Exhibit 4.1


 


EASTSIDE DISTILLING, INC.

2016 EQUITY INCENTIVE PLAN


 


1.    Purpose;
Eligibility.


 


1.1     General
Purpose. The name of this plan is the Eastside Distilling, Inc. 2016 Equity Incentive Plan (the “Plan”).
The purposes of the Plan are to (a) enable Eastside Distilling, Inc., a Nevada corporation (the “Company”),
and any Affiliate to attract and retain the types of Employees, Consultants and Directors who will contribute to the Company’s
long range success; (b) provide incentives that align the interests of Employees, Consultants and Directors with those of the shareholders
of the Company; and (c) promote the success of the Company’s business.


 


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


 


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


 


2.     Definitions.


 


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


 


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


 


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


 


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


 


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


 




     


     


    

 


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


 


“Cause” means:


 


With respect to any
Employee or Consultant: (a) If the Employee or Consultant is a party to an employment or service agreement with the Company or
its Affiliates and such agreement provides for a definition of Cause, the definition contained therein; or (b) If no such agreement
exists, or if such agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to, a felony or a crime
involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect
to the Company or an Affiliate; (ii) conduct that results in or is reasonably likely to result in harm to the reputation or business
of the Company or any of its Affiliates; (iii) gross negligence or willful misconduct with respect to the Company or an Affiliate;
(iv) intentional, material violation of any contract or agreement between such Employee or Consultant and the Company or of any
statutory duty owed to the Company; or (v) material violation of state or federal securities laws.


 


With respect to any
Director, a determination by a majority of the disinterested Board members that the Director has engaged in any of the following:
(a) malfeasance in office; (b) gross misconduct or neglect; (c) false or fraudulent misrepresentation inducing the director’s
appointment; (d) willful conversion of corporate funds; (e) intentional, material violation of any statutory duty owed to the Company
or its shareholders; or (f) repeated failure to participate in Board meetings on a regular basis despite having received proper
notice of the meetings in advance.


 


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


 




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“Change in
Control”  (a) The direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger
or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company
and its subsidiaries, taken as a whole, to any Person that is not a subsidiary of the Company; (b) The Incumbent Directors cease
for any reason to constitute at least a majority of the Board; (c) The date which is 10 business days prior to the consummation
of a complete liquidation or dissolution of the Company; (d) The acquisition by any Person of Beneficial Ownership of 50% or more
(on a fully diluted basis) of either (i) the then outstanding shares of Common Stock of the Company, taking into account as outstanding
for this purpose such Common Stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt,
and the exercise of any similar right to acquire such Common Stock (the “Outstanding Company Common Stock”)
or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election
of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this Plan,
the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company or any Affiliate, (B) any
acquisition by any employee benefit plan sponsored or maintained by the Company or any subsidiary, (C) any acquisition which complies
with clauses, (i), (ii) and (iii) of subsection (e) of this definition or (D) in respect of an Award held by a particular Participant,
any acquisition by the Participant or any group of persons including the Participant (or any entity controlled by the Participant
or any group of persons including the Participant); or (e) the consummation of a reorganization, merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the Company that requires the approval of the Company’s
shareholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”),
unless immediately following such Business Combination: (i) more than 50% of the total voting power of (A) the entity resulting
from such Business Combination (the “Surviving Company”), or (B) if applicable, the ultimate parent entity that
directly or indirectly has beneficial ownership of sufficient voting securities eligible to elect a majority of the members of
the board of directors (or the analogous governing body) of the Surviving Company (the “Parent Company”), is
represented by the Outstanding Company Voting Securities that were outstanding immediately prior to such Business Combination (or,
if applicable, is represented by shares into which the Outstanding Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the
Outstanding Company Voting Securities among the holders thereof immediately prior to the Business Combination; (ii) no Person (other
than any employee benefit plan sponsored or maintained by the Surviving Company or the Parent Company) is or becomes the Beneficial
Owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect
members of the board of directors of the Parent Company (or the analogous governing body) (or, if there is no Parent Company, the
Surviving Company); and (iii) at least a majority of the members of the board of directors (or the analogous governing body) of
the Parent Company (or, if there is no Parent Company, the Surviving Company) following the consummation of the Business Combination
were Board members at the time of the Board’s approval of the execution of the initial agreement providing for such Business
Combination.


