EXHIBIT 10.1

 

MERION, INC.

2018 OMNIBUS EQUITY PLAN

 

ARTICLE 1

GENERAL PROVISIONS

 

1.1.

PURPOSE OF THE PLAN.

 

The Merion, Inc. 2018 Omnibus Equity Plan has been established by Merion, Inc.
to (a) attract and retain high caliber employees, directors, consultants and
independent contractors; (b) motivate Participants, by means of appropriate
incentives, to achieve long-range goals; (c) provide incentive compensation
opportunities that are competitive with those of other similarly-situated
companies; and (d) further align Participants’ interests with those of the
Corporation’s stockholders through compensation that is based on the
Corporation’s common stock; and thereby promote the long-term financial interest
of the Corporation, including the growth in value of the Corporation’s equity
and enhancement of long-term stockholder return.

 

Capitalized terms shall have the meanings assigned to such terms in Section 9 of
the Plan.

 

1.2.

TYPES OF AWARDS AVAILABLE UNDER THE PLAN.

 

The Plan provides for five types of Awards:

 

Options - the Option Grant Program under which Eligible Persons may be granted
Incentive Stock Options or Non-Statutory Stock Options to purchase Shares is set
forth in Article 2;

 

Stock Appreciation Rights - the Stock Appreciation Rights Program under which
Eligible Persons may be granted a right to receive the appreciation in the Fair
Market Value of Shares in the form of cash or Stock is set forth in Article 3;

 

Restricted Stock - the Restricted Stock Program under which Eligible Persons may
be issued Shares, subject to certain conditions and restrictions, is set forth
in Article 4;

 

Unrestricted Stock: the Unrestricted Stock Program under which Eligible Persons
may be issued Shares, is set forth in Article 5; and

 

Restricted Stock Units - the Restricted Stock Unit Program under which Eligible
Persons may be granted a right to receive Stock upon the satisfaction of certain
conditions and restrictions is set forth in Article 6.

 

The provisions of Articles 1, 7 (to the extent applicable), 8 and 9 apply to
each type of Award made under the Plan and govern the interests of all persons
under the Plan.

 

1.3.

ADMINISTRATION OF THE PLAN.

 

(a)

General Administration. The Plan shall be administered and interpreted by the
Board (as designated pursuant to Paragraph (b)). Subject to the express
provisions of the Plan, the Board shall have authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the Award Agreements by which Awards shall
be evidenced (which shall not be inconsistent with the terms of the Plan), and
to make all other determinations necessary or advisable for the administration
of the Plan, all of which determinations shall be final, binding and conclusive.

 

  A-1

   

 

(b)

Powers of Board. The Board may make one or more Awards under the Plan to a
Participant. The Board shall decide which Eligible Persons shall receive an
Award and when to grant an Award, the type of Award that it shall grant and the
number of Shares covered by the Award. The Board shall also decide the terms,
conditions, performance criteria, restrictions and other provisions of the
Award. The Board may grant a single Award or an Award in combination with
another Award(s) to a Participant. The Board may grant an Award as an alternate
to or replacement of an existing Award under the Plan or award under any other
compensation plan or arrangement of the Corporation or a Related Corporation,
including a plan of any entity acquired by the Corporation or a Related
Corporation, upon the cancellation of the existing award; provided, that such
grant of an alternate or replacement Award may be made only if the alternate or
replacement Award does not constitute a repricing of the existing award (as
limited by Section 1.5(c) of the Plan). In making Award decisions, the Board may
take into account the nature of services rendered by the individual, the
individual’s present and potential contribution to the Corporation’s success and
such other factors as the Board, in its sole discretion, deems relevant.

 

 

The Board shall interpret the Plan, establish and rescind any rules and
regulations relating to the Plan, decide the terms and provisions of any Award
Agreements made under the Plan, and determine how to administer the Plan. The
Board also shall decide administrative methods for the exercise of Stock
Options. Each Board decision shall be final, conclusive and binding on all
parties.

 

(c)

Delegation by Board. Unless prohibited by applicable law or the applicable rules
of a stock exchange, the Board may allocate all or some of its responsibilities
and powers to any one or more of its members or a Committee thereof. The Board
also may delegate some or all of it administrative duties and powers to any
Employee, including officers.

 

(d)

Information to be Furnished to Board. The records of the Corporation and Related
Corporations as to an Eligible Person’s or Participant’s employment, termination
of employment, performance of Services, termination of Services, leave of
absence, reemployment and compensation shall be conclusive on all persons unless
determined to be manifestly incorrect. Participants and other persons entitled
to benefits under the Plan must, as a condition to the receipt or settlement of
any Award hereunder, furnish the Board with such evidence, data or information
as the Board reasonably considers desirable to carry out the terms of the Plan.

 

(e)

Indemnification. In addition to such other rights of indemnification that they
have as members of the Board or the Board, the Corporation shall indemnify the
members of the Board (and any designees of the Board, as permitted under
Paragraph (e)), to the extent permitted by applicable law, against reasonable
expenses (including, without limitation, attorney’s fees) actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal, to which they or any of them may
be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Award awarded hereunder, and against all amounts
paid by them in settlement thereof (provided such settlement is approved to the
extent required by and in the manner provided by the articles of incorporation
or the bylaws of the Corporation relating to indemnification of the members of
the Board) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to such matters as to which it is
adjudged in such action, suit or proceeding that such Board member or members
(or their designees) did not act in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Corporation.

 

1.4.

ELIGIBILITY.

 

The persons eligible to participate in this Plan (“Eligible Persons”) are as
follows:

 

(a)

Employees. Employees (including Employees who are members of the Board and
Employees who reside in countries other than the United States), provided that
awards of Incentive Stock Options shall only be made to Employees.

 

(b)

Outside Directors. Non-Employee members of the Board or the board of directors
of any Related Corporation.

 

  A-2

   

 

(c)

Consultants. Other consultants and independent advisors who provide bona-fide
services to the Corporation (or any Related Corporation); provided that a
consultant shall not be eligible for the grant of an Award if, at the time of
grant, either the offer or sale of the Corporation’s securities to such
consultant is not exempt under Rule 701 (“Rule 701”) promulgated under the
Securities Act of 1933, as amended, because of the nature of the services that
the consultant is providing to the Corporation or an Affiliate, because the
consultant is not a natural person, or because of any other provision of Rule
701, unless the Corporation determines that such grant need not comply with the
requirements of Rule 701 and will satisfy another exemption under the Securities
Act of 1933, as amended, as well as comply with the securities laws of all other
relevant jurisdictions.

