Document:

Exhibit 10.38

Escalade, Incorporated

Schedule of Director Compensation

 Each
non-employee director of Escalade, Incorporated currently is entitled to
receive an annual cash retainer of $25,000 with the exception of the Chairman
of the Board, who is entitled to receive an annual cash retainer of $50,000.
Each member of the Audit Committee is entitled to receive an additional annual
fee of $5,000 except for the Audit Committee Chairman who is entitled to
receive $15,000. Each member of the Compensation Committee is entitled to
receive an additional annual fee of $3,000 except for the Compensation
Committee Chairman who is entitled to receive $10,000. All Directors are
entitled to receive an additional fee of $1,000 per board meeting attended in
excess of eight meetings per year. Members of the Audit Committee and
Compensation Committee receive additional fees of $1,000 per committee meeting
attended in excess of six and four meetings respectively. Each non-employee
board member receives restricted stock units (“RSU”) annually and in 2008 this
award amounted to 1,250 RSU’s per director. In 2009, the non-employee members
of the board have all volunteered to take a 10% reduction in all fees in which
they are entitled to receive.

 Under the
terms of the Escalade, Incorporated 2007 Incentive Plan, Directors can elect to
receive some or all of the fees earned in shares of the Company’s common stock
or in the form of RSU’s which vest after one year. In 2008, there were 2,568
shares issued and 21,153 RSU’s issued pursuant to the plan. In 2008, directors
Baalmann, Williams and White opted to receive 100% of the fees they were
entitled to in the form of RSU’s. Directors Griffin, Matthews and Savitsky
received their fees in cash.Exhibit 10.39

Escalade, Incorporated

Schedule of Executive Officer Compensation

Compensation
for the executive officers of Escalade, Incorporated consists of a base salary,
bonuses and long-term incentives in the form of stock option grants or
restricted stock unit grants.

Base Salary

In general, base
salaries are set at the beginning of each year based upon the Company’s income
level generated in the prior year, any changes in the level of responsibility
and the subjective individual performance review conducted by the Company’s
Compensation Committee. The 2009 base salaries for the Companies executive
officers are as follows:

	
 

	
 

	
 

	
 

	
 

	
Name

	
Position

	
Annual Base
  Salary

	
 

	 

	 

	 

	
 

	
Robert Griffin (a)

	
Chairman of the Board

	
$  50,580

	
 

	
Robert J. Keller (a)

	
President and Chief
  Executive Officer

	
$ 270,000

	
 

	
Deborah J. Meinert (b)

	
VP Finance, CFO

	
$ 132,000

(a) Messrs
Griffin and Keller were entitled to receive $56,200 and $300,000 respectively
but have voluntarily agreed to a 10% reduction in each of these amounts.

(b) Ms.
Meinert replaced Terry Frandsen, who resigned as VP Finance and CFO of
Escalade, Inc. on January 30, 2009.

Bonuses

Each year the
Company’s Compensation Committee establishes targeted bonuses for its key
executives based on target performance levels for the Company. Performance
targets are based on achieving pre-tax income goals in relation to invested
capital which is defined as beginning shareholder equity plus average bank debt
outstanding. Based on actual results achieved, a bonus pool is accrued for use
in paying bonuses. There are no pre-defined methods for allocating the bonus
pool to any of the key executives; allocation and payment is entirely at the
discretion of the Compensation Committee and Board of Directors.

Long-Term Incentives

Under the
terms of the Escalade, Incorporated 2007 Incentive Plan, executive officers of
the Company are eligible to receive long term incentive compensation in various
forms including stock options and restricted stock units. The Company’s
Compensation Committee has full discretion over the form, amount and timing of
these grants which historically have been annual grants. In its determination
of annul grants, the Compensation Committee considers performance of both the
individual and the Company.

Additional Benefits

Executive
officers are eligible to participate in the Company’s 401(k) retirement plan
and receive Company matching contributions in accordance with the plan terms.
The Company also pays group term life insurance benefits on behalf of executive
officers. The Company’s Chairman of the Board participates in a salary deferral
plan that earns interest on undistributed amounts at the rate of 9% per annum.reeds_10kex1022.htm

    Exhibit
10.22

     

    Appendix
A

     

    REED’S,
INC.

    2007
STOCK INCENTIVE AWARD PLAN

     

    
      Section
1.     Purpose.

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      Section
2.     Definitions.  The
following terms have the respective meanings, in addition to the capitalized
terms defined in Section 1 hereof or as otherwise defined throughout this
document:

    

     

    
      	
              (a)  

            	
              “Affiliate”
      means any entity (other than the Company and any Subsidiary) that is
      designated by the Board as a participating employer under the
      Plan.

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

            	
              “Board”
      means the Company’s Board of
Directors.