 


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


 


“Committee” means
a committee of one or more members of the Board appointed by the Board to administer the Plan in accordance with Section
3.3 and Section 3.4, or the Board if no such committee has been appointed.


 


“Common Stock” means
the common stock, $0.0001 par value per share, of the Company, or such other securities of the Company as may be designated by
the Committee from time to time in substitution thereof.


 


“Company” means
Eastside Distilling, Inc., a Nevada corporation, and any successor thereto.


 


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


 




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


 


“Covered
Employee” has the same meaning as set forth in Section 162(m)(3) of the Code, as interpreted by Internal Revenue
Service Notice 2007-49.


 


“Deferred
Stock Units (DSUs)” has the meaning set forth in Section 7.2 hereof.


 


“Director” means
a member of the Board.


 


“Disability” means
that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment; provided, however, for purposes of determining the term of an Incentive Stock Option pursuant to Section
6.10 hereof, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The determination
of whether an individual has a Disability shall be determined under procedures established by the Committee. Except in situations
where the Committee is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section 6.10
hereof within the meaning of Section 22(e)(3) of the Code, the Committee may rely on any determination that a Participant is disabled
for purposes of benefits under any long-term disability plan maintained by the Company or any Affiliate in which a Participant
participates.


 


“Disqualifying
Disposition” has the meaning set forth in Section 14.12.


 


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


 


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


 


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


 


“Fair Market
Value” means, as of any date, the value of the Common Stock as determined below. If the Common Stock is listed on
any established stock exchange or a national market system, including without limitation, the New York Stock Exchange or the NASDAQ
Stock Market, the Fair Market Value shall be the closing price of a share of Common Stock (or if no sales were reported the closing
price on the date immediately preceding such date) as quoted on such exchange or system on the day of determination, as reported
in the Wall Street Journal or such other source as the Committee deems reliable. In the absence of an established market
for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee and such determination shall be
conclusive and binding on all persons.


 




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


 


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


 


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


 


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


 


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


 


“Negative
Discretion” means the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce the size
of a Performance Compensation Award in accordance with Section 7.4(d)(iv) of the Plan; provided, that, the exercise of such discretion
would not cause the Performance Compensation Award to fail to qualify as “performance-based compensation” under Section
162(m) of the Code.


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Performance
Compensation Award” means any Award designated by the Committee as a Performance Compensation
Award pursuant to Section 7.4 of the Plan. 


 


“Performance
Criteria” means the criterion or criteria that the Committee shall select for purposes
of establishing the Performance Goal(s) for a Performance Period with respect to any Performance Compensation Award under the Plan.
The Performance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment of specific levels
of performance of the Company (or Affiliate, division, business unit or operational unit of the Company) and shall be limited to
the following: (a) net earnings or net income (before or after taxes); (b) basic or diluted earnings per share (before or after
taxes); (c) net revenue or net revenue growth; (d) gross revenue; (e) gross profit or gross profit growth; (f) net operating profit
(before or after taxes); (g) return on assets, capital, invested capital, equity, or sales; (h) cash flow (including, but not limited
to, operating cash flow, free cash flow, and cash flow return on capital); (i) earnings before or after taxes, interest, depreciation
and/or amortization; (j) gross or operating margins; (k) improvements in capital structure; (l) budget and expense management;
(m) productivity ratios; (n) economic value added or other value added measurements; (o) share price (including, but not limited
to, growth measures and total shareholder return); (p) expense targets; (q) margins; (r) operating efficiency; (s) working capital
targets; (t) enterprise value; (u) safety record; (v) completion of acquisitions or business expansion; and (w) regulatory milestones
and targets. Any one or more of the Performance Criteria may be used on an absolute or relative basis to measure the performance
of the Company and/or an Affiliate as a whole or any division, business unit or operational unit of the Company and/or an Affiliate
or any combination thereof, as the Committee may deem appropriate, or as compared to the performance of a group of comparable companies,
or published or special index that the Committee, in its sole discretion, deems appropriate, or the Committee may select Performance
Criterion (o) above as compared to various stock market indices. The Committee also has the authority to provide for accelerated
vesting of any Award based on the achievement of Performance Goals pursuant to the Performance Criteria specified in this paragraph.
To the extent required under Section 162(m) of the Code, the Committee shall, within the first 90 days of a Performance Period
(or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), define in an objective fashion
the manner of calculating the Performance Criteria it selects to use for such Performance Period. In the event that applicable
tax and/or securities laws change to permit the Committee discretion to alter the governing Performance Criteria without obtaining
shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder
approval. 