 

(d)

New Hires. Persons who have been offered employment by the Corporation or a
Related Corporation, provided that such a prospective Employee may not be
granted an Incentive Stock Option until he or she becomes an Employee and may
not receive any payment or exercise any right relating to an Award until such
person begins employment with the Corporation or the Related Corporation.

 

1.5

STOCK SUBJECT TO THE PLAN.

 

(a)

Shares Available for Issuance.

 

 

(i)

Reserve. The Stock issuable under the Plan shall be Shares of authorized but
unissued or reacquired Stock, including Shares repurchased by the Corporation as
treasury shares. The maximum number of Shares available for issuance under the
Plan shall be 10,000,000 Shares.

 

 

 

 

(ii)

Share Use. Any Shares granted under the Plan that are forfeited because of the
failure to meet an Award contingency or condition shall again be available for
issuance pursuant to new Awards granted under the Plan. To the extent any Shares
covered by an Award are not delivered to a Participant or beneficiary because
the Award is forfeited or canceled, or the Shares are not delivered because the
Award is settled in cash, such Shares shall not be deemed to have been delivered
for purposes of determining the maximum number of Shares available for delivery
under the Plan. However, should the Exercise Price of an Option under the Plan
be paid with Shares or should Shares otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise or vesting of an Award under the Plan, then such
number of Shares shall be treated for purposes of this Paragraph as having been
issued to the holder. Notwithstanding the above, the total number of Shares
underlying a SAR granted under the Plan that is settled in Stock shall not be
available for subsequent issuance under the Plan regardless of the number of
Shares used to settle the SAR.

 

 

(iii)

Individual Participant Limitations. The maximum aggregate cash amount payable
under the Plan for any Awards intended to constitute performance-based
compensation under Code §162(m) to any Participant in any single calendar year
shall not exceed $1,000,000. Subject to adjustment as provided in Paragraph (b)
below, the maximum aggregate number of Shares (including Options, SARs,
Restricted Stock, and RSUs) that may be granted to any Participant in any
calendar year shall be 1,000,000 Shares.

 

(b)

Adjustment to Shares and Awards.

 

 

(i)

Recapitalization. If the Corporation is involved in a corporate transaction or
any other event which affects the Shares (including, without limitation, any
recapitalization, reclassification, reverse or forward stock split, stock
dividend, extraordinary cash dividend, split-up, spin-off, combination or
exchange of shares), then the Board shall adjust Awards to preserve the benefits
or potential benefits of the Awards as follows:

 

 

(1)

The Board shall take action to adjust the number and kind of Shares that are
issuable under the Plan and the maximum limits for each type of grant;

 

 

(2)

The Board shall take action to adjust the number and kind of Shares subject to
outstanding Awards;

 

 

(3)

The Board shall take action to adjust the Exercise Price or base price of
outstanding Options and Stock Appreciation Rights; and

 

 

(4)

The Board shall make any other equitable adjustments.

 

Only whole Shares shall be issued in making the above adjustments. Further, the
number of Shares available under the Plan or the number of Shares subject to any
outstanding Awards shall be the next lower number of Shares, so that fractions
are rounded downward. Any adjustment to or assumption of ISOs under this Section
shall be made in accordance with Code §424. If the Corporation issues any rights
to subscribe for additional Shares pro rata to holders of outstanding Shares of
the class or classes of stock then set aside for the Plan, then each Participant
shall be entitled to the same rights on the same basis as holders of outstanding
Shares with respect to such portion of the Participant’s Award as is exercised
on or prior to the record date for determining stockholders entitled to receive
or exercise such rights.

 

  A-3

   

 

 

(ii)

Reorganization. If the Corporation is part of any reorganization involving
merger, consolidation, acquisition of the Common Stock or acquisition of the
assets of the Corporation, the Board, in its discretion, may decide that:

 

 

(1)

any or all outstanding Awards shall pertain to and apply, with appropriate
adjustment as determined by the Board, to the securities of the resulting
corporation to which a holder of the number of Shares subject to each such Award
would have been entitled;

 

 

(2)

any or all outstanding Options or SARs shall become immediately fully
exercisable (to the extent permitted under federal or state securities laws) and
shall remain exercisable for the remaining term of the Options or SARs under the
terms of the Plan;

 

 

(3)

any or all Options or SARs shall become immediately fully exercisable (to the
extent permitted under federal or state securities laws) and shall be terminated
after giving at least 30 days’ notice to the Participants to whom such Options
or SARs have been granted; and/or

 

 

(4)

any or all unvested Restricted Stock Units AND Restricted Stock on which
restrictions have not yet lapsed shall become immediately fully vested,
nonforfeitable and payable.

 

 

(iii)

Limits on Adjustments. Any issuance by the Corporation of stock of any class
other than the Stock, or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to any Award, except as
specifically provided otherwise in this Plan. The grant of Awards under the Plan
shall not affect in any way the right or authority of the Corporation to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate or dissolve, or to liquidate, sell
or transfer all or any part of its business or assets. All adjustments the Board
makes under this Plan shall be conclusive.

 

(c)

No Repricings. Except in connection with a corporate transaction involving the
Corporation (including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, or exchange of Shares), the
terms of outstanding Awards may not be amended to reduce the Exercise Price of
outstanding Options or the base price of SARs or to cancel outstanding Options
or SARS in exchange for cash, other awards or Options or SARs with an Exercise
Price or base price that is less than the Exercise Price of the original Options
or base price of the original SARs without stockholder approval.

 

ARTICLE 2

OPTION GRANT PROGRAM

 

2.1

TERMS.

 

The grant of an Option entitles the Participant to purchase the number of Shares
designated in the Award Agreement for such Option at an Exercise Price
established by the Board. Options may be either Incentive Stock Options or
Non-Statutory Stock Options, as determined in the discretion of the Board. Each
Option shall be evidenced by and conditional on an Award Agreement in the form
approved by the Board, which Award Agreement shall specify whether the Option is
an ISO or NSO. No ISO may be granted to any person more than ten (10) years
after the Effective Date of the Plan. Award Agreements need not be identical,
but shall include (through incorporation of provisions hereof, by reference in
the Award Agreements, or otherwise) the terms specified below and be subject to
the provisions of the Plan applicable to such Options.

