Document:

ewlu_ex101.htm

EXHIBIT 10.1

 

MERION, INC.

2018 OMNIBUS EQUITY PLAN

 

ARTICLE 1

GENERAL PROVISIONS

 

	
1.1.
	
PURPOSE OF THE PLAN.

 

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

 

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

 

	
1.2.
	
TYPES OF AWARDS AVAILABLE UNDER THE PLAN.

 

The Plan provides for five types of Awards:

 

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

 

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

 

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

 

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

 

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

 

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

 

	
1.3.
	
ADMINISTRATION OF THE PLAN.

 

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

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

 

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

 

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

 

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

 

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

 

	
1.4.
	
ELIGIBILITY.

 

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

 

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

 

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

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

 

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

 

	
1.5
	
STOCK SUBJECT TO THE PLAN.

 

	
(a)
	
Shares Available for Issuance.

 

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

	
 
	
 
	
 

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

 

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

 

	
(b)
	
Adjustment to Shares and Awards. 

 

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

 

	
 
	
(1)
	
The Board shall take action to adjust the number and kind of Shares that are issuable under the Plan and the maximum limits for each type of grant;

 

	
 
	
(2)
	
The Board shall take action to adjust the number and kind of Shares subject to outstanding Awards;

 

	
 
	
(3)
	
The Board shall take action to adjust the Exercise Price or base price of outstanding Options and Stock Appreciation Rights; and

 

	
 
	
(4)
	
The Board shall make any other equitable adjustments.

 

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

 

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

 

	
 
	
(1)
	
any or all outstanding Awards shall pertain to and apply, with appropriate adjustment as determined by the Board, to the securities of the resulting corporation to which a holder of the number of Shares subject to each such Award would have been entitled;

 

	
 
	
(2)
	
any or all outstanding Options or SARs shall become immediately fully exercisable (to the extent permitted under federal or state securities laws) and shall remain exercisable for the remaining term of the Options or SARs under the terms of the Plan;

 

	
 
	
(3)
	
any or all Options or SARs shall become immediately fully exercisable (to the extent permitted under federal or state securities laws) and shall be terminated after giving at least 30 days’ notice to the Participants to whom such Options or SARs have been granted; and/or

 

	
 
	
(4)
	
any or all unvested Restricted Stock Units AND Restricted Stock on which restrictions have not yet lapsed shall become immediately fully vested, nonforfeitable and payable.

 

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

 

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

 

ARTICLE 2

OPTION GRANT PROGRAM

 

	
2.1
	
TERMS.

 

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

 

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

 

	 
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2.2
	
VESTING.

 

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

 

	
2.3
	
EXERCISE PRICE.

 

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

 

	
2.4
	
METHOD OF EXERCISE. 

 

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

 

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

 

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

 

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

 

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

 

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

 

	
2.5
	
SETTLEMENT OF AWARD.

 

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

 

	
2.6
	
CANCELLATION AND REGRANT OF OPTIONS.

 

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

 

	 
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ARTICLE 3

STOCK APPRECIATION RIGHTS PROGRAM

 

	
3.1
	
TERMS.

 

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

 

	
3.2
	
VESTING.

 

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

 

	
3.3
	
VALUE.

 

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

 

	
3.4
	
METHOD OF EXERCISE.

 

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

 

	
3.5
	
SETTLEMENT OF AWARD. 

 

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

 

ARTICLE 4

RESTRICTED STOCK PROGRAM

 

	
4.1
	
TERMS.

 

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

 
	 
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4.2
	
LAPSE OF RESTRICTIONS.

 

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

 

	
4.4
	
SHARE ESCROW/LEGENDS.

 

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

 

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

 

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

 

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

 

ARTICLE 5

UNRESTRICTED STOCK PROGRAM 

 

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

 

ARTICLE 6

RESTRICTED STOCK UNIT (RSU) PROGRAM

 

	
6.1
	
TERMS.

 

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

 

	 
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6.2
	
VESTING.

 

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

 

	
6.3
	
SETTLEMENT OF AWARD. 

 

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

 

ARTICLE 7

PERFORMANCE-BASED COMPENSATION

 

	
7.1
	
AWARDS OF PERFORMANCE-BASED COMPENSATION.

 

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

 

	
7.2
	
PERFORMANCE MEASURES. 

 

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

 

	 
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7.3
	
STOCKHOLDER APPROVAL.

