the term of an Incentive Stock Option
pursuant to Section 6.9 hereof, the term Disability shall have the meaning
ascribed to it under Section 22(e)(3) of the Code. The determination of whether
an individual has a Disability shall be determined under procedures established
by the Committee. Except in situations where the Committee is determining
Disability for purposes of the term of an Incentive Stock Option pursuant to
Section 6.9 hereof within the meaning of Section 22(e)(3) of the Code, the
Committee may rely on any determination that a Participant is disabled for
purposes of benefits under any long-term disability plan maintained by the
Company or any Affiliate in which a Participant participates.

     “Disqualifying
Disposition” has the meaning set forth in Section 14.11.

     “Effective Date” shall
mean the date as of which this Plan is adopted by the Board.

     “Employee” means any
person, including an Officer or Director, employed by the Company or an
Affiliate; provided, that, for purposes of determining eligibility to receive
Incentive Stock Options, an Employee shall mean an employee of the Company or a
parent or subsidiary corporation within the meaning of IRC Section 424. Mere
service as a Director or payment of a director’s fee by the Company or an
Affiliate shall not be sufficient to constitute “employment” by the Company or
an Affiliate.




- 5 -

     “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

     “Fair Market Value” means,
as of any date, the value of the Common Stock as determined below. If the Common
Stock is listed or quoted on any established stock exchange or public market,
including without limitation, the New York Stock Exchange, the NASDAQ Stock
Market, the OTC Bulletin Board operated by the Financial Industry Regulatory
Authority, or one of marketplaces operated by the OTC Markets Group, the Fair
Market Value shall be the closing price of a share of Common Stock (or if no
sales were reported the closing price on the date immediately preceding such
date) as quoted on such exchange or public market on the day of determination,
as reported in the source as the Committee deems reliable. In the absence of an
established market for the Common Stock, the Fair Market Value shall be
determined in good faith by the Committee and such determination shall be
conclusive and binding on all persons.

     “Free Standing Rights” has
the meaning set forth in Section 7.1(a) .

     “Good Reason” means:

	 	(a) 	
      If an Employee or Consultant is a party to an employment
      or service agreement with the Company or its Affiliates and such agreement
      provides for a definition of Good Reason or other similar term, the
      definition contained therein; or

	 	 	 
	 	(b) 	
      If no such agreement exists or if such agreement does not
      define Good Reason, the occurrence of one or more of the following without
      the Participant’s express written consent, which circumstances are not
      remedied by the Company within thirty (30) days of its receipt of a
      written notice from the Participant describing the applicable
      circumstances (which notice must be provided by the Participant within
      ninety (90) days of the Participant’s knowledge of the applicable
      circumstances): (i) any material, adverse change in the Participant’s
      duties, responsibilities, authority, title, status or reporting structure;
      (ii) a material reduction in the Participant’s base salary or bonus
      opportunity; or (iii) a geographical relocation of the Participant’s
      principal office location by more than fifty (50)
miles.



     “Grant Date” means the
date on which the Committee adopts a resolution, or takes other appropriate
action, expressly granting an Award to a Participant that specifies the key
terms and conditions of the Award or, if a later date is set forth in such
resolution, then such date as is set forth in such resolution.

     “Incentive Stock Option”
means an Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code.

     “Incumbent Directors”
means individuals who, on the Effective Date, constitute the Board, provided
that any individual becoming a Director subsequent to the Effective Date whose
election or nomination for election to the Board was approved by a vote of at
least two- thirds of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for Director without objection to such nomination)
shall be an Incumbent Director. No individual initially elected or nominated as
a director of the Company as a result of an actual or threatened election
contest with respect to Directors or as a result of any other actual or
threatened solicitation of proxies by or on behalf of any person other than the
Board shall be an Incumbent Director.




- 6 -

     “Negative Discretion”
means the discretion authorized by the Plan to be applied by the Committee to
eliminate or reduce the size of a Performance Compensation Award in accordance
with Section 7.3(d)(iv) of the Plan; provided, that, the exercise of such
discretion would not cause the Performance Compensation Award to fail to qualify
as “performance- based compensation” under Section 162(m) of the Code.

     “Non-Employee Director”
means a Director who is a “non-employee director” within the meaning of Rule
16b-3.

     “Non-qualified Stock
Option” means an Option that by its terms does not qualify or is not
intended to qualify as an Incentive Stock Option.

     “Officer” means a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

     “Option” means an
Incentive Stock Option or a Non-qualified Stock Option granted pursuant to the
Plan.

     “Optionholder” means a
person to whom an Option is granted pursuant to the Plan or, if applicable, such
other person who holds an outstanding Option.

     “Option Exercise Price”
means the price at which a share of Common Stock may be purchased upon the
exercise of an Option.

     “Outside Director” means a
Director who is an “outside director” within the meaning of Section 162(m) of
the Code and Treasury Regulations Section 1.162 -27(e)(3) or any successor to
such statute and regulation.

     “Participant” means an
eligible person to whom an Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Award.

     “Performance Compensation
Award” means any Award designated by the Committee as a Performance
Compensation Award pursuant to Section 7.3 of the Plan.

     “Performance Criteria”
means the criterion or criteria that the Committee shall select for purposes of
establishing the Performance Goal(s) for a Performance Period with respect to
any Performance Compensation Award under the Plan. The Performance Criteria that
will be used to establish the Performance Goal(s) shall be based on the
attainment of specific levels of performance of the Company (or Affiliate,
division, business unit or operational unit of the Company) and shall be limited
to the following:

	 	(a) 	
      net earnings or net income (before or after
  taxes);

	 	 	 
	 	(b) 	
      basic or diluted earnings per share (before or after
      taxes);

	 	 	 
	 	(c) 	
      net revenue or net revenue growth;

	 	 	 
	 	(d) 	
      gross revenue;







- 7 -

	 	(e) 	
      gross profit or gross profit growth;

	 	 	 
	 	(f) 	
      net operating profit (before or after taxes);

	 	 	 
	 	(g) 	
      return on assets, capital, invested capital, equity, or
      sales;

	 	 	 
	 	(h) 	
      cash flow (including, but not limited to, operating cash
      flow, free cash flow, and cash flow return on capital);

	 	 	 
	 	(i) 	
      earnings before or after taxes, interest, depreciation
      and/or amortization;

	 	 	 
	 	(j) 	
      gross or operating margins;

	 	 	 
	 	(k) 	
      improvements in capital structure;

	 	 	 
	 	(l) 	
      budget and expense management;

	 	 	 
	 	(m) 	
      productivity ratios;

	 	 	 
	 	(n) 	
      economic value added or other value added
      measurements;

	 	 	 
	 	(o) 	
      share price (including, but not limited to, growth
      measures and total shareholder return);

	 	 	 
	 	(p) 	
      expense targets;

	 	 	 
	 	(q) 	
      margins;

	 	 	 
	 	(r) 	
      operating efficiency;

	 	 	 
	 	(s) 	
      working capital targets;

	 	 	 
	 	(t) 	
      enterprise value;

	 	 	 
	 	(u) 	
      safety record; and

	 	 	 
	 	(v) 	
      completion of acquisitions or business
  expansion.