 

To the extent that the aggregate Fair Market Value of the Shares (determined as
of the respective date or dates of grant), subject to ISOs granted to any
Participant under the Plan and any other option plan of the Corporation or any
Related Corporation that first become exercisable in any calendar year,
including any ISOs which become exercisable on an accelerated basis during such
year, exceeds the sum of One Hundred Thousand Dollars ($100,000), such excess
Options shall be treated as NSOs.

 

  A-4

   

 

2.2

VESTING.

 

Each Option shall vest and become exercisable at such time or times, during such
period, and for such number of Shares as shall be determined by the Board and
set forth in the Award Agreement evidencing the Option; provided that no Option
may be exercisable after the expiration of ten (10) years (or, in the case of an
ISO granted to a 10% Stockholder, five (5) years) from the date of grant.
Vesting may be conditioned on the continued performance of Services or the
achievement of performance conditions measured on an individual, corporate or
other basis, or any combination thereof.

 

2.3

EXERCISE PRICE.

 

The Exercise Price shall be fixed by the Board, provided that the Exercise Price
for any Option shall never be less than one hundred percent (100%) (or, in the
case of a 10% Stockholder receiving an ISO, 110%) of the Fair Market Value per
share of Stock on the Option grant date.

 

2.4

METHOD OF EXERCISE.

 

The Participant may exercise the Option by delivering a written notice of
exercise to the Corporation, in the form and manner designated by the Board. The
notice shall be effective only if accompanied by payment of the Exercise Price
in full. The Board shall have the discretion to provide that the Exercise Price
may be payable, to the extent permitted by applicable law and securities
exchange rules or regulations, in one or more of the forms specified below:

 

(a)

Cash/Check. Cash or check made payable to the Corporation;

 

(b)

Shares Owned. By delivery to the Corporation of Shares owned by the Participant
(by either actual delivery of Shares or by attestation, with such Shares valued
at Fair Market Value as of the day of exercise) with such documentation as the
Board may require or in such other manner as the Board may require;

 

(c)

Share Withholding. By withholding Shares that would otherwise be acquired on
exercise having an aggregate Fair Market Value at the time of exercise equal to
the Exercise Price;

 

(d)

Cashless Exercise. By cashless exercise through delivery of irrevocable
instructions to a broker to promptly deliver to the Corporation the amount of
proceeds from a sale of Shares having a Fair Market Value equal to the Exercise
Price; and/or

 

(e)

Other Forms. In any other form of legal consideration that may be acceptable to
the Board, so long as it does not result in the deferral of recognition of
income or a “deferral of compensation” within the meaning of Code §409A.

 

2.5

SETTLEMENT OF AWARD.

 

The Corporation shall deliver Shares as soon as practicable after the
Corporation’s receipt of the Participant’s properly completed notice of exercise
and payment in full of the Exercise Price as described in Section 2.4. Such
Shares shall be subject to such conditions as the Board may establish, except
that such conditions may not cause the deferral of recognition of income.

 

2.6

CANCELLATION AND REGRANT OF OPTIONS.

 

The Board shall have the authority to effect, at any time and from time to time,
with the consent of the affected Participant, the cancellation of any or all
outstanding Options under the Option Grant Program and to grant in substitution
new Options covering the same or different number of Shares which might have an
Exercise Price per Share no less than the Fair Market Value per Share on the new
grant date. The cancellation and grant need not be simultaneous.

 

  A-5

   

 

ARTICLE 3

STOCK APPRECIATION RIGHTS PROGRAM

 

3.1

TERMS.

 

A Stock Appreciation Right (“SAR”) entitles the Participant to receive, with
respect to each Share subject to the SAR, the appreciation in the Fair Market
Value over a base price established by the Board (as determined below), payable
in cash or Stock, or a combination of both, as determined by the Board at the
time of payment. Each SAR shall be evidenced by an Award Agreement in the form
approved by the Board. Award Agreements evidencing SARs need not be identical,
but shall include (through incorporation of provisions hereof, by reference in
the Award Agreements, or otherwise) the terms specified below and be subject to
the provisions of the Plan applicable to such SARs.

 

3.2

VESTING.

 

The SAR shall cover a specified number of Shares and shall vest and become
exercisable upon such terms and conditions as the Board shall establish;
provided that no SAR may be exercisable more than ten (10) years after the date
of grant unless otherwise determined by the Board and set forth in the Award
Agreement. Vesting may be conditioned on the continued performance of Services
or the achievement of performance conditions measured on an individual,
corporate or other basis, or any combination thereof.

 

3.3

VALUE.

 

The base price in effect for Shares covered by a SAR shall be determined by the
Board at the time of grant. In no event, however, may the base price per Share
be less than the Fair Market Value per Share on the grant date. The Participant
will receive upon exercise of the SAR an amount equal to the excess of the Fair
Market Value of a Share on the surrender date over the base price of a Share
(the “Spread”) multiplied by the number of Shares covered by the SAR Award.
Notwithstanding the foregoing, the Board, in its sole discretion, may provide at
the time it grants a SAR that the Spread covered by such SAR may not exceed a
specified amount.

 

3.4

METHOD OF EXERCISE.

 

The Participant may exercise the SAR by delivering a written notice of exercise
to the Corporation, in the form and manner designated by the Board.

 

3.5

SETTLEMENT OF AWARD.

 

To the extent the Board determines that the Participant will receive cash upon
exercise of a SAR, the Corporation shall deliver the cash amount which becomes
due upon exercise of a SAR as soon as administratively practicable after the
Corporation’s receipt of the Participant’s properly completed notice of
exercise. To the extent the Board determines that Shares will be delivered to
the Participant upon exercise of a SAR, the Shares shall be subject to such
conditions, restrictions and contingencies as the Board may establish, except
that such conditions may not cause the deferral of recognition of income.

 

ARTICLE 4

RESTRICTED STOCK PROGRAM

 

4.1

TERMS.

 

A Restricted Stock Award is a grant of Shares subject to conditions and
restrictions as determined by the Board. Each Restricted Stock Award shall be
evidenced by an Award Agreement in the form approved by the Board. Award
Agreements evidencing Restricted Stock Awards need not be identical, but shall
include (through incorporation of provisions hereof, by reference in the Award
Agreements, or otherwise) the terms specified below and be subject to the
provisions of the Plan applicable to such Restricted Stock Awards.

