PROPOSAL
1:
GRANT
OF AUTHORITY FOR A REVERSE SPLIT OF
THE
COMPANY’S COMMON STOCK
On
October 6, 2020, the Board of Directors of the Company adopted resolutions to effect a Reverse Stock Split of the Company’s
issued and outstanding Common Stock, as described below. The Stockholders approved the Reverse Stock Split by written consent
in lieu of a meeting on October 6, 2020.
The
form of Certificate of Amendment to be filed with the Delaware Secretary of State is set forth as Appendix A to
this Information Statement.
Approval
of the proposal permits the Company to effect a Reverse Stock Split of our issued and outstanding Common Stock by a ratio of 1-for-500.
In determining the ratio of the Reverse Stock Split, our Board of Directors considered, among other things, factors such as:
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the
initial or continuing listing requirements of various stock exchanges;
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the
historical trading price and trading volume of our Common Stock;
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the
number of shares of our Common Stock issued and outstanding;
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the
then-prevailing trading price and trading volume of our Common Stock and the anticipated impact of the Reverse Stock Split
on the trading market for our Common Stock; and
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prevailing
general market and economic conditions.
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The
Company shall pay stockholders the fair value of fractions of a share as of the time when those entitled to receive such fractions
are determined. The amendment to our Certificate of Incorporation to effect a Reverse Stock Split, if any, will include only the
reverse split ratio determined by our Board of Directors to be in the best interests of our stockholders and all of the other
proposed amendments at different ratios will be abandoned.
Reasons
for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split
The
Company’s primary reasons for approving the Reverse Stock Split are to make the Common Stock more attractive to a broader
range of institutional and other investors; allow the Company to uplist to a national securities exchange; and, to decrease the
Company’s Delaware annual franchise tax which may be calculated based upon the number of issued shares.
Reducing
the number of issued shares of Common Stock should, absent other factors, increase the per share market price of the Common Stock.
The Company believes the Reverse Stock Split will make its Common Stock more attractive to a broader range of investors, as it
believes that the current market price of the Common Stock may prevent certain institutional investors, professional investors
and other members of the investing public from purchasing stock. Many brokerage houses and institutional investors have internal
policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers
from recommending low-priced stocks to their customers. Furthermore, some of those policies and practices may function to make
the processing of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’ commissions
on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the
current average price per share of common stock can result in individual stockholders paying transaction costs representing a
higher percentage of their total share value than would be the case if the share price were higher. The Company believes that
a Reverse Stock Split will make the Common Stock a more attractive and cost effective investment for many investors, which in
turn would enhance the liquidity of the holders of Common Stock. The Board also believes that a Reverse Stock Split may facilitate
the future uplisting of our Common Stock to a national securities exchange; however, no assurance can be given that our Common
Stock will be uplisted to a national securities exchange.
Reducing
the number of outstanding shares of our Common Stock through a Reverse Stock Split is intended, absent other factors, to increase
the per share market price of our Common Stock. However, other factors, such as our financial results, market conditions and the
market perception of our business may adversely affect the market price of our Common Stock. As a result, there can be no assurance
that the Reverse Stock Split will result in the intended benefits described above, that the market price of our Common Stock will
increase following the Reverse Stock Split, or that the market price of our Common Stock will not decrease in the future. Additionally,
we cannot assure you that the market price per share of our Common Stock after the Reverse Stock Split will increase in proportion
to the reduction in the number of shares of our Common Stock outstanding before the Reverse Stock Split. Accordingly, the total
market capitalization of our Common Stock after the Reverse Stock Split may be lower than the total market capitalization before
the Reverse Stock Split.
In
addition, as a Delaware corporation, we are required to pay an annual Delaware franchise tax which is calculated based upon several
variables, including a company’s number of total outstanding shares as compared to the company’s number of authorized
shares of capital stock. We believe that a decrease in the number of outstanding shares as a result of a Reverse Stock Split may
decrease our annual Delaware franchise tax liability; however, no assurance can be given that the decrease in outstanding shares
will decrease our annual Delaware franchise tax liability.
Procedure
for Implementing the Reverse Stock Split
The
Reverse Stock Split will be effective upon the filing, or such later time as specified in the filing (the “Effective
Time”), of a Certificate of Amendment to our Certificate of Incorporation with the Delaware Secretary of State. The form
of the Certificate of Amendment to our Certificate of Incorporation is attached hereto as Appendix A.
Effect
of the Reverse Stock Split on Holders of Outstanding Common Stock
Based
on the ratio for the Reverse Stock Split, 500 shares of existing Common Stock will be combined into 1 new share of Common Stock.
Based on 4,926,087,663 shares of Common Stock issued as of the Record Date, immediately following the Reverse Stock Split the
Company would have 9,852,175 shares of Common Stock issued and outstanding.
The
Reverse Stock Split will affect all holders of our Common Stock uniformly and will not affect any stockholder’s percentage
ownership interest in the Company, except that as described below in “Fractional Shares,” record holders of
Common Stock otherwise entitled to a fractional share as a result of the Reverse Stock Split will receive the fair value of fractions
of a share as of the time when those entitled to receive such fractions are determined. In addition, the Reverse Stock Split will
not affect any stockholder’s proportionate voting power (subject to the treatment of fractional shares).
The
Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of Common Stock. Odd
lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally
somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.
After
the Effective Time, our Common Stock will have a new Committee on Uniform Securities Identification Procedures (CUSIP) number,
which is a number used to identify our equity securities, and stock certificates with the older CUSIP number will need to be exchanged
for stock certificates with the new CUSIP number by following the procedures described herein. After the Reverse Stock Split,
we will continue to be subject to the periodic reporting and other requirements of the Exchange Act. Unless we simultaneously
list our Common Stock on an exchange, bid and ask prices for our Common Stock will continue to be quoted on the OTCQB tier of
the OTC Markets under the symbol “VRUS.” The Reverse Stock Split is not intended as, and will not have the effect
of, a “going private transaction” as described by Rule 13e-3 under the Exchange Act.
After
the effective time of the Reverse Stock Split, the post-split market price of our Common Stock may be less than the pre-split
price multiplied by the Reverse Stock Split ratio. In addition, a reduction in number of shares issued may impair the liquidity
for our Common Stock, which may reduce the value of our Common Stock.
Authorized
Shares of Common Stock
The
Reverse Stock Split will not change the number of authorized shares of the Company’s Common Stock under the Company’s
Certificate of Incorporation. Because the number of issued and outstanding shares of Common Stock will decrease, the number of
shares of Common Stock remaining available for issuance will increase. Currently, under our Certificate of Incorporation, our
authorized capital stock consists of 7,500,000,000 shares of Common Stock. The Company intends to use its authorized but unissued
shares of Common Stock to comply with conversions pursuant to its outstanding convertible notes and preferred stock together with
the exercises of its outstanding warrants. In addition, the Company may use its authorized but unissued shares of Common Stock
for future financings, investment opportunities, acquisitions, or other distributions and stock splits (including splits effected
through the declaration of stock dividends).