Any one or more of the Performance Criteria may be used on an
absolute or relative basis to measure the performance of the Company and/or an
Affiliate as a whole or any division, business unit or operational unit of the
Company and/or an Affiliate or any combination thereof, as the Committee may
deem appropriate, or as compared to the performance of a group of comparable
companies, or published or special index that the Committee, in its sole
discretion, deems appropriate, or the Committee may select Performance Criterion
(o) above as compared to various stock market indices. The Committee also has
the authority to provide for accelerated vesting of any Award based on the
achievement of Performance Goals pursuant to the Performance Criteria specified
in this paragraph. To the extent required under Section 162 (m) of the Code, the
Committee shall, within the first 90 days of a Performance Period (or, if longer
or shorter, within the maximum period allowed under Section 162(m) of the Code),
define in an objective fashion the manner of calculating the Performance
Criteria it selects to use for such Performance Period. In the event that
applicable tax and/or securities laws change to permit the Committee discretion to alter the governing
Performance Criteria without obtaining shareholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
shareholder approval.




- 8 -

     “Performance Formula”
means, for a Performance Period, the one or more objective formulas applied
against the relevant Performance Goal to determine, with regard to the
Performance Compensation Award of a particular Participant, whether all, some
portion but less than all, or none of the Performance Compensation Award has
been earned for the Performance Period.

     “Performance Goals” means,
for a Performance Period, the one or more goals established by the Committee for
the Performance Period based upon the Performance Criteria. The Committee is
authorized at any time during the first 90 days of a Performance Period (or, if
longer or shorter, within the maximum period allowed under Section 162(m) of the
Code), or at any time thereafter (but only to the extent the exercise of such
authority after such period would not cause the Performance Compensation Awards
granted to any Participant for the Performance Period to fail to qualify as
“performance-based compensation” under Section 162(m) of the Code), in its sole
and absolute discretion, to adjust or modify the calculation of a Performance
Goal for such Performance Period to the extent permitted under Section 162(m) of
the Code in order to prevent the dilution or enlargement of the rights of
Participants based on the following events:

	 	(a) 	
      asset write-downs;

	 	 	 
	 	(b) 	
      litigation or claim judgments or settlements;

	 	 	 
	 	(c) 	
      the effect of changes in tax laws, accounting principles,
      or other laws or regulatory rules affecting reported results;

	 	 	 
	 	(d) 	
      any reorganization and restructuring programs;

	 	 	 
	 	(e) 	
      extraordinary nonrecurring items as described in
      Accounting Principles Board Opinion No. 30 (or any successor or
      pronouncement thereto) and/or in management’s discussion and analysis of
      financial condition and results of operations appearing in the Company’s
      annual report to shareholders for the applicable year;

	 	 	 
	 	(f) 	
      acquisitions or divestitures;

	 	 	 
	 	(g) 	
      any other specific unusual or nonrecurring events, or
      objectively determinable category thereof;

	 	 	 
	 	(h) 	
      foreign exchange gains and losses; and

	 	 	 
	 	(i) 	
      a change in the Company’s fiscal
year.



     “Performance Period” means
the one or more periods of time not less than one fiscal quarter in duration, as
the Committee may select, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a Participant’s right to
and the payment of a Performance Compensation Award.




- 9 -

“Permitted Transferee” means:

	 	(a) 	
      a member of the Optionholder’s immediate family (child,
      stepchild, grandchild, parent, stepparent, grandparent, spouse, former
      spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
      daughter-in-law, brother-in-law, or sister-in-law, including adoptive
      relationships), any person sharing the Optionholder’s household (other
      than a tenant or employee), a trust in which these persons have more than
      50% of the beneficial interest, a foundation in which these persons (or
      the Optionholder) control the management of assets, and any other entity
      in which these persons (or the Optionholder) own more than 50% of the
      voting interests;

	 	 	 
	 	(b) 	
      third parties designated by the Committee in connection
      with a program established and approved by the Committee pursuant to which
      Participants may receive a cash payment or other consideration in
      consideration for the transfer of a Non-qualified Stock Option;
  and

	 	 	 
	 	(c) 	
      such other transferees as may be permitted by the
      Committee in its sole discretion.



     “Plan” means this The
Alkaline Water Company Inc. 2013 Equity Incentive Plan, as amended and/or
amended and restated from time to time.

     “Related Rights” has the
meaning set forth in Section 7.1(a) .

     “Restricted Award” means
any Award granted pursuant to Section 7.2(a) .

     “Restricted Period” has
the meaning set forth in Section 7.2(a) .

     “Rule 16b-3” means Rule
16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in
effect from time to time.

     “Securities Act” means the
Securities Act of 1933, as amended.

     “Stock Appreciation Right”
means the right pursuant to an Award granted under Section 7.1 to receive, upon
exercise, an amount payable in cash or shares equal to the number of shares
subject to the Stock Appreciation Right that is being exercised multiplied by
the excess of (a) the Fair Market Value of a share of Common Stock on the date
the Award is exercised, over (b) the exercise price specified in the Stock
Appreciation Right Award Agreement.

     “Stock for Stock Exchange”
has the meaning set forth in Section 6.3.

     “Ten Percent Shareholder”
means a person who owns (or is deemed to own pursuant to Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any of its Affiliates.

3. Administration.

3.1 Authority of Committee. The Plan shall be
administered initially by the Board, except that the Board may, in its
discretion, establish a committee composed of two (2) or more members of the
Board to administer the Plan, which committee may be an executive, compensation
or other committee, including a separate committee especially created
for this purpose. Subject to the terms of the Plan, the Committee’s charter and
Applicable Laws, and in addition to other express powers and authorization
conferred by the Plan, the Committee shall have the authority:




- 10 -

	 	(a) 	
      to construe and interpret the Plan and apply its
      provisions;

	 	 	 
	 	(b) 	
      to promulgate, amend, and rescind rules and regulations
      relating to the administration of the Plan;

	 	 	 
	 	(c) 	
      to authorize any person to execute, on behalf of the
      Company, any instrument required to carry out the purposes of the
    Plan;

	 	 	 
	 	(d) 	
      to delegate its authority to one or more Officers of the
      Company with respect to Awards that do not involve Covered Employees or
      “insiders” within the meaning of Section 16 of the Exchange Act;

	 	 	 
	 	(e) 	
      to determine when Awards are to be granted under the Plan
      and the applicable Grant Date;

	 	 	 
	 	(f) 	
      from time to time to select, subject to the limitations
      set forth in this Plan, those Participants to whom Awards shall be
      granted;

	 	 	 
	 	(g) 	
      to determine the number of shares of Common Stock to be
      made subject to each Award;

	 	 	 
	 	(h) 	
      to determine whether each Option is to be an Incentive
      Stock Option or a Non-qualified Stock Option;

	 	 	 
	 	(i) 	
      to prescribe the terms and conditions of each Award,
      including, without limitation, the exercise price and medium of payment
      and vesting provisions, and to specify the provisions of the Award
      Agreement relating to such grant;

	 	 	 
	 	(j) 	
      to designate an Award (including a cash bonus) as a
      Performance Compensation Award and to select the Performance Criteria that
      will be used to establish the Performance Goals;

	 	 	 
	 	(k) 	
      to amend any outstanding Awards, including for the
      purpose of modifying the time or manner of vesting, or the term of any
      outstanding Award; provided, however, that if any such amendment impairs a
      Participant’s rights or increases a Participant’s obligations under his or
      her Award or creates or increases a Participant’s federal income tax
      liability with respect to an Award, such amendment shall also be subject
      to the Participant’s consent;

	 	 	 
	 	(l) 	
      to determine the duration and purpose of leaves of
      absences which may be granted to a Participant without constituting
      termination of their employment for purposes of the Plan, which periods
      shall be no shorter than the periods generally applicable to Employees
      under the Company’s employment policies;







- 11 -

	 	(m) 	
      to make decisions with respect to outstanding Awards that
      may become necessary upon a change in corporate control or an event that
      triggers anti-dilution adjustments;

	 	 	 
	 	(n) 	
      to interpret, administer, reconcile any inconsistency in,
      correct any defect in and/or supply any omission in the Plan and any
      instrument or agreement relating to, or Award granted under, the Plan;
      and

	 	 	 
	 	(o) 	
      to exercise discretion to make any and all other
      determinations which it determines to be necessary or advisable for the
      administration of the Plan.