 

  A-6

   

 

4.2

LAPSE OF RESTRICTIONS.

 

Each Restricted Stock Award shall be, for the applicable Period of Restriction
determined by the Board, subject to such conditions, restrictions and
contingencies as the Board shall determine. Lapse of restrictions may be
conditioned on the continued performance of Services or the achievement of
performance conditions measured on an individual, corporate or other basis, or
any combination thereof.

 

4.4

SHARE ESCROW/LEGENDS.

 

(a)

Legend. Unless the certificate representing shares of the Restricted Stock are
deposited with a custodian (as described in subparagraph (b) below), each
certificate shall bear the following legend (in addition to any other legend
required by law):

 

“The transferability of this certificate and the shares represented hereby are
subject to the restrictions, terms and conditions (including forfeiture and
restrictions against transfer) contained in the Merion, Inc. 2018 Omnibus Equity
Plan and a Restricted Stock Agreement dated __________, ____, between
________________ and Merion, Inc. The Plan and the Restricted Stock Agreement
are on file in the office of the Corporate Secretary of Merion, Inc.”

 

Such legend shall be removed or canceled from any certificate evidencing shares
of Restricted Stock as of the date that such Shares become nonforfeitable.

 

(b)

Deposit with Custodian. As an alternative to delivering a stock certificate to
the Participant, the Board may deposit or transfer such Shares electronically to
a custodian designated by the Board. The Board shall cause the custodian to
issue a receipt for the Shares to the Participant for any Restricted Stock so
deposited. The custodian shall hold the Shares and deliver the same to the
Participant in whose name the Restricted Stock evidenced thereby are registered
only after such Shares become nonforfeitable.

 

ARTICLE 5

UNRESTRICTED STOCK PROGRAM

 

The Board may, in its sole discretion, award Unrestricted Stock to any
Participant as a stock bonus or otherwise pursuant to which such Participant may
receive shares of Stock free of restrictions or limitations that would otherwise
be applied under Section 4 of this Plan.

 

ARTICLE 6

RESTRICTED STOCK UNIT (RSU) PROGRAM

 

6.1

TERMS.

 

A Restricted Stock Unit Award entitles the Participant to receive Shares upon
the vesting of the Award. Each Restricted Stock Unit Award shall be evidenced by
an Award Agreement in the form approved by the Board. Subject to the terms of
the Plan, Restricted Stock Units may be granted to Participants in such amounts
and upon such terms and at any time and from time to time, as shall be
determined by the Board. Award Agreements evidencing Restricted Stock Unit
Awards need not be identical, but shall include (through incorporation of
provisions hereof, by reference in the Award Agreements, or otherwise) the terms
specified below and be subject to the provisions of the Plan applicable to
Restricted Stock Unit Awards.

 

  A-7

   

 

6.2

VESTING.

 

Each Restricted Stock Unit shall be subject to such vesting conditions,
restrictions and contingencies as the Board shall determine and set forth in the
Award Agreement evidencing the RSU. Vesting may be conditioned on the continued
performance of Services or the achievement of performance conditions measured on
an individual, corporate or other basis, or any combination thereof.

 

6.3

SETTLEMENT OF AWARD.

 

As soon as practicable following the date each Restricted Stock Unit vests, the
Corporation shall deliver to the Participant the Share underlying such
Restricted Stock Unit, subject to such conditions, restrictions and
contingencies as the Board may establish.

 

ARTICLE 7

PERFORMANCE-BASED COMPENSATION

 

7.1

AWARDS OF PERFORMANCE-BASED COMPENSATION.

 

At its discretion, the Board may make Awards to Participants intended to comply
with the exemption for Performance-Based Exception set forth in Code §162(m). In
such event, the number of Shares becoming exercisable or transferable or amounts
payable with respect to grants of Options, Stock Appreciation Rights, and/or
awards of Restricted Stock, Unrestricted Stock or Restricted Stock Units may be
determined based on the attainment of written performance goals based on the
performance measures set forth in Section 7.2 and which have been approved by
the Board for a specified performance period. The performance goals shall state,
in terms of an objective formula or standard, the method of computing the amount
of compensation payable to the Participant if the goal is attained. The
performance goals must be established by the Board in writing no more than
ninety (90) days after the commencement of the performance period or, if less,
the number of days that is equal to 25% of the relevant performance period. The
outcome of the performance goal must be substantially uncertain at the time the
Board establishes the performance goal. Performance goals will be based on the
attainment of one or more objectives based on performance measures. To the
degree consistent with Code §162(m), the performance goals may be calculated
without regard to extraordinary items.

 

7.2

PERFORMANCE MEASURES.

 

Performance measures may include the following: (i) earnings before all or any
taxes (“EBT”); (ii) earnings before all or any of interest expense, taxes,
depreciation and amortization (“EBITDA”); (iii) earnings before all or any of
interest expense, taxes, depreciation, amortization and rent (“EBITDAR”); (iv)
earnings before all or any of interest expense and taxes (“EBIT”); (v) net
earnings; (vi) net income; (vii) operating income or margin; (viii) earnings per
share; (ix) growth; (x) return on stockholders’ equity; (xi) capital
expenditures; (xii) expenses and expense ratio management; (xiii) return on
investment; (xiv) improvements in capital structure; (xv) profitability of an
identifiable business unit or product; (xvi) profit margins; (xvii) stock price;
(xviii) market share; (xvix) revenues; (xx) costs; (xxi) cash flow; (xxii)
working capital; (xxiii) return on assets; (xxiv) economic value added; (xxv)
industry indices; (xxvi) peer group performance; (xxvii) regulatory ratings;
(xxviii) asset quality; (xxix) gross or net profit; (xxx) net sales; (xxxi)
total stockholder return; (xxxii) sales (net or gross) measured by product line,
territory, customers or other category; (xxxiii) earnings from continuing
operations; (xxxiv) net worth; or (xxxv) levels of expense, receivables, cost or
liability by category, operating unit or any other delineation, or any other
measures approved by the Board. Performance Measures may relate to the
Corporation and/or one or more of its Affiliates, one or more of its divisions
or units or any combination of the foregoing, on a consolidated or
nonconsolidated basis, and may be applied on an absolute basis or be relative to
one or more peer group companies or indices, or any combination thereof, all as
the Board determines. In addition, to the extent consistent with the
requirements of Code §162(m), the performance measures may be calculated without
regard to extraordinary items.