By
increasing the number of authorized but unissued shares of Common Stock, the Reverse Stock Split may, under certain circumstances,
have an anti-takeover effect, although this is not the intent of the Board of Directors. For example, it may be possible for the
Board of Directors to delay or impede a takeover or transfer of control of the Company by causing such additional authorized but
unissued shares to be issued to holders who might side with the Board of Directors in opposing a takeover bid that the Board of
Directors determines is not in the best interests of the Company or its stockholders. The Reverse Stock Split therefore may have
the effect of discouraging unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover
attempts the Reverse Stock Split may limit the opportunity for the Company’s stockholders to dispose of their shares at
the higher price generally available in takeover attempts or that may be available under a merger proposal. The Reverse Stock
Split may have the effect of permitting the Company’s current management, including the current Board of Directors, to retain
its position, and place it in a better position to resist changes that the Company’s stockholders may wish to make if they
are dissatisfied with the conduct of the Company’s business. However, the Board of Directors is not aware of any attempt
to take control of the Company and the Board of Directors has not approved the Reverse Stock Split with the intent that it be
utilized as a type of anti-takeover device.
Beneficial
Holders of Common Stock (i.e. stockholders who hold in street name)
Upon
the implementation of the Reverse Stock Split, we intend to treat shares held by stockholders through a bank, broker, custodian
or other nominee in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers, custodians
or other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in
street name. However, these banks, brokers, custodians or other nominees may have different procedures than registered stockholders
for processing a Reverse Stock Split. Stockholders who hold shares of our Common Stock with a bank, broker, custodian or other
nominee and who have any questions in this regard are encouraged to contact their banks, brokers, custodians or other nominees.
Registered
“Book-Entry” Holders of Common Stock (i.e. stockholders that are registered on the transfer agent’s books and
records but do not hold stock certificates)
Certain
of our registered holders of Common Stock may hold some or all of their shares electronically in book-entry form with the transfer
agent. These stockholders do not have stock certificates evidencing their ownership of the Common Stock. They are, however, provided
with a statement reflecting the number of shares registered in their accounts.
Stockholders
who hold shares electronically in book-entry form with the transfer agent will not need to take action (the exchange will be automatic)
to receive whole shares of post-Reverse Stock Split Common Stock, subject to adjustment for treatment of fractional shares.
Holders
of Certificated Shares of Common Stock
Stockholders
holding shares of our Common Stock in certificated form will be sent a transmittal letter by our transfer agent after the Effective
Time. The letter of transmittal will contain instructions on how a stockholder should surrender his, her or its certificate(s)
representing shares of our Common Stock (the “Old Certificates”) to the transfer agent in exchange for certificates
representing the appropriate number of whole shares of post-Reverse Stock Split Common Stock (the “New Certificates”).
No New Certificates will be issued to a stockholder until such stockholder has surrendered all Old Certificates, together with
a properly completed and executed letter of transmittal, to the transfer agent. No stockholder will be required to pay a transfer
or other fee to exchange his, her or its Old Certificates. Stockholders will then receive a New Certificate(s) representing the
number of whole shares of Common Stock that they are entitled as a result of the Reverse Stock Split, subject to the treatment
of fractional shares described below. Until surrendered, we will deem outstanding Old Certificates held by stockholders to be
cancelled and only to represent the number of whole shares of post-Reverse Stock Split Common Stock to which these stockholders
are entitled, subject to the treatment of fractional shares. Any Old Certificates submitted for exchange, whether because of a
sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates. If an Old Certificate has
a restrictive legend on the back of the Old Certificate(s), the New Certificate will be issued with the same restrictive legends
that are on the back of the Old Certificate(s).
The
Company expects that our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates.
No service charges will be payable by holders of shares of Common Stock in connection with the exchange of certificates. All of
such expenses will be borne by the Company.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Fractional
Shares
The
Company does not currently intend to issue fractional shares in connection with the Reverse Stock Split. Therefore, the Company
does not expect to issue certificates representing fractional shares. The Board of Directors will arrange for the disposition
of fractional interests by stockholders entitled thereto by paying, in cash, the fair value of fractions of a share as of the
time when those entitled to receive such fractions are determined.
If
the Board of Directors determines to pay, in cash, the fair value of fractions of a share as of the time when those entitled to
receive such fractions are determined, stockholders who would otherwise hold fractional shares because the number of shares of
Common Stock they hold before the Reverse Stock Split is not evenly divisible by the ratio ultimately selected by the Board of
Directors will be entitled to receive cash (without interest or deduction) in lieu of such fractional shares from either: (i)
the Company, upon receipt by the transfer agent of a properly completed and duly executed transmittal letter and, where shares
are held in certificated form, upon due surrender of any certificate previously representing a fractional share, in an amount
equal to such holder’s fractional share based upon the volume weighted average price of the Common Stock as reported on
the OTCQB, or other principal market of the Common Stock, as applicable, as of the date the Reverse Stock Split is effected; or
(ii) the transfer agent, upon receipt by the transfer agent of a properly completed and duly executed transmittal letter and,
where shares are held in certificated form, the surrender of all Old Certificate(s), in an amount equal to the proceeds attributable
to the sale of such fractional shares following the aggregation and sale by the transfer agent of all fractional shares otherwise
issuable. If the Board of Directors determines to dispose of fractional interests pursuant to clause (ii) above, the Company expects
that the transfer agent would conduct the sale in an orderly fashion at a reasonable pace and that it may take several days to
sell all of the aggregated fractional shares of Common Stock. In this event, such holders would be entitled to an amount equal
to their pro rata share of the proceeds of such sale. The Company will be responsible for any brokerage fees or commissions related
to the transfer agent’s open market sales of shares that would otherwise be fractional shares.
The
ownership of a fractional share interest following the Reverse Stock Split will not give the holder any voting, dividend or other
rights, except the right to receive the cash payment, as described above.
Stockholders
should be aware that, under the escheat laws of various jurisdictions, sums due for fractional interests that are not timely claimed
after the effective time of the Reverse Stock Split may be required to be paid to the designated agent for each such jurisdiction,
unless correspondence has been received by the Company or the transfer agent concerning ownership of such funds within the time
permitted in such jurisdiction. Thereafter, if applicable, stockholders otherwise entitled to receive such funds, but who do not
receive them due to, for example, their failure to timely comply with the transfer agent’s instructions, will have to seek
to obtain such funds directly from the state to which they were paid.
Effect
of the Reverse Stock Split on Employee Plans, Options, Restricted Stock Awards and Units, Warrants, and Convertible or Exchangeable
Securities
Based
upon the Reverse Stock Split ratio determined by the Board of Directors, proportionate adjustments are generally required to be
made to the per share exercise price and the number of shares issuable upon the exercise or conversion of all outstanding options,
warrants, convertible or exchangeable securities entitling the holders to purchase, exchange for, or convert into, shares of Common
Stock. This would result in approximately the same aggregate price being required to be paid under such options, warrants, convertible
or exchangeable securities upon exercise, and approximately the same value of shares of Common Stock being delivered upon such
exercise, exchange or conversion, immediately following the Reverse Stock Split as was the case immediately preceding the Reverse
Stock Split. The number of shares deliverable upon settlement or vesting of restricted stock awards will be similarly adjusted,
subject to our treatment of fractional shares. The number of shares reserved for issuance pursuant to these securities will be
proportionately based upon the Reverse Stock Split ratio determined by the Board of Directors, subject to our treatment of fractional
shares.
Accounting
Matters
The proposed amendment to the Company’s
Certificate of Incorporation will not affect the par value of our Common Stock per share, which will remain $0.000001 par
value per share. As a result, as of the Effective Time, the stated capital attributable to Common Stock and the additional
paid-in capital account on our balance sheet, on aggregate, will not change due to the Reverse Stock Split. Reported per share
net income or loss will be higher because there will be fewer shares of Common Stock outstanding. The number of shares deliverable
upon settlement or vesting of restricted stock awards will be similarly adjusted, subject to our treatment of fractional shares.