The Committee also may modify the purchase price or the
exercise price of any outstanding Award, provided that if the modification
effects a repricing, shareholder approval shall be required before the repricing
is effective.

3.2 Committee Decisions Final. All decisions made by the
Committee pursuant to the provisions of the Plan shall be final and binding on
the Company and the Participants, unless such decisions are determined by a
court having jurisdiction to be arbitrary and capricious.

3.3 Delegation. The Committee, or if no Committee has
been appointed, the Board, may delegate administration of the Plan to a
committee or committees of one or more members of the Board, and the term
“Committee” shall apply to any person or persons to whom such authority
has been delegated. The Committee shall have the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board or the Committee shall
thereafter be to the committee or subcommittee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan. The members of the
Committee shall be appointed by and serve at the pleasure of the Board. From
time to time, the Board may increase or decrease the size of the Committee, add
additional members to, remove members (with or without cause) from, appoint new
members in substitution therefor, and fill vacancies, however caused, in the
Committee. The Committee shall act pursuant to a vote of the majority of its
members or, in the case of a Committee comprised of only two members, the
unanimous consent of its members, whether present or not, or by the written
consent of the majority of its members and minutes shall be kept of all of its
meetings and copies thereof shall be provided to the Board. Subject to the
limitations prescribed by the Plan and the Board, the Committee may establish
and follow such rules and regulations for the conduct of its business as it may
determine to be advisable.

3.4 Committee Composition. If the Board establishes a
committee to administer the Plan, except as otherwise determined by the Board,
the Committee shall consist solely of two or more Non-Employee Directors who are
also Outside Directors. The Board shall have discretion to determine whether or
not it intends to comply with the exemption requirements of Rule 16b-3 and/or
Section 162(m) of the Code. However, if the Board intends to satisfy such
exemption requirements, with respect to Awards to any Covered Employee and with
respect to any insider subject to Section 16 of the Exchange Act, the Committee
shall be a compensation committee of the Board that at all times consists solely
of two or more Non-Employee Directors who are also Outside Directors. Within the
scope of such authority, the Board or the Committee may (a) delegate to a
committee of one or more members of the Board who are not Outside Directors the
authority to grant Awards to eligible persons who are either (i) not then
Covered Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Award or (ii) not persons with respect
to whom the Company wishes to comply with Section 162(m) of the Code or (b) delegate to a
committee of one or more members of the Board who are not Non-Employee Directors
the authority to grant Awards to eligible persons who are not then subject to
Section 16 of the Exchange Act. Nothing herein shall create an inference that an
Award is not validly granted under the Plan in the event Awards are granted
under the Plan by a compensation committee of the Board that does not at all
times consist solely of two or more Non-Employee Directors who are also Outside
Directors.




- 12 -

3.5 Indemnification. In addition to such other rights of
indemnification as they may have as Directors or members of the Committee, and
to the extent allowed by Applicable Laws, the Committee shall be indemnified by
the Company against the reasonable expenses, including attorney’s fees, actually
incurred in connection with any action, suit or proceeding or in connection with
any appeal therein, to which the Committee may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Award
granted under the Plan, and against all amounts paid by the Committee in
settlement thereof (provided, however, that the settlement has been approved by
the Company, which approval shall not be unreasonably withheld) or paid by the
Committee in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Committee did not act in good faith and in a manner
which such person reasonably believed to be in the best interests of the
Company, or in the case of a criminal proceeding, had no reason to believe that
the conduct complained of was unlawful; provided, however, that within 60 days
after institution of any such action, suit or proceeding, such Committee shall,
in writing, offer the Company the opportunity at its own expense to handle and
defend such action, suit or proceeding.

4. Shares Subject to the Plan.

4.1 Subject to adjustment in accordance with Section 11, a
total of 20,000,000 shares of Common Stock shall be available for the grant of
Awards under the Plan. During the terms of the Awards, the Company shall keep
available at all times the number of shares of Common Stock required to satisfy
such Awards.

4.2 Shares of Common Stock available for distribution under the
Plan may consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares reacquired by the Company in any manner.

4.3 Any shares of Common Stock subject to an Award that is
canceled, forfeited or expires prior to exercise or realization, either in full
or in part, shall again become available for issuance under the Plan.
Notwithstanding anything to the contrary contained herein: shares subject to an
Award under the Plan shall not again be made available for issuance or delivery
under the Plan if such shares are (a) shares tendered in payment of an Option,
(b) shares delivered or withheld by the Company to satisfy any tax withholding
obligation, or (c) shares covered by a stock-settled Stock Appreciation Right or
other Awards that were not issued upon the settlement of the Award.

5. Eligibility.

5.1 Eligibility for Specific Awards. Incentive Stock
Options may be granted only to Employees. Awards other than Incentive Stock
Options may be granted to Employees, Consultants and Directors and those
individuals whom the Committee determines are reasonably expected to become
Employees, Consultants and Directors following the Grant Date.




- 13 -

5.2 Ten Percent Shareholders. A Ten Percent Shareholder
shall not be granted an Incentive Stock Option unless the Option Exercise Price
is at least 110% of the Fair Market Value of the Common Stock at the Grant Date
and the Option is not exercisable after the expiration of five years from the
Grant Date.

6. Option Provisions.

     Each Option granted under the
Plan shall be evidenced by an Award Agreement. Each Option so granted shall be
subject to the conditions set forth in this Section 6, and to such other
conditions not inconsistent with the Plan as may be reflected in the applicable
Award Agreement. All Options shall be separately designated Incentive Stock
Options or Non-qualified Stock Options at the time of grant, and, if
certificates are issued, a separate certificate or certificates will be issued
for shares of Common Stock purchased on exercise of each type of Option.
Notwithstanding the foregoing, the Company shall have no liability to any
Participant or any other person if an Option designated as an Incentive Stock
Option fails to qualify as such at any time or if an Option is determined to
constitute “nonqualified deferred compensation” within the meaning of Section
409A of the Code and the terms of such Option do not satisfy the requirements of
Section 409A of the Code. The provisions of separate Options need not be
identical, but each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:

6.1 Term. Subject to the provisions of Section 5.2
regarding Ten Percent Shareholders, no Incentive Stock Option shall be
exercisable after the expiration of 10 years from the Grant Date. The term of a
Non-qualified Stock Option granted under the Plan shall be determined by the
Committee; provided, however, no Non-qualified Stock Option shall be exercisable
after the expiration of 10 years from the Grant Date.

6.2 Exercise Price of an Incentive Stock Option. Subject
to the provisions of Section 5.2 regarding Ten Percent Shareholders, the Option
Exercise Price of each Incentive Stock Option shall be not less than 100% of the
Fair Market Value of the Common Stock subject to the Option on the Grant Date.
Notwithstanding the foregoing, an Incentive Stock Option may be granted with an
Option Exercise Price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.