 

  A-8

   

 

7.3

STOCKHOLDER APPROVAL.

 

For Awards to constitute performance-based compensation under Code §162(m), the
material terms of performance measures on which the performance goals are to be
based must be disclosed to and subsequently approved by the Corporation’s
stockholders prior to payment of the compensation. Stockholder approval of the
Plan is necessary for the Awards to meet the Code §162(m) exemption.

 

7.4

CODE SECTION 162(M) COMMITTEE AND CERTIFICATION.

 

Awards intended to qualify for exemption as performance-based compensation shall
be granted by a committee of “outside directors” as defined in Code §162(m). The
Board may establish a Code §162(m) committee, if necessary, to make such grants.
Any payment of compensation with respect to an Award that is intended to be
performance-based compensation will be, to the extent that such requirement
applies under Code §162(m), subject to the written certification of the
Committee that the performance measures were satisfied prior to the payment of
the performance-based compensation. This written certification may include the
approved minutes of the Committee meeting in which the certification is made.

 

ARTICLE 8

RULES APPLICABLE TO ALL AWARDS

 

8.1

TERMINATION OF SERVICE.

 

Unless otherwise determined by the Board and included in the Participant’s Award
Agreement, in the event that a Participant’s Service with the Corporation and
all Related Corporations is terminated for any reason, all Awards held by the
Participant which are unexercised or have not yet vested as of such date shall
expire, terminate, and become unexercisable as of such termination date,
provided, however, that if the Participant’s Service terminates for reasons
other than Cause, all outstanding vested Options and SARs held by the
Participant as of his or her termination date shall continue to be exercisable
until the earlier of the expiration of their term or the date that is three
months after such termination date.

 

8.2

ACCELERATION OF VESTING.

 

The Board shall have complete discretion, subject to the terms of the Plan,
exercisable either at the time an Award is granted or at any time while the
Award remains outstanding, to accelerate the vesting of or lapse of restrictions
on any Award.

 

8.3

EXTENSION OF EXERCISE PERIOD.

 

The Board shall have complete discretion, subject to the terms of the Plan,
exercisable either at the time an Award is granted or at any time while the
Award remains outstanding, to extend the period of time for which the Option or
SAR is to remain exercisable following the Participant’s termination of Service
from the limited exercise period otherwise in effect for that Option or SAR to
such greater period of time as the Board shall deem appropriate, but in no event
beyond the expiration of the Option or SAR term, and/or to permit the Option or
SAR to be exercised, during the applicable post-termination exercise period, not
only with respect to the number of vested Shares for which such Option or SAR is
exercisable at the time of the Participant’s termination of Service but also
with respect to one or more additional installments in which the Participant
would have vested had the Participant continued in Service. Such an extension
may result in recharacterization of an ISO as a Non-Statutory Stock Option.

 

8.4

TRANSFERABILITY.

 

All rights with respect to an Award granted to a Participant under the Plan
shall be available during his or her lifetime only to such Participant, except
as designated by the Participant by will or by the laws of descent and
distribution; provided, however, that the Board shall have the discretion to
provide that an Award other than an ISO may, in connection with the
Participant’s estate plan, be assigned in whole or in part during the
Participant’s lifetime to a trust established exclusively for one or more
members of the Participant’s immediate family. The terms applicable to the
assigned portion shall be the same as those in effect for the Award immediately
prior to such assignment and shall be set forth in such documents issued to the
assignee as the Board may deem appropriate. Any assignment shall not affect the
Participant’s obligations to satisfy applicable tax withholding as described
herein. The Participant may also designate in writing one or more persons as the
beneficiary or beneficiaries of his or her outstanding Awards, and those Awards
shall, except to the extent that any lifetime transfer as provided herein,
automatically be transferred to such beneficiary or beneficiaries upon the
Participant’s death while holding those Awards. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Corporation, and will be effective only when filed by the
Participant in writing with the Corporation during the Participant’s lifetime.
In the absence of any such designation, benefits under an Award remaining unpaid
at the Participant’s death shall be paid to the Participant’s estate. A
beneficiary or beneficiaries shall take the transferred Awards subject to all
the terms and conditions of the applicable Award Agreement, including (without
limitation) the limited time period during which any Award may be exercised
following the Participant’s death.

 

  A-9

   

 

8.5

STOCKHOLDER RIGHTS.

 

Except as otherwise provided by the Board in the Award Agreement, the
Participant (or his or her beneficiaries) holding an Award shall have no
stockholder rights with respect to the Shares subject to the Award until he or
she has received and become a holder of record of the Shares underlying the
Award or, in the case of Restricted Stock, all restrictions have lapsed.

 

8.6

TAX WITHHOLDING.

 

(a)

Conditions on Delivery of Stock. The Corporation’s obligation to deliver Shares
under the Plan shall, to the extent required by Federal, state, local or foreign
law, be subject to the satisfaction of all applicable Federal, state, local and
foreign income and employment tax withholding requirements (or, in the case of
Restricted Stock, the making of arrangements satisfactory to the Corporation
regarding such payment). Whenever under the Plan payments are to be made in
cash, such payments may be net of an amount sufficient to satisfy such
withholding requirements.

 

(b)

Tender of Shares. The Board may, in its discretion, provide any or all
Participants granted Non-Statutory Stock Options, SARs, Restricted Stock,
Unrestricted Stock, or RSUs settled in Stock under the Plan with the right to
use Shares in satisfaction of all or part of the applicable withholding taxes to
which such Participants may become subject in connection with the exercise of
their Options or SARs, the vesting of their Restricted Stock, or the settlement
of their Restricted Stock Units or other Awards in Stock. Such right may be
provided to any such Participant in either or both of the following formats:

 

 

(i)

The election to have the Corporation withhold, from the Shares otherwise
issuable upon the exercise of the NSO or SAR, the vesting of the Restricted
Stock, or the settlement of Restricted Stock Units or other Awards in Stock, a
portion of those Shares with an aggregate Fair Market Value equal to the
percentage of the applicable withholding taxes (not to exceed the minimum
required by law) designated by the Participant.