The number of shares reserved for issuance pursuant to these securities will be proportionately based upon the Reverse Stock Split
ratio determined by the Board of Directors, subject to our treatment of fractional shares.
Certain
Federal Income Tax Consequences of the Reverse Stock Split
The
following summary describes certain material U.S. federal income tax consequences of the Reverse Stock Split to holders of our
Common Stock.
Unless
otherwise specifically indicated herein, this summary addresses the tax consequences only to a beneficial owner of our Common
Stock that is a citizen or individual resident of the United States, a corporation organized in or under the laws of the United
States or any state thereof or the District of Columbia or otherwise subject to U.S. federal income taxation on a net income basis
in respect of our Common Stock (a “U.S. holder”). A trust may also be a U.S. holder if (1) a U.S. court is able to
exercise primary supervision over administration of such trust and one or more U.S. persons have the authority to control all
substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person. An estate whose income
is subject to U.S. federal income taxation regardless of its source may also be a U.S. holder. This summary does not address all
of the tax consequences that may be relevant to any particular investor, including tax considerations that arise from rules of
general application to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by investors.
This summary also does not address the tax consequences to (i) persons that may be subject to special treatment under U.S. federal
income tax law, such as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment
trusts, tax-exempt organizations, U.S. expatriates, persons subject to the alternative minimum tax, traders in securities that
elect to mark to market and dealers in securities or currencies, (ii) persons that hold our Common Stock as part of a position
in a “straddle” or as part of a “hedging,” “conversion” or other integrated investment transaction
for federal income tax purposes, or (iii) persons that do not hold our Common Stock as “capital assets” (generally,
property held for investment).
If
a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our
Common Stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the
partner and the activities of the partnership. Partnerships that hold our Common Stock, and partners in such partnerships, should
consult their own tax advisors regarding the U.S. federal income tax consequences of any Reverse Stock Split.
This
summary is based on the provisions of the Internal Revenue Code of 1986, as amended, U.S. Treasury regulations, administrative
rulings and judicial authority, all as in effect as of the date of this proxy statement. Subsequent developments in U.S. federal
income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material
effect on the U.S. federal income tax consequences of the Reverse Stock Split.
PLEASE
CONSULT YOUR OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE
STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.
U.S.
Holders
The
Reverse Stock Split should be treated as a recapitalization for U.S. federal income tax purposes. Therefore, a stockholder generally
will not recognize gain or loss on the Reverse Stock Split, except to the extent of cash, if any, received in lieu of a fractional
share interest in the post-Reverse Stock Split shares. The aggregate tax basis of the post-split shares received will be equal
to the aggregate tax basis of the pre-split shares exchanged therefore (excluding any portion of the holder’s basis allocated
to fractional shares), and the holding period of the post-split shares received will include the holding period of the pre-split
shares exchanged. A holder of the pre-split shares who receives cash will generally recognize gain or loss equal to the difference
between the portion of the tax basis of the pre-split shares allocated to the fractional share interest and the cash received.
Such gain or loss will be a capital gain or loss and will be short term if the pre-split shares were held for one year or less
and long term if held more than one year. No gain or loss will be recognized by us as a result of the Reverse Stock Split.
No
Appraisal Rights
Under
Delaware law and our charter documents, holders of our Common Stock will not be entitled to dissenter’s rights or appraisal
rights with respect to the Reverse Stock Split.
PROPOSAL
2:
APPROVAL
OF THE COMPANY’S 2020 EQUITY INCENTIVE PLAN AND THE RESERVATION OF 750,000,000 (1,500,000 POST-SPLIT) SHARES OF COMMON STOCK
FOR ISSUANCE THEREUNDER
Summary
The
Company’s 2020 Equity Incentive Plan was adopted by the Board on October 6, 2020 and by the Stockholders on October 6, 2020.
The 2020 Plan shall permit us to issue equity awards to selected key service providers in order to motivate and retain such persons
and to further align their interests with our stockholders.
Having
an adequate number of shares available for future equity compensation grants is necessary to promote our long-term success and
the creation of stockholder value by:
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Enabling
us to continue to attract and retain the services of key service providers who would be eligible to receive grants;
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Aligning
participants’ interests with stockholders’ interests through incentives that are based upon the performance of
our Common Stock;
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Motivating
participants, through equity incentive awards, to achieve long-term growth in the Company’s business, in addition to
short-term financial performance; and,
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Providing
a long-term equity incentive program that is competitive as compared to other companies with whom we compete for talent.
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The
2020 Plan will permit the discretionary award of incentive stock options (“ISOs”), nonstatutory stock options (“NQSOs”),
restricted stock, restricted stock units (“RSUs”), stock appreciation rights (“SARs”), other equity awards
and/or cash awards to selected participants. The 2020 Plan will remain in effect until the earlier of (i) October 31, 2030 and
(ii) the date upon which the 2020 Plan is terminated pursuant to its terms, and in any event subject to the maximum share limit
of the 2020 Plan.
On
October 6, 2020, our Board adopted the 2020 Plan and the reservation of 750,000,000 (1,500,000 post-split) shares of Common Stock
for issuance thereunder. The number of shares available for issuance under the 2020 Plan constitutes approximately 15% of our
post-split issued and outstanding shares of Common Stock as of the Record Date.
When
approving the reservation of 750,000,000 (1,500,000 post-split) shares of common stock issuable pursuant to the 2020 Plan, the
Board considered a number of factors, including those set forth below:
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Alignment
with our Stockholders. Achieving superior, long-term results for our stockholders remains one of our primary objectives.
We believe that stock ownership enhances the alignment of the long-term economic interests of our employees and our stockholders.
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Attract,
Motivate and Retain Key Employees. We compete for employees in a variety of geographic and talent markets and strive to
maintain compensation programs that are competitive in order to attract, motivate and retain key employees. If we are unable
to grant equity as part of our total compensation strategy, our ability to attract and retain all levels of talent we need
to operate our business successfully would be significantly harmed.
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Balanced
Approach to Compensation. We believe that a balanced approach to compensation - using a mix of salaries, performance-based
bonus incentives and long-term equity incentives (including performance based equity) - encourages management to make decisions
that favor long-term stability and profitability, rather than short-term results.
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Burn
Rate and Dilution. When deciding to adopt the 2020 Plan, the Board evaluated our projected need for equity grants over
the next year, our expected burn rate of shares under the 2020 Plan and the dilutive impact of the proposed share allocation.
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Set
forth below is a summary of the 2020 Plan, which is qualified in its entirety by reference to the full text of the 2020 Plan,
a copy of which is included as Appendix B to this Information Statement. If there is any inconsistency between
the following summary of the 2020 Plan and Appendix B, the 2020 Plan shall govern.
Key
Features of the 2020 Plan
Certain
key features of the 2020 Plan are summarized as follows:
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If
not terminated earlier by the Board, the 2020 Plan will terminate on October 31, 2030.
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Up
to a maximum aggregate of750,000,000 (1,500,000 post-split) shares of Common Stock may be issued under the 2020 Plan. The
maximum number of shares to be issued to the exercise of ISOs shall comply with Treasury Regulation Section 1.422-2(b). The
2020 Plan is limited to issue that number of shares exercisable for the first time by any individual during any calendar year
whose aggregate fair market value does not exceed $100,000.
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The
2020 Plan will generally be administered by a committee comprised solely of independent members of the Board. This committee
will be the compensation committee unless otherwise designated by the Board (the “Committee”). If no committee
has been appointed, the full Board shall constitute the committee. The Board may designate a separate committee to make awards
to employees who are not officers subject to the reporting requirements of Section 16 of the Exchange Act.