6.3 Consideration. The Option Exercise Price of Common
Stock acquired pursuant to an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (a) in cash or by certified or bank
check at the time the Option is exercised or (b) in the discretion of the
Committee, upon such terms as the Committee shall approve, the Option Exercise
Price may be paid: (i) by delivery to the Company of other Common Stock, duly
endorsed for transfer to the Company, with a Fair Market Value on the date of
delivery equal to the Option Exercise Price (or portion thereof) due for the
number of shares being acquired, or by means of attestation whereby the
Participant identifies for delivery specific shares of Common Stock that have an
aggregate Fair Market Value on the date of attestation equal to the Option
Exercise Price (or portion thereof) and receives a number of shares of Common
Stock equal to the difference between the number of shares thereby purchased and
the number of identified attestation shares of Common Stock (a “Stock for
Stock Exchange”); (ii) a “cashless” exercise program established with a
broker; (iii) by reduction in the number of shares of Common Stock otherwise
deliverable upon exercise of such Option with a Fair Market Value equal to the
aggregate Option Exercise Price at the time of exercise; (iv) any combination of
the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to
the Committee. Unless otherwise specifically provided in the Option, the
exercise price of Common Stock acquired pursuant to an Option that is paid by
delivery (or attestation) to the Company of other Common Stock acquired,
directly or indirectly from the Company, shall be paid only by shares of the
Common Stock of the Company that have been held for more than six months (or
such longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes). Notwithstanding the foregoing, during any period
for which the Common Stock is publicly traded an exercise by a Director or
Officer that involves or may involve a direct or indirect extension of credit or
arrangement of an extension of credit by the Company, directly or indirectly, in
violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be
prohibited with respect to any Award under this Plan.




- 14 -

6.4 Transferability of an Incentive Stock Option. An
Incentive Stock Option shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the
Option.

6.5 Transferability of a Non-qualified Stock Option. A
Non-qualified Stock Option may, in the sole discretion of the Committee, be
transferable to a Permitted Transferee, upon written approval by the Committee
to the extent provided in the Award Agreement. If the Non- qualified Stock
Option does not provide for transferability, then the Non-qualified Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

6.6 Vesting of Options. Each Option may, but need not,
vest and therefore become exercisable in periodic installments that may, but
need not, be equal. The Option may be subject to such other terms and conditions
on the time or times when it may be exercised (which may be based on performance
or other criteria) as the Committee may deem appropriate. The vesting provisions
of individual Options may vary. No Option may be exercised for a fraction of a
share of Common Stock. The Committee may, but shall not be required to, provide
for an acceleration of vesting and exercisability in the terms of any Award
Agreement upon the occurrence of a specified event.

6.7 Termination of Continuous Service. Unless otherwise
provided in an Award Agreement or in an employment agreement the terms of which
have been approved by the Committee, in the event an Optionholder’s Continuous
Service terminates (other than upon the Optionholder’s death or Disability), the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination) but only
within such period of time ending on the earlier of (a) the date three months
following the termination of the Optionholder’s Continuous Service or (b) the
expiration of the term of the Option as set forth in the Award Agreement;
provided that, if the termination of Continuous Service is by the Company for
Cause, all outstanding Options (whether or not vested) shall immediately
terminate and cease to be exercisable. If, after termination, the Optionholder
does not exercise his or her Option within the time specified in the Award
Agreement, the Option shall terminate.




- 15 -

6.8 Extension of Termination Date. An Optionholder’s
Award Agreement may also provide that if the exercise of the Option following
the termination of the Optionholder’s Continuous Service for any reason would be
prohibited at any time because the issuance of shares of Common Stock would
violate the registration requirements under the Securities Act or any other
state or federal securities law or the rules of any securities exchange or
interdealer quotation system, then the Option shall terminate on the earlier of
(a) the expiration of the term of the Option in accordance with Section 6.1 or
(b) the expiration of a period after termination of the Participant’s Continuous
Service that is three months after the end of the period during which the
exercise of the Option would be in violation of such registration or other
securities law requirements.

6.9 Disability of Optionholder. Unless otherwise
provided in an Award Agreement, in the event that an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (a) the date 12 months
following such termination or (b) the expiration of the term of the Option as
set forth in the Award Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein or in the Award
Agreement, the Option shall terminate.

6.10 Death of Optionholder. Unless otherwise provided in
an Award Agreement, in the event an Optionholder’s Continuous Service terminates
as a result of the Optionholder’s death, then the Option may be exercised (to
the extent the Optionholder was entitled to exercise such Option as of the date
of death) by the Optionholder’s estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the Option upon the Optionholder’s death, but only within the period
ending on the earlier of (a) the date 12 months following the date of death or
(b) the expiration of the term of such Option as set forth in the Award
Agreement. If, after the Optionholder’s death, the Option is not exercised
within the time specified herein or in the Award Agreement, the Option shall
terminate.

6.11 Incentive Stock Option $100,000 Limitation. To the
extent that the aggregate Fair Market Value (determined at the time of grant) of
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by any Optionholder during any calendar year (under all plans of
the Company and its Affiliates) exceeds $100,000, the Options or portions
thereof which exceed such limit (according to the order in which they were
granted) shall be treated as Non-qualified Stock Options.

7. Provisions of Awards Other Than
Options.

	7.1 	
      Stock Appreciation Rights.

	 	 	 
		(a) 	
      General. Each Stock Appreciation Right granted
      under the Plan shall be evidenced by an Award Agreement. Each Stock
      Appreciation Right so granted shall be subject to the conditions set forth
      in this Section 7.1, and to such other conditions not inconsistent with
      the Plan as may be reflected in the applicable Award Agreement. Stock
      Appreciation Rights may be granted alone (“Free Standing Rights”)
      or in tandem with an Option granted under the Plan (“Related
      Rights”).

	 	 	 
		(b) 	
      Grant Requirements. Any Related Right that relates
      to a Non-qualified Stock Option may be granted at the same time the Option
      is granted or at any time thereafter but before the exercise or expiration of the Option. Any
      Related Right that relates to an Incentive Stock Option must be granted at
  the same time the Incentive Stock Option is granted.








- 16 -

	 	(c) 	
      Term of Stock Appreciation Rights. The term of a
      Stock Appreciation Right granted under the Plan shall be determined by the
      Committee; provided, however, no Stock Appreciation Right shall be
      exercisable later than the tenth anniversary of the Grant Date.

	 	 	 
	 	(d) 	
      Vesting of Stock Appreciation Rights. Each Stock
      Appreciation Right may, but need not, vest and therefore become
      exercisable in periodic installments that may, but need not, be equal. The
      Stock Appreciation Right may be subject to such other terms and conditions
      on the time or times when it may be exercised as the Committee may deem
      appropriate. The vesting provisions of individual Stock Appreciation
      Rights may vary. No Stock Appreciation Right may be exercised for a
      fraction of a share of Common Stock. The Committee may, but shall not be
      required to, provide for an acceleration of vesting and exercisability in
      the terms of any Stock Appreciation Right upon the occurrence of a
      specified event.

	 	 	 
	 	(e) 	
      Exercise and Payment. Upon exercise of a Stock
      Appreciation Right, the holder shall be entitled to receive from the
      Company an amount equal to the number of shares of Common Stock subject to
      the Stock Appreciation Right that is being exercised multiplied by the
      excess of (i) the Fair Market Value of a share of Common Stock on the date
      the Award is exercised, over (ii) the exercise price specified in the
      Stock Appreciation Right or related Option. Payment with respect to the
      exercise of a Stock Appreciation Right shall be made on the date of
      exercise. Payment shall be made in the form of shares of Common Stock
      (with or without restrictions as to substantial risk of forfeiture and
      transferability, as determined by the Committee in its sole discretion),
      cash or a combination thereof, as determined by the Committee.