 

 

(ii)

The election to deliver to the Corporation, at the time the NSO or SAR is
exercised, the Restricted Stock vests, or the Restricted Stock Units or other
Awards are settled in Stock, one or more Shares previously acquired by such
Participant (other than in connection with the Option or SAR exercise,
Restricted Stock vesting or Restricted Stock Units or other Awards in Stock
settlement triggering the withholding taxes) with an aggregate Fair Market Value
equal to the percentage of the withholding taxes (not to exceed the minimum
required by law) designated by the Participant.

 

ARTICLE 9

DEFINITIONS

 

The following definitions shall be in effect under the Plan:

 

9.1 Affiliate shall mean, at the time of determination, any “parent” or
“majority-owned subsidiary” of the Company, or entity under common control with
the Company, as such terms are defined in Rule 405 promulgated under the
Securities Act of 1933, as amended. The Board shall have the authority to
determine the time or times at which “parent,” “majority-owned subsidiary,” or
entity under common control status is determined within the foregoing
definition.

 

9.2 Award Agreement shall mean a written document setting forth the terms and
provisions applicable to an Award granted to a Participant under the Plan, and
is a condition to the grant of an Award hereunder.

 

  A-10

   

 

9.3 Awards shall mean any award or benefit granted to any Participant under the
Plan, including, without limitation, the grant of Options, SARs, Restricted
Stock, Unrestricted Stock and Restricted Stock Units.

 

9.4 Board shall mean the Corporation’s Board of Directors.

 

9.5 Cause shall have the meaning ascribed to such term in any written agreement
between the Participant and the Corporation defining such term and, in the
absence of such agreement, such term means with respect to a Participant, the
occurrence of any of the following events: the commission of any act or
attempted act of fraud, embezzlement or dishonesty by the Participant, any act
or omission by such person constituting a breach or default under any written or
oral agreement between such person and the Corporation (or any Related
Corporation), any unauthorized use or disclosure by such person of confidential
information or trade secrets of the Corporation (or any Related Corporation), or
any other intentional act by such person adversely affecting the business or
affairs of the Corporation (or any Related Corporation) in a material manner.
The foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation (or any Related Corporation) may consider as
grounds for the dismissal or discharge of any Participant or other person in the
Service of the Corporation (or any Related Corporation). The determination that
a termination of the Participant’s Service is either for Cause or without Cause
shall be made by the Corporation in its sole discretion. Any determination by
the Corporation that the Service of a Participant was terminated with or without
Cause for the purposes of outstanding Awards held by such Participant shall have
no effect upon any determination of the rights or obligations of the Corporation
or such Participant for any other purpose.

 

9.6 Change of Control shall mean the first of the following events to occur:

 

(a)

The acquisition by any one person or more than one person acting as a group
(within the meaning of Treasury Regulation §1.409A-3(i)(5)(v)(B)), other than
the Corporation, any Related Corporation, or any employee benefit plan (or
related trust) sponsored or maintained by the Corporation or any Related
Corporation, (a “Person”) of any of stock of the Corporation that, together with
stock held by such Person, constitutes more than 50% of the total fair market
value or total voting power of the stock of the Corporation. For purposes of
this Paragraph (a), the following acquisitions shall not constitute a Change of
Control: (i) the acquisition of additional stock by a Person who is considered
to own more than 50% of the total fair market value or total voting power of the
stock of the Corporation, (ii) any acquisition in which the Corporation does not
remain outstanding thereafter and (iii) any acquisition pursuant to a
transaction which complies with Paragraph (c) below. An increase in the
percentage of stock owned by any one Person as a result of a transaction in
which the Corporation acquires its stock in exchange for property will be
treated as an acquisition of stock for purposes of this Paragraph;

 

(b)

The replacement of individuals who, as of the date hereof, constitute a majority
of the Board, during any twelve (12) month period by directors whose appointment
or election is not endorsed by a majority of the Board before the date of the
appointment or election, provided that, if the Corporation is not the relevant
corporation for which no other corporation is a majority stockholder for
purposes of Treasury Regulation §1.409A-3(i)(5)(iv)(A)(2), this Paragraph (b)
shall be applied instead with respect to the members of the board of the
directors of such relevant corporation for which no other corporation is a
majority stockholder;

 

(c)

The acquisition by any one person or more than one person acting as a group
(within the meaning of Treasury Regulation §1.409A-3(i)(5)(vi)(D)), other than
the Corporation, a Related Corporation or any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any Related Corporation,
during the 12-month period ending on the date of the most recent acquisition by
such by such person or persons, of ownership of stock of the Corporation
possessing 30% or more of the total voting power of the stock of the
Corporation. For purposes of this Paragraph (c), the following acquisitions
shall not constitute a Change of Control: (i) the acquisition of additional
control by a person or more than one person acting as a group who are considered
to effectively control the Corporation within the meaning of Treasury Regulation
§1.409A-3(i)(5)(vi) and (ii) any acquisition pursuant to a transaction which
complies with Paragraph (a); or

 

(d)

The acquisition by any individual person or more than one person acting as a
group (within the meaning of Treasury Regulation §1.409A-3(i)(5)(vii)(C)), other
than a transfer to a related person within the meaning of Treasury Regulation
§1.409A-3(i)(5)(vii)(B), during the 12-month period ending on the date of the
most recent acquisition by such person or persons, of assets from the
Corporation that have a total gross fair market value equal to or more than 40%
of the total gross fair market value of all of the assets of the Corporation
immediately prior to such acquisition(s). For purposes of this Paragraph (d),
“gross fair market value” means the value of the assets of the Corporation, or
the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.

 

  A-11

   

 

The above definition of “Change of Control” shall be interpreted by the Board,
in good faith, to apply in a similar manner to transactions involving
partnerships and partnership interests, and to comply with Code §409A and
official guidance issued thereunder from time to time.

 

9.7 Code shall mean the Internal Revenue Code of 1986, as amended.

 

9.8 Committee shall mean a committee designated by the Board.

 

9.9 Corporation shall mean Merion, Inc., a Nevada corporation, and any corporate
successor to all or substantially all of the assets or voting stock of Merion,
Inc. which shall by appropriate action adopt the Plan.