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Employees,
consultants and Board members are eligible to receive awards, provided that the Committee has the discretion to determine
(i) who shall receive any awards, and (ii) the terms and conditions of such awards.
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Awards
may consist of ISOs, NQSOs, restricted stock, RSUs, SARs, other equity awards and/or cash awards.
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Stock
options and SARs may not be granted at a per share exercise price below the fair market value of a share of our Common Stock
on the date of grant.
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Stock
options and SARs may not be repriced or exchanged without stockholder approval.
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The
maximum exercisable term of stock options and SARs may not exceed ten years.
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Awards
are subject to recoupment of compensation policies adopted by the Company.
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Background
and Purpose of the 2020 Plan. The purpose of the 2020 Plan is to promote our long-term success and the creation of stockholder
value by:
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Attracting
and retaining the services of key employees who would be eligible to receive grants as selected participants;
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Motivating
selected participants through equity-based compensation that is based upon the performance of our Common Stock; and
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Further
aligning selected participants’ interests with the interests of our stockholders, through the award of equity compensation
grants which increases their interest in the Company, to achieve long-term growth over short-term performance.
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The
2020 Plan permits the grant of the following types of equity-based incentive awards: (1) stock options (which can be either ISOs
or NQSOs), (2) SARs, (3) restricted stock, (4) RSUs, (5) other equity awards and (6) cash awards. The vesting of awards can be
based on either continuous service and/or performance goals. Awards are evidenced by a written agreement between the selected
participant and the Company.
Eligibility
to Receive Awards. Employees, consultants and Board members of the Company and certain of our affiliated companies are
eligible to receive awards under the 2020 Plan. The Committee determines, in its discretion, the selected participants who will
be granted awards under the 2020 Plan.
Shares
Subject to the 2020 Plan. The maximum number of shares of Common Stock that can be issued under the 2020 Plan is 750,000,000
(1,500,000 post-split) shares. The shares underlying forfeited or terminated awards (without payment of consideration), or unexercised
awards become available again for issuance under the 2020 Plan. The 2020 Plan also imposes certain share grant limits such as
the limit on grants to non-employee directors described above and other limits that are intended to comply with the legal requirements
of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and which are discussed elsewhere in
this proposal. No fractional shares may be issued under the 2020 Plan. No shares will be issued with respect to a participant’s
award unless applicable tax withholding obligations have been satisfied by the participant.
Administration
of the 2020 Plan. The 2020 Plan will be administered by the Committee. Subject to the terms of the 2020 Plan, the Committee
has the sole discretion, among other things, to:
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Select
the individuals who will receive awards;
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Determine
the terms and conditions of awards (for example, performance conditions, if any, and vesting schedule);
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Correct
any defect, supply any omission, or reconcile any inconsistency in the 2020 Plan or any award agreement;
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Accelerate
the vesting, extend the post-termination exercise term or waive restrictions of any awards at any time and under such terms
and conditions as it deems appropriate, subject to the limitations set forth in the 2020 Plan;
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Permit
a participant to defer compensation to be provided by an award; and
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Interpret
the provisions of the 2020 Plan and outstanding awards.
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The
Committee may suspend vesting, settlement, or exercise of awards pending a determination of whether a selected participant’s
service should be terminated for cause (in which case outstanding awards would be forfeited). Awards may be subject to any policy
that the Board may implement on the recoupment of compensation (referred to as a “clawback” policy). The members of
the Board, the Committee and their delegates shall be indemnified by the Company to the maximum extent permitted by applicable
law for actions taken or not taken regarding the 2020 Plan. In addition, the Committee may use the 2020 Plan to issue shares under
other plans or sub-plans as may be deemed necessary or appropriate, such as to provide for participation by non-U.S. employees
and those of any of our subsidiaries and affiliates.
Types
of Awards.
Stock
Options. A stock option is the right to acquire shares at a fixed exercise price over a fixed period of time. The Committee
will determine, among other terms and conditions, the number of shares covered by each stock option and the exercise price of
the shares subject to each stock option, but such per share exercise price cannot be less than the fair market value of a share
of our Common Stock on the date of grant of the stock option. The fair market value of a share of our Common Stock for the purposes
of pricing our awards shall be equal to the closing price for our Common Stock as reported by the OTCQB or such other principal
trading market on which our securities are traded on the date of determination. Stock options may not be repriced or exchanged
without stockholder approval, and no re-load options may be granted under the 2020 Plan.
Stock
options granted under the 2020 Plan may be either ISOs or NQSOs. As required by the Code and applicable regulations, ISOs are
subject to various limitations not imposed on NQSOs. For example, the exercise price for any ISO granted to any employee owning
more than 10% of our Common Stock may not be less than 110% of the fair market value of the Common Stock on the date of grant,
and such ISO must expire no later than five years after the grant date. The aggregate fair market value (determined at the date
of grant) of Common Stock subject to all ISOs held by a participant that are first exercisable in any single calendar year cannot
exceed $100,000. ISOs may not be transferred other than upon death, or to a revocable trust where the participant is considered
the sole beneficiary of the stock option while it is held in trust. In order to comply with Treasury Regulation Section 1.422-2(b),
the 2020 Plan is limited to issue that number of shares exercisable for the first time by any individual during any calendar year
whose aggregate fair market value does not exceed $100,000.
A
stock option granted under the 2020 Plan generally cannot be exercised until it becomes vested. The Committee establishes the
vesting schedule of each stock option at the time of grant. The maximum term for stock options granted under the 2020 Plan may
not exceed ten years from the date of grant although the Committee may establish a shorter period at its discretion. The exercise
price of each stock option granted under the 2020 Plan must be paid in full at the time of exercise, either with cash, or through
a broker-assisted “cashless” exercise and sale program, or net exercise, or through another method approved by the
Committee. The optionee must also make arrangements to pay any taxes that are required to be withheld at the time of exercise.
SARs.
A SAR is the right to receive, upon exercise, an amount equal to the difference between the fair market value of the shares on
the date of the SAR’s exercise and the aggregate exercise price of the shares covered by the exercised portion of the SAR.
The Committee determines the terms of SARs, including the exercise price (provided that such per share exercise price cannot be
less than the fair market value of a share of our Common Stock on the date of grant), the vesting and the term of the SAR. The
maximum term for SARs granted under the 2020 Plan may not exceed ten years from the date of grant, subject to the discretion of
the Committee to establish a shorter period. Settlement of a SAR may be in shares of Common Stock or in cash, or any combination
thereof, as the Committee may determine. SARs may not be repriced or exchanged without stockholder approval.
Restricted
Stock. A restricted stock award is the grant of shares of our Common Stock to a selected participant and such shares may be
subject to a substantial risk of forfeiture until specific conditions or goals are met. The restricted shares may be issued with
or without cash consideration being paid by the selected participant as determined by the Committee. The Committee also will determine
any other terms and conditions of an award of restricted stock. In determining whether an award of restricted stock should be
made, and/or the vesting schedule for any such award, the Committee may impose whatever conditions to vesting it determines to
be appropriate. During the period of vesting, the participant will not be permitted to transfer the restricted shares but will
generally have voting and dividend rights (subject to vesting) with respect to such shares.
RSUs.