	 	 	 
	 	(f) 	
      Exercise Price. The exercise price of a Free
      Standing Stock Appreciation Right shall be determined by the Committee. A
      Related Right granted simultaneously with or subsequent to the grant of an
      Option and in conjunction therewith or in the alternative thereto shall
      have the same exercise price as the related Option, shall be transferable
      only upon the same terms and conditions as the related Option, and shall
      be exercisable only to the same extent as the related Option; provided,
      however, that a Stock Appreciation Right, by its terms, shall be
      exercisable only when the Fair Market Value per share of Common Stock
      subject to the Stock Appreciation Right and related Option exceeds the
      exercise price per share thereof and no Stock Appreciation Rights may be
      granted in tandem with an Option unless the Committee determines that the
      requirements of Section 7.1(b) are satisfied.

	 	 	 
	 	(g) 	
      Reduction in the Underlying Option Shares. Upon
      any exercise of a Related Right, the number of shares of Common Stock for
      which any related Option shall be exercisable shall be reduced by the
      number of shares for which the Stock Appreciation Right has been
      exercised. The number of shares of Common Stock for which a Related Right
      shall be exercisable shall be reduced upon any exercise of any related
      Option by the number of shares of Common Stock for which such Option has
      been exercised.








- 17 -

	7.2 	Restricted Awards.




	 	(a) 	
      General. A Restricted Award is an Award of actual
      shares of Common Stock (“Restricted Stock”) or hypothetical Common
      Stock units (“Restricted Stock Units”) having a value equal to the
      Fair Market Value of an identical number of shares of Common Stock, which
      may, but need not, provide that such Restricted Award may not be sold,
      assigned, transferred or otherwise disposed of, pledged or hypothecated as
      collateral for a loan or as security for the performance of any obligation
      or for any other purpose for such period (the “Restricted Period”)
      as the Committee shall determine. Each Restricted Award granted under the
      Plan shall be evidenced by an Award Agreement. Each Restricted Award so
      granted shall be subject to the conditions set forth in this Section 7.2,
      and to such other conditions not inconsistent with the Plan as may be
      reflected in the applicable Award Agreement.

	 	 	 
	 	(b) 	
      Restricted Stock and Restricted Stock
  Units.




	 	(i) 	
      Each Participant granted Restricted Stock shall execute
      and deliver to the Company an Award Agreement with respect to the
      Restricted Stock setting forth the restrictions and other terms and
      conditions applicable to such Restricted Stock. If the Committee
      determines that the Restricted Stock shall be held by the Company or in
      escrow rather than delivered to the Participant pending the release of the
      applicable restrictions, the Committee may require the Participant to
      additionally execute and deliver to the Company (A) an escrow agreement
      satisfactory to the Committee, if applicable and (B) the appropriate blank
      stock power with respect to the Restricted Stock covered by such
      agreement. If a Participant fails to execute an agreement evidencing an
      Award of Restricted Stock and, if applicable, an escrow agreement and
      stock power, the Award shall be null and void. Subject to the restrictions
      set forth in the Award, the Participant generally shall have the rights
      and privileges of a shareholder as to such Restricted Stock, including the
      right to vote such Restricted Stock and the right to receive dividends;
      provided that, any cash dividends and stock dividends with respect to the
      Restricted Stock shall be withheld by the Company for the Participant’s
      account, and interest may be credited on the amount of the cash dividends
      withheld at a rate and subject to such terms as determined by the
      Committee. The cash dividends or stock dividends so withheld by the
      Committee and attributable to any particular share of Restricted Stock
      (and earnings thereon, if applicable) shall be distributed to the
      Participant in cash or, at the discretion of the Committee, in shares of
      Common Stock having a Fair Market Value equal to the amount of such
      dividends, if applicable, upon the release of restrictions on such share
      and, if such share is forfeited, the Participant shall have no right to
      such dividends.

	 	 	 
	 	(ii) 	
      The terms and conditions of a grant of Restricted Stock
      Units shall be reflected in an Award Agreement. No shares of Common Stock
      shall be issued at the time a Restricted Stock Unit is granted, and the
      Company will not be required to set aside a fund for the payment of any
      such Award. A Participant shall have no voting rights with respect to any
      Restricted Stock Units granted hereunder. At the discretion of the
      Committee, each Restricted Stock Unit (representing
one share of Common Stock) may be credited
with cash and stock dividends paid by the Company in respect of one share of
Common Stock (“Dividend Equivalents”). Dividend Equivalents shall be
withheld by the Company for the Participant’s account, and interest may be
credited on the amount of cash Dividend Equivalents withheld at a rate and
subject to such terms as determined by the Committee. Dividend Equivalents
credited to a Participant’s account and attributable to any particular
Restricted Stock Unit (and earnings thereon, if applicable) shall be distributed
in cash or, at the discretion of the Committee, in shares of Common Stock having
a Fair Market Value equal to the amount of such Dividend Equivalents and
earnings, if applicable, to the Participant upon settlement of such Restricted
Stock Unit and, if such Restricted Stock Unit is forfeited, the Participant
shall have no right to such Dividend Equivalents.








- 18 -

	 	(c) 	Restrictions 



	 	(i) 	
      Restricted Stock awarded to a Participant shall be
      subject to the following restrictions until the expiration of the
      Restricted Period, and to such other terms and conditions as may be set
      forth in the applicable Award Agreement: (A) if an escrow arrangement is
      used, the Participant shall not be entitled to delivery of the stock
      certificate; (B) the shares shall be subject to the restrictions on
      transferability set forth in the Award Agreement; (C) the shares shall be
      subject to forfeiture to the extent provided in the applicable Award
      Agreement; and (D) to the extent such shares are forfeited, the stock
      certificates shall be returned to the Company, and all rights of the
      Participant to such shares and as a shareholder with respect to such
      shares shall terminate without further obligation on the part of the
      Company.

	 	 	 
	 	(ii) 	
      Restricted Stock Units awarded to any Participant shall
      be subject to (A) forfeiture until the expiration of the Restricted
      Period, and satisfaction of any applicable Performance Goals during such
      period, to the extent provided in the applicable Award Agreement, and to
      the extent such Restricted Stock Units are forfeited, all rights of the
      Participant to such Restricted Stock Units shall terminate without further
      obligation on the part of the Company and (B) such other terms and
      conditions as may be set forth in the applicable Award
Agreement.

	 	 	 
	 	(iii) 	
      The Committee shall have the authority to remove any or
      all of the restrictions on the Restricted Stock and Restricted Stock Units
      whenever it may determine that, by reason of changes in Applicable Laws or
      other changes in circumstances arising after the date the Restricted Stock
      or Restricted Stock Units are granted, such action is
  appropriate.




	 	(d) 	
      Restricted Period. With respect to Restricted
      Awards, the Restricted Period shall commence on the Grant Date and end at
      the time or times set forth on a schedule established by the Committee in
      the applicable Award Agreement.







- 19 -

No Restricted Award may be granted or settled for a fraction of
a share of Common Stock. The Committee may, but shall not be required to,
provide for an acceleration of vesting in the terms of any Award Agreement upon
the occurrence of a specified event.