 

9.10 Disability shall mean, unless otherwise provided in the Award Agreement or
in an employment, change of control or similar agreement in effect between the
Participant and the Corporation or Related Corporation, the Participant is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months; or, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health
plan covering employees of the Corporation or a Related Corporation.

 

9.11 Effective Date shall mean the date the Plan is adopted by the Board.

 

9.12 Eligible Persons shall mean persons eligible to participate in the Plan, as
described in Section 1.4.

 

9.13 Employee shall mean an employee of the Corporation (or any Related
Corporation).

 

9.14 Exercise Price shall mean the per Share exercise price of an Option as
determined under Article 2 of the Plan.

 

9.15 Fair Market Value per Share on the relevant date shall mean, if the Shares
are duly listed on a national securities exchange or on The Nasdaq Stock Market,
or the OTC Markets, the closing price of the Stock on the relevant date, or, if
there are no sales on such date, on the next preceding day on which there were
sales, or if the Shares are not so listed, the fair market value of the Shares
for the relevant date, as determined by the Board in good faith and in
compliance with Code §409A.

 

9.16 Incentive Stock Option or ISO shall mean an Option that is intended to
qualify as, and that satisfies the requirements applicable to, an “incentive
stock option” described in Code § 422(b).

 

9.17 Non-Statutory Stock Option or NSO shall mean an Option that is not intended
to be, or does not qualify as, an Incentive Stock Option.

 

9.18 Option shall mean a right to acquire Stock of the Corporation pursuant to a
Non-Statutory Stock Option or Incentive Stock Option granted under Article 2 of
the Plan.

 

9.19 Participant shall mean any Eligible Person who receives an Award under the
Plan, and includes those former Eligible Persons who have certain
post-termination rights under the terms of an Award granted under the Plan.

 

9.20 Performance-Based Exception means the exception for performance-based
compensation from the tax deductibility limitations of Code §162(m).

 

9.21 Period of Restriction shall mean the period(s) during which the transfer of
an Award or the Shares subject to an Award is limited in some way (based on the
passage of time, the achievement of performance goals, or upon the occurrence of
other events as determined by the Board, at its discretion) or the Shares are
subject to a substantial risk of forfeiture, pursuant to the terms of this Plan
or the applicable Award Agreement.

 

  A-12

   

 

9.22 Plan shall mean the Merion, Inc. 2018 Omnibus Equity Plan, as set forth in
this document.

 

9.23 Related Corporation shall mean any Affiliate of the Corporation; provided,
however, that with respect to any ISO and for purposes of the definition of 10%
Stockholder, “Related Corporation” shall mean any Corporation during any period
in which it is a “parent corporation” (as that term is defined in Code §424(e))
with respect to the Corporation or a “subsidiary corporation” (as that term is
defined in Code §424(f)) with respect to the Corporation.

 

9.24 Restricted Stock shall mean a grant of Shares granted under Article 4 of
the Plan that is subject to such conditions, restrictions and contingencies as
the Board determines and sets forth in the applicable Award Agreement.

 

9.25 Restricted Stock Unit or RSUs shall mean a right to receive Shares upon
satisfaction of certain vesting requirements pursuant to Article 6 of the Plan.

 

9.26 Service shall mean the performance of services for the Corporation (or any
Related Corporation) by a person in the capacity of an Employee, a non-Employee
member of the board of directors, or a consultant or independent advisor, except
to the extent otherwise specifically provided in the Award Agreement.

 

9.27 Shares or Stock shall mean Shares of common stock of the Corporation, par
value $0.001 per share.

 

9.28 Stock Appreciation Rights or SARs shall mean a right to receive the
appreciation in the Fair Market Value of Shares, as granted under Article 3 of
the Plan.

 

9.29 10% Stockholder shall mean the owner of stock (as determined under Code
§424(d)) possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Corporation (or any Related Corporation).

 

ARTICLE 10

MISCELLANEOUS

 

10.1

EFFECTIVE DATE AND TERM OF PLAN.

 

(a)

Effective Date. The Plan shall become effective immediately upon its adoption by
the Board, subject to approval by the stockholders of the Corporation at the
first annual meeting of stockholders held following the adoption by the Board,
or any special meeting of the stockholders duly called. Options may be granted
under the Option Grant Program at any time on or after the Effective Date.
However, until the stockholders approve the Plan, no Options or SARs granted
under the Plan may be exercised, no Restricted or Unrestricted Stock shall be
issued under the Plan and no Award may be settled in Stock under the Plan. If
stockholder approval is not obtained within twelve (12) months after the
Effective Date, then all Awards shall be null and void.

 

(b)

Termination Date. The Plan shall terminate upon the earliest to occur of (i) the
tenth (10th) anniversary of the Plan’s Effective Date, or (ii) the date on which
all Shares available for issuance under the Plan shall have been issued as
fully-vested Shares. Should the Plan terminate on the tenth (10th) anniversary
of the Effective Date, then all Awards outstanding at that time shall continue
to have force and effect in accordance with the provisions of the applicable
Award Agreements.

 

10.2

AMENDMENT OF PLAN.

 

(a)

Amendment and Termination By the Board. Subject to Paragraph (b) below, the
Board shall have the power at any time to add to, amend, modify or repeal any of
the provisions of the Plan, to suspend the operation of the entire Plan or any
of its provisions for any period or to terminate the Plan in whole or in part.
In the event of any such action, the Board shall prepare written procedures
shall govern the administration of the Plan resulting from such addition,
amendment, modification, repeal, suspension or termination. The Board may amend
any Award Agreement that it previously has authorized under the Plan and the
applicable Participant; provided, however, that no Award Agreement may be
amended to reprice or constructively reprice any Award.