RSUs are the right to receive an amount equal to the fair market value of the shares covered by the RSU at some future date after
the grant. The Committee will determine all of the terms and conditions of an award of RSUs, including the vesting period. Upon
each vesting date of an RSU, a selected participant will become entitled to receive an amount equal to the number of shares indicated
in the grant notice, or, if expressed in dollar terms, the fair market value of the shares on the settlement date. Payment for
vested RSUs may be in shares of Common Stock or in cash, or any combination thereof, as the Committee may determine. Settlement
of vested stock units will generally occur at or around the time of vesting but the Committee may permit a participant to defer
such compensation until a later point in time. Stock units represent an unfunded and unsecured obligation for us, and a holder
of a stock unit has no rights other than those of a general creditor.
Other
Awards. The 2020 Plan also provides that other equity awards, which derive their value from the value of our shares or from
increases in the value of our shares, may be granted. In addition, cash awards may also be issued. Substitute awards may be issued
under the 2020 Plan in assumption of or substitution for or exchange for awards previously granted by an entity which we (or an
affiliate) acquire.
Limited
Transferability of Awards. Awards granted under the 2020 Plan generally are not transferrable other than by will or by the
laws of descent and distribution. However, the Committee may in its discretion permit the transfer of awards other than ISOs.
Generally, where transfers are permitted, they will be permitted only by gift to a member of the selected participant’s
immediate family or to a trust or other entity for the benefit of the selected participant and/or member(s) of his or her immediate
family.
Termination
of Employment, Death or Disability. The 2020 Plan generally determines the effect of the termination of employment on awards,
which determination may be different depending on the nature of the termination, such as terminations due to cause, resignation,
death, or disability and the status of the award as vested or unvested, unless the award agreement or a selected participant’s
employment agreement or other agreement provides otherwise.
Dividends
and Dividend Equivalents. Any dividend equivalents distributed in the form of shares under the 2020 Plan will count against
the 2020 Plan’s maximum share limit. The 2020 Plan also provides that dividend equivalents will not be paid or accrue on
unexercised stock options or unexercised SARs. Dividends and dividend equivalents that may be paid or accrue with respect to unvested.
Awards shall be subject to the same vesting conditions as the underlying award and shall only be distributed to the extent that
such vesting conditions are satisfied.
Adjustments
upon Changes in Capitalization.
In
the event of the following actions:
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stock
split of our outstanding shares of Common Stock;
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stock
dividend;
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dividend
payable in a form other than shares in an amount that has a material effect on the price of the shares;
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consolidation;
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combination
or reclassification of the shares;
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recapitalization;
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spin-off;
or
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other
similar occurrences,
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then
the following shall each be equitably and proportionately adjusted by the Committee:
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maximum
number of shares that can be issued under the 2020 Plan (including the ISO share grant limit);
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number
and class of shares issued under the 2020 Plan and subject to each award;
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exercise
prices of outstanding awards; and
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number
and class of shares available for issuance under the 2020 Plan.
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Change
in Control. In the event that we are a party to a merger or other reorganization or similar transaction, outstanding 2020
Plan awards will be subject to the agreement pertaining to such merger or reorganization. Such agreement may provide for (i) the
continuation of the outstanding awards by us if we are a surviving corporation, (ii) the assumption or substitution of the outstanding
awards by the surviving entity or its parent, (iii) full exercisability and/or full vesting of outstanding awards, or (iv) cancellation
of outstanding awards either with or without consideration, in all cases with or without consent of the selected participant.
The Board or the Committee need not adopt the same rules for each award or selected participant.
The
Committee will decide the effect of a change in control of the Company on outstanding awards. The Committee may, among other things,
provide that awards will fully vest and/or be canceled upon a change in control, or fully vest upon an involuntary termination
of employment following a change in control. The Committee may also include in an award agreement provisions designed to minimize
potential negative income tax consequences for the participant or the Company that could be imposed under the golden parachute
tax rules of Code Section 280G.
Term
of the 2020 Plan. The 2020 Plan is in effect until October 31, 2030 or until earlier terminated by the Board. Outstanding
awards shall continue to be governed by their terms after the termination of the 2020 Plan.
Governing
Law. The 2020 Plan shall be governed by the laws of the State of Delaware (which is the state of our incorporation) except
for conflict of law provisions.
Amendment
and Termination of the 2020 Plan. The Board generally may amend or terminate the 2020 Plan at any time and for any reason,
except that it must obtain stockholder approval of material amendments to the extent required by applicable laws, regulations
or rules.
Certain
Federal Income Tax Information
The
following is a general summary, as of April 1, 2018, of the federal income tax consequences to us and to U.S. participants for
awards granted under the 2020 Plan. The federal tax laws may change and the federal, state and local tax consequences for any
participant will depend upon his or her individual circumstances. This summary is not intended to be exhaustive and does not discuss
the tax consequences of a participant’s death or provisions of income tax laws of any municipality, state or other country.
We advise participants to consult with a tax advisor regarding the tax implications of their awards under the 2020 Plan.
Incentive
Stock Options. For federal income tax purposes, the holder of an ISO has no taxable income at the time of the grant or exercise
of the ISO. If such person retains the Common Stock acquired under the ISO for a period of at least two years after the stock
option is granted and one year after the stock option is exercised, any gain upon the subsequent sale of the Common Stock will
be taxed as a long-term capital gain. A participant who disposes of shares acquired by exercise of an ISO prior to the expiration
of two years after the stock option is granted or before one year after the stock option is exercised will realize ordinary income
equal to the lesser of (i) the excess of the fair market value over the exercise price of the shares on the date of exercise,
or (ii) the excess of the amount realized on the disposition over the exercise price for the shares. Any additional gain or loss
recognized upon any later disposition of the shares would be a short- or long-term capital gain or loss, depending on whether
the shares have been held by the participant for more than one year. Utilization of losses is subject to special rules and limitations.
Nonstatutory
Stock Options. A participant who receives a nonstatutory stock option generally will not realize taxable income on the grant
of such option, but will realize ordinary income at the time of exercise of the stock option equal to the difference between the
option exercise price and the fair market value of the stock on the date of exercise.
Restricted
Stock. A participant will generally not have taxable income upon grant of unvested restricted shares unless he or she elects
to be taxed at that time pursuant to an election under Code Section 83(b). Instead, he or she will recognize ordinary income at
the time(s) of vesting equal to the fair market value (on each vesting date) of the shares or cash received minus any amount paid
for the shares, if any.
Stock
Units. No taxable income is generally reportable when unvested stock units are granted to a participant. Upon settlement of
the vested stock units, the participant will recognize ordinary income in an amount equal to the fair market value of the shares
issued or payment received in connection with the vested stock units.
Stock
Appreciation Rights. No taxable income is generally reportable when a stock appreciation right is granted to a participant.
Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received plus the fair
market value of any shares received.
Income
Tax Effects for the Company. We generally will be entitled to a tax deduction in connection with an award under the 2020 Plan
in an amount equal to the ordinary income realized by a participant at the time the participant recognizes such income (for example,
upon the exercise of a nonqualified stock option or vesting of restricted stock).
Internal
Revenue Code Section 162(m) Deduction Limitation. Section 162(m) of the Code places a limit of $1 million on the amount of
compensation that we may deduct in any one fiscal year with respect to our executive officers and other persons who are subject
to Code Section 162(m). Therefore, compensation derived from 2020 Plan awards may not be fully deductible by the Company.
Internal
Revenue Code Section 280G. For certain persons, if a change in control of the Company causes an award to vest or become newly
payable, or if the award was granted within one year of a change in control and the value of such award or vesting or payment,
when combined with all other payments in the nature of compensation contingent on such change in control, equals or exceeds the
dollar limit provided in Section 280G of the Code (generally, this dollar limit is equal to three times the five-year historical
average of the individual’s annual compensation received from the Company), then the entire amount exceeding the individual’s
average annual compensation will be considered an excess parachute payment. The recipient of an excess parachute payment must
pay a 20% excise tax on this excess amount and the Company cannot deduct the excess amount from its taxable income.