	 	(e) 	
      Delivery of Restricted Stock and Settlement of
      Restricted Stock Units. Upon the expiration of the Restricted Period
      with respect to any shares of Restricted Stock, the restrictions set forth
      in Section 7.2(c) and the applicable Award Agreement shall be of no
      further force or effect with respect to such shares, except as set forth
      in the applicable Award Agreement. If an escrow arrangement is used, upon
      such expiration, the Company shall deliver to the Participant, or his or
      her beneficiary, without charge, the stock certificate evidencing the
      shares of Restricted Stock which have not then been forfeited and with
      respect to which the Restricted Period has expired (to the nearest full
      share) and any cash dividends or stock dividends credited to the
      Participant’s account with respect to such Restricted Stock and the
      interest thereon, if any. Upon the expiration of the Restricted Period
      with respect to any outstanding Restricted Stock Units, the Company shall
      deliver to the Participant, or his or her beneficiary, without charge, one
      share of Common Stock for each such outstanding Restricted Stock Unit
      (“Vested Unit”) and cash equal to any Dividend Equivalents credited
      with respect to each such Vested Unit in accordance with Section
      7.2(b)(ii) hereof and the interest thereon or, at the discretion of the
      Committee, in shares of Common Stock having a Fair Market Value equal to
      such Dividend Equivalents and the interest thereon, if any; provided,
      however, that, if explicitly provided in the applicable Award Agreement,
      the Committee may, in its sole discretion, elect to pay cash or part cash
      and part Common Stock in lieu of delivering only shares of Common Stock
      for Vested Units. If a cash payment is made in lieu of delivering shares
      of Common Stock, the amount of such payment shall be equal to the Fair
      Market Value of the Common Stock as of the date on which the Restricted
      Period lapsed with respect to each Vested Unit.

	 	 	 
	 	(f) 	
      Stock Restrictions. Each certificate representing
      Restricted Stock awarded under the Plan shall bear a legend in such form
      as the Company deems appropriate.




	7.3 	Performance Compensation Awards.
  



	 	(a) 	
      General. The Committee shall have the authority,
      at the time of grant of any Award described in this Plan (other than
      Options and Stock Appreciation Rights granted with an exercise price equal
      to or greater than the Fair Market Value per share of Common Stock on the
      Grant Date), to designate such Award as a Performance Compensation Award
      in order to qualify such Award as “performance-based compensation” under
      Section 162(m) of the Code. In addition, the Committee shall have the
      authority to make an Award of a cash bonus to any Participant and
      designate such Award as a Performance Compensation Award in order to
      qualify such Award as “performance- based compensation” under Section
      162(m) of the Code.

	 	 	 
	 	(b) 	
      Eligibility. The Committee will, in its sole
      discretion, designate within the first 90 days of a Performance Period
      (or, if longer or shorter, within the maximum period allowed under Section
      162(m) of the Code) which Participants will be eligible to receive
      Performance Compensation Awards in respect of such Performance Period.
      However, designation of a Participant eligible to receive an Award
      hereunder for a Performance Period shall not in any manner entitle the Participant to
      receive payment in respect of any Performance Compensation Award for such
      Performance Period. The determination as to whether or not such
      Participant becomes entitled to payment in respect of any Performance
      Compensation Award shall be decided solely in accordance with the
      provisions of this Section 7.3. Moreover, designation of a Participant
      eligible to receive an Award hereunder for a particular Performance Period
      shall not require designation of such Participant eligible to receive an
      Award hereunder in any subsequent Performance Period and designation of
      one person as a Participant eligible to receive an Award hereunder shall
      not require designation of any other person as a Participant eligible to
      receive an Award hereunder in such period or in any other
period.








- 20 -

	 	(c) 	
      Discretion of Committee with Respect to Performance
      Compensation Awards. With regard to a particular Performance Period,
      the Committee shall have full discretion to select the length of such
      Performance Period (provided any such Performance Period shall be not less
      than one fiscal quarter in duration), the type(s) of Performance
      Compensation Awards to be issued, the Performance Criteria that will be
      used to establish the Performance Goal(s), the kind(s) and/or level(s) of
      the Performance Goal(s) that is (are) to apply to the Company and the
      Performance Formula. Within the first 90 days of a Performance Period (or,
      if longer or shorter, within the maximum period allowed under Section
      162(m) of the Code), the Committee shall, with regard to the Performance
      Compensation Awards to be issued for such Performance Period, exercise its
      discretion with respect to each of the matters enumerated in the
      immediately preceding sentence of this Section 7.3(c) and record the same
      in writing.

	 	 	 
	 	(d) 	
      Payment of Performance Compensation
  Awards





	 	(i) 	
      Condition to Receipt of Payment. Unless otherwise
      provided in the applicable Award Agreement, a Participant must be employed
      by the Company on the last day of a Performance Period to be eligible for
      payment in respect of a Performance Compensation Award for such
      Performance Period.

	 	 	 
	 	(ii) 	
      Limitation. A Participant shall be eligible to
      receive payment in respect of a Performance Compensation Award only to the
      extent that: (A) the Performance Goals for such period are achieved; and
      (B) the Performance Formula as applied against such Performance Goals
      determines that all or some portion of such Participant’s Performance
      Compensation Award has been earned for the Performance Period.

	 	 	 
	 	(iii) 	
      Certification. Following the completion of a
      Performance Period, the Committee shall review and certify in writing
      whether, and to what extent, the Performance Goals for the Performance
      Period have been achieved and, if so, calculate and certify in writing the
      amount of the Performance Compensation Awards earned for the period based
      upon the Performance Formula. The Committee shall then determine the
      actual size of each Participant’s Performance Compensation Award for the
      Performance Period and, in so doing, may apply Negative Discretion in
      accordance with Section 7.3(d)(iv) hereof, if and when it deems
      appropriate.







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	 	(iv) 	
      Use of Discretion. In determining the actual size
      of an individual Performance Compensation Award for a Performance Period,
      the Committee may reduce or eliminate the amount of the Performance
      Compensation Award earned under the Performance Formula in the Performance
      Period through the use of Negative Discretion if, in its sole judgment,
      such reduction or elimination is appropriate. The Committee shall not have
      the discretion to (A) grant or provide payment in respect of Performance
      Compensation Awards for a Performance Period if the Performance Goals for
      such Performance Period have not been attained or (B) increase a
      Performance Compensation Award above the maximum amount payable under
      Section 7.3(d)(i) of the Plan.

	 	 	 
	 	(v) 	
      Timing of Award Payments. Performance Compensation
      Awards granted for a Performance Period shall be paid to Participants as
      soon as administratively practicable following completion of the
      certifications required by this Section 7.3.



8. Securities Law Compliance. 

     Each Award Agreement shall
provide that no shares of Common Stock shall be purchased or sold thereunder
unless and until (a) any then applicable requirements of state or federal laws
and regulatory agencies have been fully complied with to the satisfaction of the
Company and its counsel and (b) if required to do so by the Company, the
Participant has executed and delivered to the Company a letter of investment
intent in such form and containing such provisions as the Committee may require.
The Company shall use reasonable efforts to seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to grant Awards and to issue and sell shares of Common Stock upon
exercise of the Awards; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Award or
any Common Stock issued or issuable pursuant to any such Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of Common Stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell Common Stock
upon exercise of such Awards unless and until such authority is obtained.

9. Use of Proceeds from Stock. 

     Proceeds from the sale of Common
Stock pursuant to Awards, or upon exercise thereof, shall constitute general
funds of the Company.

10. Miscellaneous.

10.1 Acceleration of Exercisability and Vesting. The
Committee shall have the power to accelerate the time at which an Award may
first be exercised or the time during which an Award or any part thereof will
vest in accordance with the Plan, notwithstanding the provisions in the Award
stating the time at which it may first be exercised or the time during which it
will vest.