 

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

 

	
7.4
	
CODE SECTION 162(M) COMMITTEE AND CERTIFICATION.

 

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

 

ARTICLE 8

RULES APPLICABLE TO ALL AWARDS

 

	
8.1
	
TERMINATION OF SERVICE.

 

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

 

	
8.2
	
ACCELERATION OF VESTING.

 

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

 

	
8.3
	
EXTENSION OF EXERCISE PERIOD.

 

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

 

	
8.4
	
TRANSFERABILITY.

 

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

 

	 
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8.5
	
STOCKHOLDER RIGHTS.

 

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

 

	
8.6
	
TAX WITHHOLDING.

 

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

 

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

 

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

 

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

 

ARTICLE 9

DEFINITIONS

 

The following definitions shall be in effect under the Plan:

 

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

 

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

 

	 
	A-10
	

 
	 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	 
	A-11
	

 
	 

 

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

 

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

 

9.8 Committee shall mean a committee designated by the Board.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	 
	A-12
	

 
	 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 10

MISCELLANEOUS

 

	
10.1
	
EFFECTIVE DATE AND TERM OF PLAN.

 

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

 

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

 

	
10.2
	
AMENDMENT OF PLAN.

 

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

 

	 
	A-13
	

 
	 

 

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

 

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

 

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

 

	
10.3
	
CONTINUING SECURITIES LAW COMPLIANCE; LEGENDS.

 

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

 

	
10.4
	
LIQUIDATION OF THE CORPORATION.

 

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

 

	 
	A-14
	

 
	 

 

	
10.5
	
NO EMPLOYMENT/SERVICE RIGHTS.

 

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

 

	
10.6
	
RULES OF CONSTRUCTION.

 

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

 

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

		
 

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

		
 

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

		
 

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

		
 

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

		
 

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

		
 

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

 

	
10.7
	
UNFUNDED STATUS OF PLAN. 

 

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

 

	
10.8
	
AWARDS TO PARTICIPANTS OUTSIDE THE UNITED STATES.

 

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

 

	
10.9
	
SEVERABILITY. 

 

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

 

	
10.10
	
GOVERNING LAW. 

 

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

 

 

	A-15Exhibit

EXHIBIT 4-A-1

EXCEPT AS OTHERWISE PROVIDED HEREIN, THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A COMMON DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN SUCH COMMON DEPOSITARY OR A NOMINEE THEREOF, AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE BANK OF NEW YORK DEPOSITORY (NOMINEES) LIMITED, AS NOMINEE OF THE BANK OF NEW YORK MELLON, LONDON BRANCH, AS COMMON DEPOSITARY FOR EUROCLEAR BANK, S.A./N. V.  (“EUROCLEAR”) AND CLEARSTREAM BANKING S.A. (“CLEARSTREAM,” AND, TOGETHER WITH EUROCLEAR, THE “DEPOSITORY”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF THE BANK OF NEW YORK DEPOSITORY (NOMINEES) LIMITED OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE BANK OF NEW YORK MELLON, LONDON BRANCH, AS COMMON DEPOSITARY FOR THE DEPOSITORY (AND ANY PAYMENT IS MADE TO THE BANK OF NEW YORK DEPOSITORY (NOMINEES) LIMITED OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE BANK OF NEW YORK MELLON, LONDON BRANCH, AS COMMON DEPOSITARY FOR THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, THE BANK OF NEW YORK MELLON, LONDON BRANCH, HAS AN INTEREST HEREIN.
TRANSFERS OF THIS NOTE ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE COMMON DEPOSITARY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY ARE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE TRANSFER PROVISIONS OF THE INDENTURE.

FORD MOTOR CREDIT COMPANY LLC
FLOATING RATE 
EURO MEDIUM-TERM NOTES 
DUE NINE MONTHS OR MORE FROM THE DATE OF ISSUE

    
No. R-1    

FORD MOTOR CREDIT COMPANY LLC, a limited liability company, duly formed and existing under the laws of the State of Delaware (herein called the “Company”, which term includes any successor company under the Indenture hereinafter referred to), for value received, hereby promises to pay to THE BANK OF NEW YORK DEPOSITORY (NOMINEES) LIMITED, as nominee of The Bank of New York Mellon, London Branch, a common depositary for Euroclear and Clearstream, or registered assigns, the principal sum outstanding hereunder up to an aggregate of €5,250,000,000 Euros (or its equivalent in other currencies) less the principal amount outstanding under the Ford Motor Credit Company LLC Euro Fixed Rate Note Due Nine Months or More from the Date of Issue dated as of even date herewith and the Ford Motor Credit Company LLC Medium-Term Notes Due Nine Months or More from the Date of Issue - Series B and to pay interest on the principal amount outstanding hereunder at the rate per annum in accordance with the terms of the Pricing Supplements attached hereto commencing on the date specified in the attached Pricing Supplements (each such date an “Interest Payment Date”) at the rate specified in the attached Pricing Supplements, until the principal hereof is paid or made available for payment.  If the Interest  