Internal
Revenue Code Section 409A. Section 409A of the Code governs the federal income taxation of certain types of nonqualified deferred
compensation arrangements. A violation of Section 409A of the Code generally results in an acceleration of the recognition of
income of amounts intended to be deferred and the imposition of a federal excise tax of 20% on the employee over and above the
income tax owed, plus possible penalties and interest. The types of arrangements covered by Section 409A of the Code are broad
and may apply to certain awards available under the 2020 Plan (such as stock units). The intent is for the 2020 Plan, including
any awards available thereunder, to comply with the requirements of Section 409A of the Code to the extent applicable. As required
by Code Section 409A, certain nonqualified deferred compensation payments to specified employees may be delayed to the seventh
month after such employee’s separation from service.
New
Plan Benefits. All 2020 Plan awards are granted at the Committee’s discretion, subject to the limitations contained
in the 2020 Plan. Therefore, future benefits and amounts that will be received or allocated under the 2020 Plan are not presently
determinable. As of the Record Date, the fair market value of a share of our Common Stock (as determined by the closing price
quoted by the OTQCB on that date) was $0.0017.
Existing
Plan Benefits. As of the Record Date, no awards have been granted under the 2020 Plan.
STOCKHOLDER
PROPOSALS
The
Company’s Board of Directors has not yet determined the date on which the next annual meeting of stockholders will be held.
Any proposal by a stockholder intended to be presented at the Company’s next annual meeting of stockholders must be received
at the Company’s offices a reasonable amount of time prior to the date on which the information or proxy statement for that
meeting is mailed to stockholders in order to be included in the Company’s information or proxy statement relating to that
meeting.
DELIVERY
OF INFORMATION TO A SHARED ADDRESS
If
you and one or more Stockholders share the same address, it is possible that only one Information Statement was delivered to your
address. Any registered stockholder who wishes to receive a separate copy of the Information Statement at the same address now
or in the future may mail a request to receive separate copies to the Company at 9841 Washingtonian Boulevard, Suite 390, Gaithersburg,
MD 20878, Attn: CEO, or call the Company at (301) 329-2700 and we will promptly deliver the Information Statement to you upon
your request. Stockholders who received multiple copies of this Information Statement at a shared address and who wish to receive
a single copy may direct their request to the same address.
FORWARD-LOOKING
STATEMENTS AND INFORMATION
This
Information Statement includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. You can identify our forward-looking statements by the words “expects,” “projects,”
“believes,” “anticipates,” “intends,” “plans,” “predicts,” “estimates”
and similar expressions. The forward-looking statements are based on management’s current expectations, estimates and projections
about us. The Company cautions you that these statements are not guarantees of future performance and involve risks, uncertainties
and assumptions that we cannot predict. In addition, the Company has based many of these forward-looking statements on assumptions
about future events that may prove to be inaccurate. Accordingly, actual outcomes and results may differ materially from what
the Company has expressed or forecast in the forward-looking statements. You should rely only on the information the Company has
provided in this Information Statement. The Company has not authorized any person to provide information other than that provided
herein. The Company has not authorized anyone to provide you with different information. You should not assume that the information
in this Information Statement is accurate as of any date other than the date on the front of the document.
WHERE
YOU CAN FIND MORE INFORMATION ABOUT THE COMPANY
The
Company files annual, quarterly and current reports, proxy statements and other information with the SEC. You can read and copy
any materials that the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington,
D.C. 20549. You can obtain information about the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains a website that contains information we file electronically with the SEC, which you can access over the
Internet at http://www.sec.gov. Copies of these materials may also be obtained by mail from the Public Reference Section of the
SEC, 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates.
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By
Order of the Board of Directors
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/s/
Anshu Bhatnagar
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Anshu
Bhatnagar
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Chief
Executive Officer and Chairman of the Board
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Gaithersburg,
MD
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November 6, 2020
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APPENDIX
A
Certificate
of Amendment
of
Amended
and Restated Certificate of Incorporation
of
Verus
International, Inc.
Under
Section 242 of the Delaware General Corporation Law
Verus
International, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”)
hereby certifies as follows:
FIRST:
The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended by adding the following to the end
of Article IV:
ARTICLE
IV
“Effective
as of [ ] a.m./p.m., local time on [ ], 2020 (the “Amendment Effective Time”), every five hundred (500) shares of
the Company’s Common Stock (the “Old Common Stock”) then issued and outstanding shall, automatically and without
any action on the part of the respective holders thereof, be combined, converted and changed into one (1) share of Common Stock
of the Company (the “Reverse Stock Split”). No fractional shares shall be issued upon the Reverse Stock Split. If
the Reverse Stock Split would result in the issuance of a fraction of a share of Common Stock, the Corporation shall, in lieu
of issuing any such fractional share, pay an amount in cash, without interest, equal to the fair value of such fractional interest.”
SECOND:
The foregoing amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation law
of the State of Delaware by the vote of a majority of each class of outstanding stock of the Corporation entitled to vote thereon.
IN
WITNESS WHEREOF, I have signed this Certificate this __ day of ________, 2020
APPENDIX
B
VERUS
INTERNATIONAL, INC.
2020
EQUITY INCENTIVE PLAN
EFFECTIVE
AS OF OCTOBER 6, 2020
SECTION
1. INTRODUCTION.
The
Company’s Board of Directors adopted the Verus International, Inc. 2020 Equity Incentive Plan effective as of the Adoption
Date subject to obtaining Company stockholder approval as provided in Section 15 below.
The
purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by offering Key Employees
an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, and to encourage
such Key Employees to continue to provide services to the Company and to attract new individuals with outstanding qualifications.
The
Plan seeks to achieve this purpose by providing for Awards in the form of Options (which may constitute Incentive Stock Options
or Nonstatutory Stock Options), Stock Appreciation Rights, Restricted Stock Grants, Stock Units, Other Equity Awards and/or Cash
Awards.
Capitalized
terms shall have the meaning provided in Section 2 unless otherwise provided in this Plan or any related Award Agreement.
SECTION
2. DEFINITIONS.
If a Participant’s employment agreement or Award Agreement (or other written agreement executed by and between Participant
and the Company) expressly includes defined terms that expressly are different from and/or conflict with the defined terms contained
in this Plan then the defined terms contained in the employment agreement or Award Agreement (or other written agreement executed
by and between Participant and the Company) shall govern and shall supersede the definitions provided in this Plan.
(a)
“Adoption Date” means October 6, 2020.
(b)
“Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not
less than 50% of such entity.
(c)
“Award” means any award of an Option, SAR, Restricted Stock Grant, Stock Unit, Other Equity Award or Cash Award
under the Plan.
(d)
“Award Agreement” means an agreement between the Company and a Participant evidencing the award of an Option,
SAR, Restricted Stock Grant, Stock Unit, Other Equity Award or Cash Award as applicable.
(e)
“Board” means the Board of Directors of the Company, as constituted from time to time.
(f)
“Cash Award” means, a cash incentive opportunity awarded under this Plan and which is (i) payable only in cash
and is (ii) not an Option, SAR, Restricted Stock Grant, Stock Unit or Other Equity Award.