10.2 Shareholder Rights. Except as provided in the Plan
or an Award Agreement, no Participant shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares of Common Stock
subject to such Award unless and until such Participant has satisfied all
requirements for exercise of the Award pursuant to its terms and no adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions of other rights for which the
record date is prior to the date such Common Stock certificate is issued, except
as provided in Section 11 hereof.




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10.3 No Employment or Other Service Rights. Nothing in
the Plan or any instrument executed or Award granted pursuant thereto shall
confer upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Award was granted or shall
affect the right of the Company or an Affiliate to terminate (a) the employment
of an Employee with or without notice and with or without Cause or (b) the
service of a Director pursuant to the By-laws of the Company or an Affiliate,
and any applicable provisions of the corporate law of the state in which the
Company or the Affiliate is incorporated, as the case may be.

10.4 Transfer; Approved Leave of Absence. For purposes
of the Plan, no termination of employment by an Employee shall be deemed to
result from either (a) a transfer to the employment of the Company from an
Affiliate or from the Company to an Affiliate, or from one Affiliate to another,
or (b) an approved leave of absence for military service or sickness, or for any
other purpose approved by the Company, if the Employee’s right to reemployment
is guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Committee otherwise so provides
in writing, in either case, except to the extent inconsistent with Section 409A
of the Code if the applicable Award is subject thereto.

10.5 Withholding Obligations. To the extent provided by
the terms of an Award Agreement and subject to the discretion of the Committee,
the Participant may satisfy any federal, state or local tax withholding
obligation relating to the exercise or acquisition of Common Stock under an
Award by any of the following means (in addition to the Company’s right to
withhold from any compensation paid to the Participant by the Company) or by a
combination of such means: (a) tendering a cash payment; (b) authorizing the
Company to withhold shares of Common Stock from the shares of Common Stock
otherwise issuable to the Participant as a result of the exercise or acquisition
of Common Stock under the Award, provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to
be withheld by law; or (c) delivering to the Company previously owned and
unencumbered shares of Common Stock of the Company.

11. Adjustments Upon Changes in Stock.

     In the event of changes in the
outstanding Common Stock or in the capital structure of the Company by reason of
any stock or extraordinary cash dividend, stock split, reverse stock split, an
extraordinary corporate transaction such as any recapitalization,
reorganization, merger, consolidation, combination, exchange, or other relevant
change in capitalization occurring after the Grant Date of any Award, Awards
granted under the Plan and any Award Agreements, the exercise price of Options
and Stock Appreciation Rights and the maximum number of shares of Common Stock
subject to all Awards stated in Section 4 will be equitably adjusted or
substituted, as to the number, price or kind of a share of Common Stock or other
consideration subject to such Awards to the extent necessary to preserve the
economic intent of such Award. In the case of adjustments made pursuant to this
Section 11, unless the Committee specifically determines that such adjustment is
in the best interests of the Company or its Affiliates, the Committee shall, in
the case of Incentive Stock Options, ensure that any adjustments under this
Section 11 will not constitute a modification, extension or renewal of the
Incentive Stock Options within the meaning of Section 424(h)(3) of the Code and
in the case of Non-qualified Stock Options, ensure that any adjustments under
this Section 11 will not constitute a modification of such Non-qualified Stock Options within the meaning of Section 409A
of the Code. Any adjustments made under this Section 11 shall be made in a
manner which does not adversely affect the exemption provided pursuant to Rule
16b-3 under the Exchange Act. Further, with respect to Awards intended to
qualify as “performance-based compensation” under Section 162(m) of the Code,
any adjustments or substitutions will not cause the Company to be denied a tax
deduction on account of Section 162(m) of the Code. The Company shall give each
Participant notice of an adjustment hereunder and, upon notice, such adjustment
shall be conclusive and binding for all purposes.




- 23 -

12. Effect of Change in Control.

12.1 Unless otherwise provided in an Award Agreement,
notwithstanding any provision of the Plan to the contrary:

	 	(a) 	
      In the event of a Change in Control, all Options and
      Stock Appreciation Rights shall become immediately exercisable with
      respect to 100% of the shares subject to such Options or Stock
      Appreciation Rights, and/or the Restricted Period shall expire immediately
      with respect to 100% of the shares of Restricted Stock or Restricted Stock
      Units.

	 	 	 
	 	(b) 	
      With respect to Performance Compensation Awards, in the
      event of a Change in Control, all Performance Goals or other vesting
      criteria will be deemed achieved at 100% of target levels and all other
      terms and conditions will be deemed met.



To the extent practicable, any actions taken by the Committee
under the immediately preceding clauses (a) and (b) shall occur in a manner and
at a time which allows affected Participants the ability to participate in the
Change in Control with respect to the shares of Common Stock subject to their
Awards.

12.2 In addition, in the event of a Change in Control, the
Committee may in its discretion and upon at least 10 days’ advance notice to the
affected persons, cancel any outstanding Awards and pay to the holders thereof,
in cash or stock, or any combination thereof, the value of such Awards based
upon the price per share of Common Stock received or to be received by other
shareholders of the Company in the event. In the case of any Option or Stock
Appreciation Right with an exercise price (or SAR Exercise Price in the case of
a Stock Appreciation Right) that equals or exceeds the price paid for a share of
Common Stock in connection with the Change in Control, the Committee may cancel
the Option or Stock Appreciation Right without the payment of consideration
therefor.

12.3 The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to all or substantially all of
the assets and business of the Company and its Affiliates, taken as a whole.

13. Amendment of the Plan and Awards.

13.1 Amendment of Plan. The Board at any time, and from
time to time, may amend or terminate the Plan. However, except as provided in
Section 11 relating to adjustments upon changes in Common Stock and Section
13.3, no amendment shall be effective unless approved by the shareholders of the
Company to the extent shareholder approval is necessary to satisfy any
Applicable Laws. At the time of such amendment, the Board shall determine, upon advice
from counsel, whether such amendment will be contingent on shareholder
approval.




- 24 -

13.2 Shareholder Approval. The Board may, in its sole
discretion, submit any other amendment to the Plan for shareholder approval,
including, but not limited to, amendments to the Plan intended to satisfy the
requirements of Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive officers.

13.3 Contemplated Amendments. It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees, Consultants and Directors
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options or to the nonqualified deferred compensation provisions of Section 409A
of the Code and/or to bring the Plan and/or Awards granted under it into
compliance therewith.

13.4 No Impairment of Rights. Rights under any Award
granted before amendment of the Plan shall not be impaired by any amendment of
the Plan unless (a) the Company requests the consent of the Participant and (b)
the Participant consents in writing.

13.5 Amendment of Awards. The Committee at any time, and
from time to time, may amend the terms of any one or more Awards; provided,
however, that the Committee may not affect any amendment which would otherwise
constitute an impairment of the rights under any Award unless (a) the Company
requests the consent of the Participant and (b) the Participant consents in
writing.

14. General Provisions.

14.1 Forfeiture Events. The Committee may specify in an
Award Agreement that the Participant’s rights, payments and benefits with
respect to an Award shall be subject to reduction, cancellation, forfeiture or
recoupment upon the occurrence of certain events, in addition to applicable
vesting conditions of an Award. Such events may include, without limitation,
breach of non-competition, non-solicitation, confidentiality, or other
restrictive covenants that are contained in the Award Agreement or otherwise
applicable to the Participant, a termination of the Participant’s Continuous
Service for Cause, or other conduct by the Participant that is detrimental to
the business or reputation of the Company and/or its Affiliates.