2

Payment Date is not a Business Day, the Interest Payment Date will be postponed to the next Business Day; provided that when the Pricing Supplement specifies that the interest rate for this global Security is based on EURIBOR or LIBOR, if the next Business Day is in the next calendar month, the Interest Payment Date will be the immediately preceding Business Day.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this global Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the 15th day next preceding such Interest Payment Date (whether or not a Business Day) unless otherwise specified in a Pricing Supplement.  Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder hereof on such Regular Record Date and may either be paid to the Person in whose name this global Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to the Holder of this global Security not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities evidenced by this global Security may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The Pricing Supplement may also contain such other additional terms as are not otherwise inconsistent with the terms of this Security or the Indenture.   As used herein, unless otherwise defined in the Pricing Supplement, the term “Business Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which commercial banks are authorized or required by law, regulation or executive order to close in London or The City of New York. 

Payment of the principal of and any interest on this global Security will be made by The Bank of New York Mellon, London Branch, as Paying Agent, and will be made in the currency specified in the attached Pricing Supplements (the “Applicable Currency”), and all payments of principal of, the redemption price (if any), and interest and additional amounts (if any), on this global Security, will be payable in the Applicable Currency, provided, that if the Applicable Currency is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company’s control or if the Applicable Currency is no longer being used or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of this global Security will be made in U.S. dollars until the Applicable Currency is again available to the Company or so used. The amount payable on any date in the Applicable Currency will be converted into U.S. dollars at the rate mandated by the Board of Governors of the Federal Reserve System as of the close of business on the second Business Day prior to the relevant payment date or, in the event the Board of Governors of the Federal Reserve System has not mandated a rate of conversion, on the basis of the most recent U.S. dollar/ Applicable Currency exchange rate published in The Wall Street Journal on or prior to the second Business Day prior to the relevant payment date or, in the event The Wall Street Journal has not published such exchange rate, the rate will be determined in the Company’s sole discretion on the basis of the most recently available market exchange rate for the Applicable Currency. Any payment in respect of this global Security so made in U.S. dollars will not constitute an event of default under this global Security or the Indenture. Neither the Trustee nor The Bank of New York Mellon, London Branch shall have any responsibility for any calculation or conversion in connection with the foregoing.
This global Security is a global security evidencing a portion of a duly authorized issuance of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of March 16, 2015 (herein called the “Indenture”), between the Company and The Bank of New York Mellon, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.  This global Security represents a portion of the series designated as the Company’s Euro Medium-Term Notes Due Nine Months or More from the Date of Issue (herein called the “Notes”). 
Notices with respect to this global Security will be published in a newspaper in The City of New York.  It is expected that publication will be made in The Wall Street Journal.  Any such notice shall be deemed to have been given on the date of such publication or, if published more than once, on the date of the first such publication.