 

  A-13

   

 

(b)

Restrictions on Amendment and Termination. Notwithstanding the provisions of
Paragraph (a) above, the following restrictions shall apply to the Board’s
authority under Paragraph (a) above:

 

 

(i)

Prohibition Against Adverse Effects on Outstanding Awards. No addition,
amendment, modification, repeal, suspension or termination shall adversely
affect, in any way, the rights of the Participants who have outstanding Awards
without the consent of such Participants;

 

 

(ii)

Stockholder Approval Required for Certain Modifications. No modification or
amendment of the Plan may be made without the prior approval of the stockholders
of the Company if (i) such modification or amendment would cause the applicable
portions of the Plan to fail to qualify as an ISO plan pursuant to Code §422,
(ii) such modification or amendment would materially increase the benefits
accruing to participants under the Plan, (iii) such modification or amendment
would materially increase the number of securities which may be issued under the
Plan, or (iv) such modification or amendment would materially modify the
requirements as to eligibility for participation in the Plan, or (v) such
modification or amendment would modify the material terms of the Plan within the
meaning of Treasury Regulation §1.162-27(e)(4). Clauses (ii), (iii) and (iv) of
the preceding sentence shall be interpreted in accordance with the provisions of
paragraph (b)(2) of Rule 16b-3 of the 1934 Act. Stockholder approval shall be
made by a majority of the votes cast at a duly held meeting at which a quorum
representing a majority of all outstanding voting stock is, either in person or
by proxy, present and voting, or by the written consent in lieu of a meeting of
the holders of a majority of the outstanding voting stock or such greater number
of shares of voting stock as may be required by the Company’s articles or
certificate of incorporation and bylaws and by applicable law; provided,
however, that for modifications described in clauses (ii), (iii) and (iv) above,
such stockholder approval, whether by vote or by written consent in lieu of a
meeting, must be solicited substantially in accordance with the rules and
regulations in effect under Section 14(a) of the 1934 Act as required by
paragraph (b)(2) of Rule 16b-3 of the 1934 Act.

 

10.3

CONTINUING SECURITIES LAW COMPLIANCE; LEGENDS.

 

The granting of Awards and the issuance of Shares under the Plan shall be
subject to all applicable laws, and to such approvals by any governmental
agencies or national securities exchanges as may be required. If at any time on
or after the Effective Date, the Board, in its discretion, shall determine that
the requirements of any applicable federal or state securities laws should fail
to be met, no Shares issuable under Awards and no Options or SARs shall be
exercisable until the Board has determined that these requirements have again
been met. The Board may suspend the right to exercise an Options or SAR at any
time when it determines that allowing the exercise and issuance of Shares would
violate any federal or state securities or other laws, and may provide that any
time periods to exercise the Option or SAR are extended during a period of
suspension. With respect to “Insiders,” transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 under the
Securities Exchange Act of 1934. To the extent any provision of the Plan or
action by the Board fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board. Each Award Agreement
and each certificate representing securities granted pursuant to the Plan
(including securities issuable pursuant to the terms of derivative securities)
may bear such restrictive legend(s) as the Corporation deems necessary or
advisable under applicable law, including Federal and state securities laws. If
any Award is made to a Participant who is subject to the Corporation’s policy
regarding trading of its Stock by its officers and directors and Shares are
scheduled to be delivered under the Plan to the Participant on a day (the
“original distribution date”) that does not occur during a “window period”
applicable to the Participant, as determined by the Corporation in accordance
with such policy, then the Corporation can choose not to deliver such Shares on
such original distribution date and instead to deliver such Shares on the first
day of the next “window period” applicable to the Participant pursuant to such
policy, but in no event later than the March 15 following the close of the
calendar year in which such Shares were no longer subject to a substantial risk
of forfeiture (within the meaning of Code §409A).

 

10.4

LIQUIDATION OF THE CORPORATION.

 

In the event of the complete liquidation or dissolution of the Corporation, any
outstanding Awards granted under this Plan shall be deemed automatically
canceled without any action on the part of the Corporation and without regard to
or limitation by any other provision of the Plan.

 

  A-14

   

 

10.5

NO EMPLOYMENT/SERVICE RIGHTS.

 

Nothing in the Plan shall confer upon the Participant any right to continue in
Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Related Corporation
employing or retaining such person) or of the Participant, which rights are
hereby expressly reserved by each, to terminate the Participant’s Service at any
time for any reason, with or without Cause.

 

10.6

RULES OF CONSTRUCTION.

 

For all purposes of this Plan, except as otherwise expressly provided:

 

(a)

all accounting terms not otherwise defined herein have the meanings ascribed
thereto under U.S. generally accepted accounting principles;

 

(b)

all references in this Plan to designated “Articles,” “Sections” and other
subdivisions are to the designated Articles, Sections and other subdivisions of
the body of this Plan except to the extent identified as references to sections
or subsections of the Code;

 

(c)

the words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Plan as a whole and not to any particular Article, Section or
other subdivision;

 

(d)

whenever the words “include,” “includes” or “including” are used in this Plan,
they shall be deemed to be followed by the words “without limitation”;

 

(e)

whenever this Plan refers to a number of days, such number shall refer to
calendar days unless business days are expressly specified;

 

(f)

a reference to any legislation or to any provision of any legislation shall
include such legislation, as amended through the date hereof, and all subsequent
amendments or modification thereto or re-enactment thereof, any legislative
provision substituted therefor and all regulations and statutory instruments
issued thereunder or pursuant thereto; and

 

(g)

except where otherwise indicated by the context, any masculine term used herein
also shall include the feminine; the plural shall include the singular and the
singular shall include the plural.

 

10.7

UNFUNDED STATUS OF PLAN.

 

The Plan is intended to constitute an “unfunded” plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Corporation, nothing set forth herein shall give any such Participant any rights
that are greater than those of a general creditor of the Corporation. In its
sole discretion, the Board may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Stock or
a payment in lieu of or with respect to Awards hereunder, provided, however,
that the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.

 

10.8

AWARDS TO PARTICIPANTS OUTSIDE THE UNITED STATES.

 

The Board may modify the terms of any Award under the Plan made to or held by a
Participant who is then resident or primarily employed outside the United States
in any manner deemed by the Board to be necessary or appropriate in order that
the Award shall conform to laws, regulations, and customs of the country in
which the Participant is then resident or primarily employed, or so that the
value and other benefits of the Award to the Participant, as affected by foreign
tax laws and other restrictions applicable as a result of the Participant’s
residence or employment abroad, shall be comparable to the value of such an
Award to a Participant who is resident or primarily employed in the United
States. Such authorization shall extend to and include establishing one or more
separate sub-plans which include provisions not inconsistent with the Plan that
comply with statutory or regulatory requirements imposed by the foreign country
or countries in which the Participant resides.

 

10.9

SEVERABILITY.

 

In the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.

 

10.10

GOVERNING LAW.

 

To the extent not preempted by United States Federal law, the Plan, and all
agreements hereunder, shall be construed in accordance with and governed by the
laws of the State of Nevada.

 

 

A-15