14.2 Clawback. Notwithstanding any other provisions in
this Plan, any Award which is subject to recovery under any law, government
regulation or stock exchange listing requirement, will be subject to such
deductions and clawback as may be required to be made pursuant to such law,
government regulation or stock exchange listing requirement (or any policy
adopted by the Company pursuant to any such law, government regulation or stock
exchange listing requirement).

14.3 Other Compensation Arrangements. Nothing contained
in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to shareholder approval if such approval is
required; and such arrangements may be either generally applicable or applicable
only in specific cases.

14.4 Sub-plans. The Committee may from time to time
establish sub-plans under the Plan for purposes of satisfying blue sky,
securities, tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain
such limitations and other terms and conditions as the Committee determines are
necessary or desirable. All sub- plans shall be deemed a part of the Plan, but
each sub-plan shall apply only to the Participants in the jurisdiction for which
the sub-plan was designed.




- 25 -

14.5 Deferral of Awards. The Committee may establish one
or more programs under the Plan to permit selected Participants the opportunity
to elect to defer receipt of consideration upon exercise of an Award,
satisfaction of performance criteria, or other event that absent the election
would entitle the Participant to payment or receipt of shares of Common Stock or
other consideration under an Award. The Committee may establish the election
procedures, the timing of such elections, the mechanisms for payments of, and
accrual of interest or other earnings, if any, on amounts, shares or other
consideration so deferred, and such other terms, conditions, rules and
procedures that the Committee deems advisable for the administration of any such
deferral program.

14.6 Unfunded Plan. The Plan shall be unfunded. Neither
the Company, the Board nor the Committee shall be required to establish any
special or separate fund or to segregate any assets to assure the performance of
its obligations under the Plan.

14.7 Delivery. Upon exercise of a right granted under
this Plan, the Company shall issue Common Stock or pay any amounts due within a
reasonable period of time thereafter. Subject to any statutory or regulatory
obligations the Company may otherwise have, for purposes of this Plan, 30 days
shall be considered a reasonable period of time.

14.8 No Fractional Shares. No fractional shares of
Common Stock shall be issued or delivered pursuant to the Plan. The Committee
shall determine whether cash, additional Awards or other securities or property
shall be issued or paid in lieu of fractional shares of Common Stock or whether
any fractional shares should be rounded, forfeited or otherwise eliminated.

14.9 Other Provisions. The Award Agreements authorized
under the Plan may contain such other provisions not inconsistent with this
Plan, including, without limitation, restrictions upon the exercise of the
Awards, as the Committee may deem advisable.

14.10 Section 409A. The Plan is intended to comply with
Section 409A of the Code to the extent subject thereto, and, accordingly, to the
maximum extent permitted, the Plan shall be interpreted and administered to be
in compliance therewith. Any payments described in the Plan that are due within
the “short-term deferral period” as defined in Section 409A of the Code shall
not be treated as deferred compensation unless Applicable Laws require
otherwise. Notwithstanding anything to the contrary in the Plan, to the extent
required to avoid accelerated taxation and tax penalties under Section 409A of
the Code, amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to the Plan during the six (6) month period
immediately following the Participant’s termination of Continuous Service shall
instead be paid on the first payroll date after the six-month anniversary of the
Participant’s separation from service (or the Participant’s death, if earlier).
Notwithstanding the foregoing, neither the Company nor the Committee shall have
any obligation to take any action to prevent the assessment of any excise tax or
penalty on any Participant under Section 409A of the Code and neither the
Company nor the Committee will have any liability to any Participant for such
tax or penalty.

14.11 Disqualifying Dispositions. Any Participant who
shall make a “disposition” (as defined in Section 424 of the Code) of all or any
portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the Grant Date of
such Incentive Stock Option or within one year after the issuance of the shares
of Common Stock acquired upon exercise of such Incentive Stock Option (a
“Disqualifying Disposition”) shall be required to immediately advise the
Company in writing as to the occurrence of the sale and the price realized upon
the sale of such shares of Common Stock.




- 26 -

14.12 Section 16. It is the intent of the Company that
the Plan satisfy, and be interpreted in a manner that satisfies, the applicable
requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act
so that Participants will be entitled to the benefit of Rule 16b-3, or any other
rule promulgated under Section 16 of the Exchange Act, and will not be subject
to short-swing liability under Section 16 of the Exchange Act. Accordingly, if
the operation of any provision of the Plan would conflict with the intent
expressed in this Section 14.12, such provision to the extent possible shall be
interpreted and/or deemed amended so as to avoid such conflict.

14.13 Section 162(m). To the extent the Committee issues
any Award that is intended to be exempt from the deduction limitation of Section
162(m) of the Code, the Committee may, without shareholder or grantee approval,
amend the Plan or the relevant Award Agreement retroactively or prospectively to
the extent it determines necessary in order to comply with any subsequent
clarification of Section 162(m) of the Code required to preserve the Company’s
federal income tax deduction for compensation paid pursuant to any such
Award.

14.14 Beneficiary Designation. Each Participant under
the Plan may from time to time name any beneficiary or beneficiaries by whom any
right under the Plan is to be exercised in case of such Participant’s death.
Each designation will revoke all prior designations by the same Participant,
shall be in a form reasonably prescribed by the Committee and shall be effective
only when filed by the Participant in writing with the Company during the
Participant’s lifetime.

14.15 Expenses. The costs of administering the Plan
shall be paid by the Company.

14.16 Severability. If any of the provisions of the Plan
or any Award Agreement is 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.

14.17 Plan Headings. The headings in the Plan are for
purposes of convenience only and are not intended to define or limit the
construction of the provisions hereof.

14.18 Non-Uniform Treatment. The Committee’s
determinations under the Plan need not be uniform and may be made by it
selectively among persons who are eligible to receive, or actually receive,
Awards. Without limiting the generality of the foregoing, the Committee shall be
entitled to make non-uniform and selective determinations, amendments and
adjustments, and to enter into nonuniform and selective Award Agreements.

15. Effective Date of Plan.

     The Plan shall become effective
as of the Effective Date, but no Award shall be exercised (or, in the case of a
stock Award, shall be granted) unless and until the Plan has been approved by
the shareholders of the Company, which approval shall be within twelve (12)
months before or after the date the Plan is adopted by the Board.




- 27 -

16. Termination or Suspension of the
Plan.

     The Plan shall terminate
automatically on October 7, 2023. No Award shall be granted pursuant to the Plan
after such date, but Awards theretofore granted may extend beyond that date. The
Board may suspend or terminate the Plan at any earlier date pursuant to Section
13.1 hereof. No Awards may be granted under the Plan while the Plan is suspended
or after it is terminated. Unless the Company determines to submit Section 7.3
of the Plan and the definition of “Performance Goal” and “Performance Criteria”
to the Company’s shareholders at the first shareholder meeting that occurs in
the fifth year following the year in which the Plan was last approved by
shareholders (or any earlier meeting designated by the Board), in accordance
with the requirements of Section 162(m) of the Code, and such shareholder
approval is obtained, then no further Performance Compensation Awards shall be
made to Covered Employees under Section 7.3 after the date of such annual
meeting, but the Plan may continue in effect for Awards to Participants not in
accordance with Section 162(m) of the Code.

17. Choice of Law.

     The law of the State of Nevada
shall govern all questions concerning the construction, validity and
interpretation of this Plan, without regard to such state’s conflict of law
rules.

As adopted by the Board of Directors of The Alkaline Water
Company Inc. on October 7, 2013. 

As approved by the shareholders of The Alkaline Water Company
Inc. on October 7, 2013.