 




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


 


“Performance
Goals” means, for a Performance Period, the one or more goals established by the Committee
for the Performance Period based upon the Performance Criteria. The Committee is authorized at any time during the first 90 days
of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), or at any
time thereafter (but only to the extent the exercise of such authority after such period would not cause the Performance Compensation
Awards granted to any Participant for the Performance Period to fail to qualify as “performance-based compensation”
under Section 162(m) of the Code), in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal
for such Performance Period to the extent permitted under Section 162(m) of the Code in order to prevent the dilution or enlargement
of the rights of Participants based on the following events: (a) asset write-downs; (b) litigation or claim judgments or settlements;
(c) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (d)
any reorganization and restructuring programs; (e) extraordinary, unusual or infrequently occurring items as described in management’s
discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders
for the applicable year; (f) acquisitions or divestitures; (g) any other specific unusual or nonrecurring events, or objectively
determinable category thereof; (h) foreign exchange gains and losses; and (i) a change in the Company’s fiscal year.


 


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


 


“Performance
Share Award” means any Award granted pursuant to Section 7.3
hereof. 


 




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“Performance
Share” means the grant of a right to receive a number of actual shares of Common Stock
or share units based upon the performance of the Company during a Performance Period, as determined by the Committee.


 


“Permitted
Transferee” means: (a) a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships), any person sharing the Optionholder’s household (other
than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which
these persons (or the Optionholder) control the management of assets, and any other entity in which these persons (or the Optionholder)
own more than 50% of the voting interests; (b) third parties designated by the Committee in connection with a program established
and approved by the Committee pursuant to which Participants may receive a cash payment or other consideration in consideration
for the transfer of a Non-qualified Stock Option; and (c) such other transferees as may be permitted by the Committee in its sole
discretion.


 


“Plan” means
this Eastside Distilling, Inc. 2016 Equity Incentive Plan, as amended and/or amended and restated from time to time.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Stock for
Stock Exchange” has the meaning set forth in Section 6.4.


 


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


 




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3.    Administration.


 


3.1     Authority
of Committee. The Plan shall be administered by the Committee or, in the Board’s sole discretion, by the Board. Subject
to the terms of the Plan, the Committee’s charter and Applicable Laws, and in addition to other express powers and authorization
conferred by the Plan, the Committee shall have the authority:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(j)      to
determine the target number of Performance Shares to be granted pursuant to a Performance Share Award, the performance measures
that will be used to establish the performance goals, the performance period(s) and the number of Performance Shares earned by
a Participant;


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


4.        Shares
Subject to the Plan.


 


4.1     Subject
to adjustment in accordance with Section 4.2 and Section 11, a total of 500,000 shares of Common Stock
(on a post-reverse split basis) shall be available for the grant of Awards under the Plan. During the terms of the Awards, the
Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards.


 


4.2     The
aggregate number of shares of Common Stock reserved for Awards under the Plan will automatically increase on January 1st
of each year, for a period of not more than ten (10) years, commencing on January 1st of the year following the year
in which the Effective Date occurs and ending on (and including) January 1, 2026, in an amount equal to eight percent (8%) of the
total number of shares of Outstanding Company Common Stock on December 31st of the preceding calendar year. Notwithstanding
the foregoing, the Board or the Committee may act prior to January 1st of a given year to provide that there will be
no January 1st increase for such year or that the increase for such year will be a lesser number of shares of Common
Stock than provided herein.