3

This global Security is subject to redemption, as set forth hereunder and in the Pricing Supplements.
This global Security is only subject to redemption in accordance with the attached Pricing Supplements, upon not less than 30 nor more than 60 days’ prior notice given in the manner provided in the Indenture, at a redemption price specified in such Pricing Supplement, together with any accrued and unpaid interest to such redemption date.
All payments of principal and interest in respect of this Security will be made free and clear of, and without deduction or withholding for or on account of any present or future taxes, duties, assessments or other governmental charges of whatsoever nature required to be deducted or withheld by the United States or any political subdivision or taxing authority of or in the United States, unless such withholding or deduction is required by law.
If an Event of Default with respect to the Notes shall occur and be continuing, the principal of such Notes may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of a particular series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected.  The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this global Security shall be conclusive and binding upon such Holder and upon all future Holders of this global Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this global Security.
No reference herein to the Indenture and no provision of this global Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this global Security at the times, place and rate, and in the coin or currency, herein prescribed.
If at any time the Depository notifies the Company that it is unwilling or unable to continue as Depository for the Securities evidenced hereby and a successor Depository is not appointed by the Company within 90 days after the Company receives such notice, the Company shall execute, and the Trustee shall authenticate and deliver, Securities in definitive registered form without coupons, in denominations of €100,000 (or its equivalent in other currencies) or any amount in excess thereof which is an integral multiple of €1,000 (or its equivalent in other currencies), unless otherwise specified in a Pricing Supplement, (such denominations referred to herein as “authorized denominations”), of like tenor and in an aggregate principal amount equal to the principal amount of this global Security in exchange for this global Security.  In addition, the Company may at any time determine that the Securities evidenced hereby shall no longer be represented by a global security.  Notes (including Notes denominated in pounds sterling) in respect of which the issue proceeds are to be accepted in the United Kingdom or which issue otherwise constitutes a contravention of Section 19 of the Financial Services and Markets Act 2000 and which have a maturity of less than one year shall have a minimum denomination and redemption value of £100,000 (or if the Notes are denominated in a currency other than pounds sterling, as specified in the Pricing Supplement, at least the equivalent thereof in such currency using the spot rate as of the date of issue). In such event, the Company shall execute and the Trustee, upon receipt of an Officers’ Certificate evidencing such determination by the Company, shall authenticate and deliver Securities in definitive registered form without coupons, in authorized denominations, and of like tenor and in an aggregate principal amount equal to the principal amount of this global Security in exchange for this global Security.  Upon the exchange of this global Security for such Securities in definitive registered form without coupons, in authorized denominations, this global Security shall be cancelled by the Trustee.  Securities in definitive registered form issued in exchange for this global Security shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee.  The Trustee shall deliver such Securities to the Persons in whose names such Securities are so registered.
 

4

As provided in the Indenture and subject to certain limitations set forth therein, the transfer of a Security may be registered on the Security Register upon surrender of such Security for registration of transfer at the corporate trust office of the Trustee or at such other office in The City of New York or another city as the Company may designate where the principal of and interest on such Security are payable, (i) duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of authorized denominations, and of like tenor and in the same aggregate principal amount shall be issued to the designated transferee or transferees.  No service charge shall be charged for any registration of transfer or exchange of a Security, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange; provided, however, that for so long as any Securities are evidenced by this global Security, this global Security may be transferred in whole but not in part, only to another nominee of the Depository or to a successor Depository selected or approved by the Company or to a nominee of such successor Depository.
Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner hereof for all purposes, whether or not such Security is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this global Security that are defined in the Indenture and not herein otherwise defined shall have the meanings assigned to them therein.
Unless the certificate of authentication hereon has been executed by the Trustee, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this global Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, Ford Motor Credit Company LLC has caused this instrument to be signed by its Chairman of the Board, or its President, or one of its Vice Presidents, and by its Treasurer or one of its Assistant Treasurers, manually or in facsimile, and its corporate seal to be imprinted hereon.

	
		
	Dated:  February 17, 2017
	FORD MOTOR CREDIT COMPANY LLC

	 
	 

	 
	By: 
      Chairman of the Board

	 
	 

	[COMPANY SEAL]
	 

	 
	By:
     Chief Financial Officer and Treasurer

Attest: 

By:  ________________________
        Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the global Securities of the series designated herein referred to in the within-mentioned Indenture.

THE BANK OF NEW YORK MELLON
   As Trustee,

By:  _________________________
        Authorized Officer

Dated:  February 17, 2017

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
______________________________________________________________________

______________________________________________________________________
(Print or Type Name and Address including Zip Code of Assignee)

the within global Security, and all rights thereunder, hereby irrevocably constituting and appointing 
________________________________________________________________attorney to transfer said global Security on the books of the Company, with full power of substitution in the premises.

Dated__________________

NOTE:  The signature to this assignment must correspond with the name as written upon the face of the within global Security in every particular without alteration or enlargement or any change whatsoever and must be guaranteed by a commercial bank or trust company having its principal office or correspondent in The City of New York or by a member of the New York Stock Exchange.

NOTE: Medallion Guarantee Stamp - We cannot complete the transfer if this stamp is not affixed to this assignment.  This stamp can be obtained from a financial institution that is a member of the Securities Transfer Association Medallion Program, New York Exchange Medallion Program or Global Note Exchange Medallion Program.

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