(g)
“Cashless Exercise” means, to the extent that a Stock Option Agreement so provides and as permitted by applicable
law and in accordance with any procedures established by the Committee, an arrangement whereby payment of some or all of the aggregate
Exercise Price may be made all or in part by delivery of an irrevocable direction to a securities broker to sell Shares and to
deliver all or part of the sale proceeds to the Company. Cashless Exercise may also be utilized to satisfy an Option’s tax
withholding obligations as provided in Section 14(b).
(h)
“Cause” means, with respect to a Participant, the occurrence of any of the following: (i) a conviction of a
Participant for a felony crime or the failure of a Participant to contest prosecution for a felony crime, or (ii) a Participant’s
misconduct, fraud, disloyalty or dishonesty (as such terms may be defined by the Committee in its sole discretion), or (iii) any
unauthorized use or disclosure of confidential information or trade secrets by a Participant, or (iv) a Participant’s negligence,
malfeasance, breach of fiduciary duties, neglect of duties, or (v) any material violation by a Participant of a written Company
or Subsidiary or Affiliate policy or any material breach by a Participant of a written agreement with the Company or Subsidiary
or Affiliate, or (vi) any other act or omission by a Participant that, in the opinion of the Committee, could reasonably be expected
to adversely affect the Company’s or a Subsidiary’s or an Affiliate’s business, financial condition, prospects
and/or reputation. In each of the foregoing subclauses (i) through (vi), whether or not a “Cause” event has occurred
will be determined by the Committee in its sole discretion or, in the case of Participants who are directors or Officers or Section
16 Persons, the Board, each of whose determination shall be final, conclusive and binding. A Participant’s Service shall
be deemed to have terminated for Cause if, after the Participant’s Service has terminated, facts and circumstances are discovered
that would have justified a termination for Cause, including, without limitation, violation of material Company policies or breach
of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant.
(i)
“Change in Control” means the occurrence of any of the following:
(i)
The consummation of an acquisition, a merger or consolidation of the Company with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding
immediately after such acquisition, merger, consolidation or other reorganization is owned by persons who in the aggregate owned
less than 20% of the Company’s combined voting power represented by the Company’s outstanding securities immediately
prior to such acquisition, merger, consolidation or other reorganization;
(ii)
A sale of more than fifty percent (50%) of the outstanding shares of each class of capital stock of the Company to a person, entity
or group other than a person, entity or group affiliated with the Company; or
(iii)
The sale, transfer or other disposition of all or substantially all of the Company’s assets to a person, entity or group
other than a person, entity or group affiliated with the Company.
A
transaction shall not constitute a Change in Control if: (i) its principal purpose is to change the state of the Company’s
incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transactions; or (ii) it is an equity financing primarily for capital raising
purposes. In addition, an IPO shall not constitute a Change in Control. If the timing of payments provided under an Award Agreement
is based on or triggered by a Change in Control then, to extent necessary to avoid violating Code Section 409A, a Change in Control
must also constitute a Change in Control Event.
(j)
“Change in Control Event” has the meaning provided to such term under Code Section 409A and the applicable
regulations and guidance promulgated thereunder.
(k)
“Charter” means the Company’s Amended and Restated Certificate of Incorporation, as amended as may be
amended from time to time.
(l)
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated
thereunder.
(m)
“Committee” means a committee consisting of members of the Board that is appointed by the Board (as described
in Section 3) to administer the Plan. If no Committee has been appointed, the full Board shall constitute the Committee.
(n)
“Common Stock” means the Company’s common stock (as defined in the Charter and with the rights and obligations
provided under the Charter) and any other securities into which such shares are changed, for which such shares are exchanged or
which may be issued in respect thereof.
(o)
“Company” means Verus International, Inc., a Delaware corporation.
(p)
“Consultant” means an individual (or entity) which performs bona fide services to the Company, a Parent, a
Subsidiary or an Affiliate other than as an Employee or Non-Employee Director.
(q)
“Disability” means the following with respect to a Participant:
i.
For all ISOs, the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code;
ii.
For all Awards which are considered nonqualified deferred compensation under Code Section 409A and for which payment can be made
on account of the Participant’s disability, the disability of the Participant within the meaning of Section 409A of the
Code; or
iii.
For all other Awards, the Participant’s medically determinable physical or mental incapacitation such that for a continuous
period of not less than twelve (12) months, the Participant is unable to engage in any substantial gainful activity or which can
be expected to result in death.
Any
question as to the existence of the Participant’s physical or mental incapacitation as to which the Participant or Participant’s
representative and the Company cannot agree shall be determined in writing by a qualified independent physician selected by the
Company. The physician’s determination of Disability shall be made in writing to the Company and the determination shall
be final and conclusive for all purposes of the Participant’s Awards.
(r)
“Employee” means any individual who is a common-law employee of the Company, or of a Parent, or of a Subsidiary
or of an Affiliate.
(s)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(t)
“Exercise Price” means, in the case of an Option, the amount for which a Share may be purchased upon exercise
of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, means
an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value in determining the amount
payable to a Participant upon exercise of such SAR.
(u)
“Fair Market Value” means the market price of a Share, determined by the Committee as follows:
(i)
If the Shares were traded on a stock exchange (such as the New York Stock Exchange, NYSE Amex, the NASDAQ Global Market or NASDAQ
Capital Market) at the time of determination, then the Fair Market Value shall be equal to the regular session closing price for
such stock as reported by such exchange (or the exchange or market with the greatest volume of trading in the Shares) on the date
of determination, or if there were no sales on such date, on the last date preceding such date on which a closing price was reported;
(ii)
If the Shares were traded on the OTC Markets at the time of determination, then the Fair Market Value shall be equal to the last-sale
price reported by the OTC Markets for such date, or if there were no sales on such date, on the last date preceding such date
on which a sale was reported; and
(iii)
If neither of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good
faith using a reasonable application of a reasonable valuation method as the Committee deems appropriate.
Whenever
possible, the determination of Fair Market Value by the Committee shall be based on the prices reported by the applicable exchange
or the OTC Markets, as applicable, or a nationally recognized publisher of stock prices or quotations (including an electronic
on-line publication). Such determination shall be conclusive and binding on all persons.
(v)
“Incentive Stock Option” or “ISO” means an incentive stock option described in Code section
422.
(w)
“IPO” means an initial public offering by the Company of its equity securities pursuant to an effective registration
statement filed with the SEC.
(x)
“Key Employee” means an Employee, Non-Employee Director or Consultant who has been selected by the Committee
to receive an Award under the Plan.
(y)
“Net Exercise” means, to the extent that a Stock Option Agreement so provides and as permitted by applicable
law, an arrangement pursuant to which the number of Shares issued to the Optionee in connection with the Optionee’s exercise
of the Option will be reduced by the Company’s retention of a portion of such Shares. Upon such a net exercise of an Option,
the Optionee will receive a net number of Shares that is equal to (i) the number of Shares as to which the Option is being exercised
minus (ii) the quotient (rounded down to the nearest whole number) of the aggregate Exercise Price of the Shares being exercised
divided by the Fair Market Value of a Share on the Option exercise date. The number of Shares covered by clause (ii) will be retained
by the Company and not delivered to the Optionee. No fractional Shares will be created as a result of a Net Exercise and the Optionee
must contemporaneously pay for any portion of the aggregate Exercise Price that is not covered by the Shares retained by the Company
under clause (ii). The number of Shares delivered to the Optionee may be further reduced if Net Exercise is utilized under Section
14(b) to satisfy applicable tax withholding obligations.
(z)
“Non-Employee Director” means a member of the Board who is not an Employee.
(aa)
“Nonstatutory Stock Option” or “NSO” means a stock option that is not an ISO.