            

    

     

    
      	
              (f)  

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

            

    

     

    
      	
              (g)  

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

            

    

     

    
      	
              (h)  

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

            

    

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (j)  

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

            

    

     

    
      	
              (k)  

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

            

    

     

    
      	
              (l)  

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

            

    

     

    
      	
              (m)  

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

            

    

     

    
      	
              (n)  

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

            

    

     

    
      	
              (o)  

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

            

    

     

    
      	
              (p)  

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

            

    

     

    
      	
              (q)  

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

            

    

     

    
      	
              (r)  

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

            

    

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
              (s)  

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

            

    

     

    
      	
              (t)  

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

            

    

     

    
      	
              (u)  

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

            

    

     

    
      	
              (v)  

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

            

    

     

    
      	
              (w)  

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

            

    

     

    
      	
              (x)  

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

            

    

     

    
      	
              (y)  

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

            

    

     

    
      	
              (z)  

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

            

    

     

    
      	
              (aa)  

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

            

    

     

    
      Section
3.     Administration.

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (f)  

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

            

    

     

    
      Section
4.     Stock Subject to
Plan.

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
              (c)  

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

            

    

     

    
      Section
5.     Eligibility.

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      Section
6.     Specific Terms of Awards Granted
Under the Plan.

    

     

    
      	
              (a)  

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

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
              (iv)  

            	
              Disposition upon
      Termination of Employment.

            

    

     

    
      	
              (A)  

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

            

    

     

    
      	
              (B)  

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

            

    

     

    
      	
              (C)  

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

            

    

     

    
      	
              (D)  

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

            

    

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	
              (E)  

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

            

    

     

    
      	
              (v)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      	
              (iv)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (i)  

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

            

    

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      	
              (f)  

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

            

    

     

    
      	
              (g)  

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

            

    

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      Section
7.     Additional Provisions Applicable to
Awards.

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (A)  

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

            

    

     

    
      	
              (B)  

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

            

    

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	
              (C)  

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

            

    

     

    
      	
              (D)  

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

            

    

     

    
      	
              (E)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      Section
8.     Corporate
Transactions.

    

     

    
      	
              (a)  

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

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

            	
              Either
      of the following two actions shall be
taken:

            

    

     

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    
      	
              (A)  

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

            

    

     

    
      	
              (B)  

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

            

    

     

    With
respect to the Company’s establishment of an exercise window, (i) any
exercise of an Option or Share Appreciation Right during such fifteen-day period
shall be conditioned upon the consummation of the event and shall be effective
only immediately before the consummation of the event, and (ii) upon
consummation of any Corporate Transaction, the Plan and all outstanding but
unexercised Options and Share Appreciation Rights shall terminate. The Committee
shall send notice of an event that will result in such a termination to all
individuals who hold Options and Share Appreciation Rights not later than the
time at which the Company gives notice thereof to its stockholders.

     

    
      	
              (b)  

            	
              Corporate
      Transaction in which Awards are Assumed. The Plan, Options, Share
      Appreciation Rights, Restricted Stock Awards, Stock Units, and Other
      Stock-Based Awards theretofore granted shall continue in the manner and
      under the terms so provided in the event of any Corporate Transaction to
      the extent that provision is made in writing in connection with such
      Corporate Transaction for the assumption or continuation of the Options,
      Share Appreciation Rights, Restricted Stock Awards, Stock Units, and Other
      Stock-Based Awards theretofore granted, or for the substitution for such
      Options, Share Appreciation Rights, Restricted Stock Awards, Stock Units,
      and Other Stock-Based Awards for new common stock options and stock
      appreciation rights and new common stock units and restricted stock
      relating to the stock of a successor entity, or a parent or subsidiary
      thereof, with appropriate adjustments as to the number of shares
      (disregarding any consideration that is not common stock) and option and
      stock appreciation right exercise prices in accordance with the provisions
      of Sections 5(b) and 10(c).

            

    

     

    
      Section
9.     Additional
Award Forfeiture Provisions.

    

     

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

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

     

    
      Section
10.     General
Provisions.

    

     

    
      	
              (a)  

            	
              Compliance
      with Legal and Other
Requirements.

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (b)  

            	
              Limits on
      Transferability;
Beneficiaries.

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

            	
              Tax
      Provisions.

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    
      	
              (iii)  

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

            

    

     

    
      	
              (iv)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (f)  

            	
              Unfunded
      Status of Awards, Creation of Trusts.  The Plan is
      intended to constitute an “unfunded” plan for
      equity incentive compensation. With respect to any payments not yet made
      to a Participant or obligations to deliver Stock pursuant to an Award,
      nothing contained in the Plan or any Award shall give any such Participant
      any rights that are greater than those of a general creditor of the
      Company; provided that the Committee may authorize the creation of trusts
      and deposit therein cash, Stock, other Awards or other property, or make
      other arrangements to meet the Company’s obligations under the Plan. Such
      trusts or other arrangements shall be consistent with the “unfunded” status of the
      Plan unless the Committee otherwise
determines.

            

    

     

    
      	
              (g)  

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

            

    

     

    
      	
              (h)  

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

            

    

     

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    
      	
              (i)  

            	
              Compliance
      with Code Section 162(m).

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (j)  

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

            

    

     

    
      	
              (k)  

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

            

    

     

    
      	
              (l)  

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

            

    

     

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    
      	
              (m)  

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

            

    

     

    
      	
              (n)  

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

            

    

     

    
      	
              (o)  

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

            

    

     

    
      	
              (p)  

            	
              Adoption.

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

     

     

    REEDS,
INC.

     

    By: /Christopher J. Reed/        

    Christopher
J. Reed

    Chief
Executive Officer

     

     

     

     

    18

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