 




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


 


4.4     Subject
to adjustment in accordance with Section 11, no Participant shall be granted, during any one (1) year period, Options
to purchase Common Stock and Stock Appreciation Rights with respect to more than 25,000 shares of Common Stock in the aggregate
or any other Awards with respect to more than 25,000 shares of Common Stock in the aggregate. If an Award is to be settled in cash,
the number of shares of Common Stock on which the Award is based shall count toward the individual share limit set forth in this
Section 4.


 


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


 


5.        Eligibility.


 


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


 


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


 


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


 




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


 


6.2     Exercise
Price of an Incentive Stock Option. Subject to the provisions of Section 5.2 regarding Ten Percent Shareholders,
the Option Exercise Price of each Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock
subject to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an Option
Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a) and Section 409A of the Code.


 


6.3     Exercise
Price of a Non-qualified Stock Option. The Option Exercise Price of each Non-qualified Stock Option shall be not less than
100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, a Non-qualified
Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option is
granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 409A of the
Code.


 


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


 




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


 


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


 


6.7     Vesting
of Options. Each Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need
not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Committee may deem appropriate, provided, however, that if no vesting schedule
is specified at the time of grant, the Option shall be vested according to the following schedule: one-fourth (1/4th)
of the shares subject to the Option shall vest one year following the date that the Option commences vesting as specified at the
time of grant, or, if no date is specified at the time of grant, the Grant Date (such date for such Option, the “Vesting
Commencement Date”), and the balance of the shares subject to the Option shall vest in a series of thirty-six (36) successive
equal monthly installments measured from the first anniversary of the Vesting Commencement Date, subject to Optionholder’s
Continuous Service as of each such date.


 


The vesting provisions
of individual Options may vary. No Option may be exercised for a fraction of a share of Common Stock. The Committee may, but shall
not be required to, provide for an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence
of a specified event.


 


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


 




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


 


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


 


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


 


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


 




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7.     Provisions
of Awards Other Than Options.


 


7.1     Stock
Appreciation Rights.  


 


(a)    General


 


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


 


(b)    Grant
Requirements


 


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


 


(c)    Term
of Stock Appreciation Rights


 


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


 


(d)    Vesting
of Stock Appreciation Rights


 


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


 


(e)    Exercise
and Payment


 


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


 


(f)     Exercise
Price


 


The exercise price of
a Free Standing Stock Appreciation Right shall be determined by the Committee, but shall not be less than 100% of the Fair Market
Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right. A Related Right granted simultaneously with
or subsequent to the grant of an Option and in conjunction therewith or in the alternative thereto shall have the same exercise
price as the related Option, shall be transferable only upon the same terms and conditions as the related Option, and shall be
exercisable only to the same extent as the related Option; provided, however, that a Stock Appreciation Right, by its terms,
shall be exercisable only when the Fair Market Value per share of Common Stock subject to the Stock Appreciation Right and related
Option exceeds the exercise price per share thereof and no Stock Appreciation Rights may be granted in tandem with an Option unless
the Committee determines that the requirements of Section 7.1(b) are satisfied.


 




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(g)    Reduction
in the Underlying Option Shares


 


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


 


7.2     Restricted
Awards.  


 


(a)    General


 


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


 


(b)    Restricted
Stock and Restricted Stock Units


 


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



 




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



 


(c)    Restrictions


 


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



 




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



 


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



 


(d)    Restricted
Period


 


With respect to Restricted
Awards, the Restricted Period shall commence on the Grant Date and end at the time or times set forth on a schedule established
by the Committee in the applicable Award Agreement. No Restricted Award may be granted or settled for a fraction of a share of
Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting in the terms of any Award
Agreement upon the occurrence of a specified event.


 


(e)    Delivery
of Restricted Stock and Settlement of Restricted Stock Units


 


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


 




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(f)     Stock
Restrictions


 


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


 


7.3     Performance
Share Awards. 


 


(a)    Grant
of Performance Share Awards 


 


Each Performance Share
Award granted under the Plan shall be evidenced by an Award Agreement. Each Performance Share Award so granted shall be subject
to the conditions set forth in this Section 7.3, and to such other conditions not inconsistent with the Plan as may be reflected
in the applicable Award Agreement. The Committee shall have the discretion to determine: (i) the number of shares of Common Stock
or stock-denominated units subject to a Performance Share Award granted to any Participant; (ii) the performance period applicable
to any Award; (iii) the conditions that must be satisfied for a Participant to earn an Award; and (iv) the other terms, conditions
and restrictions of the Award.


 


(b)    Earning
Performance Share Awards


 


The number of Performance
Shares earned by a Participant will depend on the extent to which the performance goals established by the Committee are attained
within the applicable Performance Period, as determined by the Committee. No payout shall be made with respect to any Performance
Share Award except upon written certification by the Committee that the minimum threshold performance goal(s) have been achieved.


 


7.4     
Performance Compensation Awards.


 


(a)    General


 


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


 




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(b)    Eligibility


 


The Committee will, in
its sole discretion, designate within the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period
allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect
of such Performance Period. However, designation of a Participant eligible to receive an Award hereunder for a Performance Period
shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance
Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation
Award shall be decided solely in accordance with the provisions of this Section 7.4. Moreover, designation of a Participant eligible
to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to
receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive
an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in
such period or in any other period.


 


(c)    Discretion
of Committee with Respect to Performance Compensation Awards


 


With regard to a particular
Performance Period, the Committee shall have full discretion to select the length of such Performance Period (provided any such
Performance Period shall be not less than one fiscal quarter in duration), the type(s) of Performance Compensation Awards to be
issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance
Goal(s) that is (are) to apply to the Company and the Performance Formula. Within the first 90 days of a Performance Period (or,
if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to
the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the
matters enumerated in the immediately preceding sentence of this Section 7.4(c) and record the same in writing.


 


(d)    Payment
of Performance Compensation Awards


 


(i)    Condition
to Receipt of Payment


 


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


 


(ii)   Limitation


 


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


 




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(iii)  Certification


 


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


 


(iv)  Use
of Discretion


 


In determining the
actual size of an individual Performance Compensation Award for a Performance Period, the Committee may reduce or eliminate the
amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period through the use of
Negative Discretion if, in its sole judgment, such reduction or elimination is appropriate. The Committee shall not have the discretion
to (A) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals
for such Performance Period have not been attained or (B) increase a Performance Compensation Award above the maximum amount payable
under Section 7.4(d)(vi) of the Plan.


 


(v)   Timing
of Award Payments


 


Performance Compensation
Awards granted for a Performance Period shall be paid to Participants as soon as administratively practicable following completion
of the certifications required by this Section 7.4 but in no event later than 2 1/2 months following the end of the fiscal year
during which the Performance Period is completed.


 


(vi)  Maximum
Award Payable


 


Notwithstanding any
provision contained in this Plan to the contrary, the maximum Performance Compensation Award payable to any one Participant under
the Plan for a Performance Period (excluding any Options and Stock Appreciation Rights) is 25,000 shares of Common Stock or, in
the event such Performance Compensation Award is paid in cash, the equivalent cash value thereof on the first or last day of the
Performance Period to which such Award relates, as determined by the Committee. The maximum amount that can be paid in any calendar
year to any Participant pursuant to a cash bonus Award described in the last sentence of Section 7.4(a) shall be $1,000,000. Furthermore,
any Performance Compensation Award that has been deferred shall not (between the date as of which the Award is deferred and the
payment date) increase (A) with respect to a Performance Compensation Award that is payable in cash, by a measuring factor for
each fiscal year greater than a reasonable rate of interest set by the Committee or (B) with respect to a Performance Compensation
Award that is payable in shares of Common Stock, by an amount greater than the appreciation of a share of Common Stock from the
date such Award is deferred to the payment date.


 




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


 


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


 


10.  Miscellaneous.


 


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


 


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


 


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


 


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


 




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


 


11.  Adjustments
Upon Changes in Stock. In the event of changes in the outstanding Common Stock or in the capital structure of the Company by
reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such
as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization
occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements, the exercise price of Options
and Stock Appreciation Rights, the maximum number of shares of Common Stock subject to all Awards stated in Section 4
and the maximum number of shares of Common Stock with respect to which any one person may be granted Awards during any period stated
in Section 4 and Section 7.4(d)(vi) will be equitably adjusted or substituted, as to the number, price or
kind of a share of Common Stock or other consideration subject to such Awards to the extent necessary to preserve the economic
intent of such Award. In the case of adjustments made pursuant to this Section 11, unless the Committee specifically determines
that such adjustment is in the best interests of the Company or its Affiliates, the Committee shall, in the case of Incentive Stock
Options, ensure that any adjustments under this Section 11 will not constitute a modification, extension or renewal of the Incentive
Stock Options within the meaning of Section 424(h)(3) of the Code and in the case of Non-qualified Stock Options, ensure that any
adjustments under this Section 11 will not constitute a modification of such Non-qualified Stock Options within the meaning of
Section 409A of the Code. Any adjustments made under this Section 11 shall be made in a manner which does not adversely affect
the exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to Awards intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, any adjustments or substitutions will not cause the Company to be denied
a tax deduction on account of Section 162(m) of the Code. The Company shall give each Participant notice of an adjustment hereunder
and, upon notice, such adjustment shall be conclusive and binding for all purposes.


 


12.  Effect
of Change in Control.


 


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


 




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


 


(b)    With
respect to Performance Compensation Awards, in the event of a Change in Control, all incomplete Performance Periods in respect
of such Award in effect on the date the Change in Control occurs shall end on the date of such change and the Committee shall (i)
determine the extent to which Performance Goals with respect to each such Performance Period have been met based upon such audited
or unaudited financial information then available as it deems relevant and (ii) cause to be paid to the applicable Participant
partial or full Awards with respect to Performance Goals for each such Performance Period based upon the Committee’s determination
of the degree of attainment of Performance Goals or, if not determinable, assuming that the applicable “target” levels
of performance have been attained, or on such other basis determined by the Committee.


 


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


 


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


 


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


 


13.  Amendment
of the Plan and Awards.


 


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


 


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


 




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


 


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


 


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


 


14.   General
Provisions.


 


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


 


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


 


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


 


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


 




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


 


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


 


14.7   Recapitalizations.
Each Award Agreement shall contain provisions required to reflect the provisions of Section 11.


 


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


 


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


 


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


 


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


 




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


 


14.13  Section
16. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements
of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of Rule
16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under
Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed
in this Section 14.13, such provision to the extent possible shall be interpreted and/or deemed amended so as to
avoid such conflict.


 


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


 


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


 


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


 


14.17  Severability.
If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable, whether in whole or
in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability
and the remaining provisions shall not be affected thereby.


 


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


 


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


 




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


 


16.   Termination
or Suspension of the Plan. The Plan shall terminate automatically on the tenth anniversary of the Effective Date. No Award
shall be granted pursuant to the Plan after such date, but Awards theretofore granted may extend beyond that date. The Board may
suspend or terminate the Plan at any earlier date pursuant to Section 13.1 hereof. No Awards may be granted under
the Plan while the Plan is suspended or after it is terminated. Unless the Company determines to submit Section 7.4
of the Plan and the definition of “Performance Goal” and “Performance Criteria” to the Company’s shareholders
at the first shareholder meeting that occurs in the fifth year following the year in which the Plan was last approved by shareholders
(or any earlier meeting designated by the Board), in accordance with the requirements of Section 162(m) of the Code, and such shareholder
approval is obtained, then no further Performance Compensation Awards shall be made to Covered Employees under Section
7.4 after the date of such annual meeting, but the Plan may continue in effect for Awards to Participants not in accordance
with Section 162(m) of the Code


 


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


 


As adopted by the Board of Directors of
Eastside Distilling, Inc. on September 8, 2016.


 


As approved by the shareholders
of Eastside Distilling, Inc. on December 15, 2016.


 


As amended by the Board of
Directors of Eastside Distilling, Inc. on May 12, 2017, June 8, 2017 and October 18, 2017, which amendments were approved by the shareholders
of Eastside Distilling, Inc. on December 8, 2017.


 




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