(bb)
“Officer” means an individual who is an officer of the Company within the meaning of Rule 16a-1(f) of the Exchange
Act.
(cc)
“Option” means an ISO or NSO granted under the Plan entitling the Optionee to purchase Shares under the Plan
as provided in Section 6.
(dd)
“Optionee” means an individual, estate or other entity that holds an Option.
(ee)
“Other Equity Award” means an award (other than an Option, SAR, Stock Unit, Restricted Stock Grant or Cash
Award) which derives its value from the value of Shares and/or from increases in the value of Shares. Settlement of Other Equity
Awards may be in the form of Shares and/or cash as determined by the Committee.
(ff)
“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the
Company, if each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of
a Parent on a date after the Adoption Date shall be considered a Parent commencing as of such date.
(gg)
“Participant” means an individual or estate or other entity that holds an Award.
(hh)
“Plan” means this Verus International, Inc. 2020 Equity Incentive Plan as it may be amended from time to time.
(ii)
“Re-Load Option” means a new Option or SAR that is automatically granted to a Participant as result of such
Participant’s exercise of an Option or SAR.
(jj)
“Re-Price” means that the Company has lowered or reduced the Exercise Price of outstanding Options and/or outstanding
SARs and/or outstanding Other Equity Awards for any Participant(s) in a manner described by SEC Regulation S-K Item 402(d)(2)(viii)
(or as described in any successor provision(s) or definition(s)). For avoidance of doubt, Re-Price also includes any exchange
of Options or SARs for other Awards or cash.
(kk)
“Restricted Stock Grant” means Shares awarded under the Plan as provided in Section 9.
(ll)
“Restricted Stock Grant Agreement” means the agreement described in Section 9 evidencing each Award of a Restricted
Stock Grant.
(mm)
“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.
(nn)
“SAR Agreement” means the agreement described in Section 8 evidencing each Award of a Stock Appreciation Right.
(oo)
“SEC” means the Securities and Exchange Commission.
(pp)
“Section 16 Persons” means those Officers or directors or Non-Employee Directors or other persons who are subject
to Section 16 of the Exchange Act.
(qq)
“Securities Act” means the Securities Act of 1933, as amended.
(rr)
“Separation From Service” means a Participant’s separation from service with the Company within the meaning
of Code Section 409A.
(ss)
“Service” means service as an Employee, Non-Employee Director or Consultant. Service will be deemed terminated
as soon as the entity to which Service is being provided is no longer either (i) the Company, (ii) a Parent, (iii) a Subsidiary
or (iv) an Affiliate. The Committee determines when Service commences and when Service terminates. The Committee may determine
whether any Company transaction, such as a sale or spin-off of a division or subsidiary that employs a Participant, shall be deemed
to result in termination of Service for purposes of any affected Awards, and the Committee’s decision shall be final, conclusive
and binding.
(tt)
“Share” means one share of Common Stock.
(uu)
“Stock Appreciation Right or SAR” means a stock appreciation right awarded under the Plan as provided in Section
8.
(vv)
“Stock Option Agreement” means the agreement described in Section 6 evidencing each Award of an Option.
(ww)
“Stock Unit” means a bookkeeping entry representing the equivalent of one Share awarded under the Plan as provided
in Section 10.
(xx)
“Stock Unit Agreement” means the agreement described in Section 10 evidencing each Award of Stock Units.
(yy)
“Stockholder Approval Date” means the date that the Company’s stockholders approve this Plan.
(zz)
“Stockholders Agreement” means any applicable agreement between the Company’s stockholders and/or investors
that provides certain rights and obligations for stockholders.
(aaa)
“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning
with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
A corporation that attains the status of a Subsidiary on a date after the Adoption Date shall be considered a Subsidiary commencing
as of such date.
(bbb)
“Termination Date” means the date on which a Participant’s Service terminates as determined by the Committee.
(ccc)
“10-Percent Shareholder” means an individual who owns more than ten percent (10%) of the total combined voting
power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries. In determining stock ownership,
the attribution rules of section 424(d) of the Code shall be applied.
SECTION
3. ADMINISTRATION.
(a)
Committee Composition. A Committee appointed by the Board shall administer the Plan. The Board shall designate one of the
members of the Committee as chairperson. Members of the Committee shall serve for such period of time as the Board may determine
and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.
Effective
with the Shares being publicly traded or the Company being subject to the reporting requirements of the Exchange Act, with respect
to Awards to Section 16 Persons, the Committee shall consist either (i) solely of two or more individuals who satisfy the requirements
of Rule 16b-3 (or its successor) under the Exchange Act or (ii) of the full Board. The Board may also appoint one or more separate
committees of the Board, each composed of directors of the Company who need not qualify under Rule 16b-3, who may administer the
Plan with respect to Key Employees who are not Section 16 Persons, may grant Awards under the Plan to such Key Employees and may
determine all terms of such Awards. To the extent permitted by applicable law, the Board may also appoint a committee, composed
of one or more Officers of the Company, that may authorize Awards to Employees (who are not Section 16 Persons) within parameters
specified by the Board and consistent with any limitations imposed by applicable law.
(b)
Authority of the Committee. Subject to the provisions of the Plan, the Committee shall have full authority and discretion
to take any actions it deems necessary or advisable for the administration of the Plan. Such actions shall include without limitation:
(i)
selecting Key Employees who are to receive Awards under the Plan;
(ii)
determining the type, number, vesting requirements, performance conditions (if any) and their degree of satisfaction, and other
features and conditions of such Awards and amending such Awards;
(iii)
correcting any defect, supplying any omission, or reconciling or clarifying any inconsistency in the Plan or any Award Agreement;
(iv)
accelerating the vesting, or extending the post-termination exercise term, or waiving restrictions, of Awards at any time and
under such terms and conditions as it deems appropriate;
(v)
interpreting the Plan and any Award Agreements;
(vi)
making all other decisions relating to the operation of the Plan; and
(vii)
granting Awards to Key Employees who are foreign nationals on such terms and conditions different from those specified in the
Plan, which may be necessary or desirable to foster and promote achievement of the purposes of the Plan, and adopting such modifications,
procedures, and/or subplans (with any such subplans attached as appendices to the Plan) and the like as may be necessary or desirable
to comply with provisions of the laws or regulations of other countries or jurisdictions to ensure the viability of the benefits
from Awards granted to Participants employed in such countries or jurisdictions, or to meet the requirements that permit the Plan
to operate in a qualified or tax efficient manner, and/or comply with applicable foreign laws or regulations.
The
Committee may adopt such rules or guidelines, as it deems appropriate to implement the Plan. The Committee’s determinations
under the Plan shall be final, conclusive and binding on all persons. The Committee’s decisions and determinations need
not be uniform and may be made selectively among Participants in the Committee’s sole discretion. The Committee’s
decisions and determinations will be afforded the maximum deference provided by applicable law.
(c)
Indemnification. To the maximum extent permitted by applicable law, each member of the Committee, or of the Board, or any
persons (including without limitation Employees and Officers) who are delegated by the Board or Committee to perform administrative
functions in connection with the Plan, shall be indemnified and held harmless by the Company against and from (i) any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim,
action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken
or failure to act under the Plan or any Award Agreement, and (ii) from any and all amounts paid by him or her in settlement thereof,
with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not
be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Bylaws or
Charter, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold
them harmless.
SECTION
4. GENERAL.
(a)
Eligibility. Only Employees, Non-Employee Directors and Consultants shall be eligible for designation as Key Employees
by the Committee.
(b)
Incentive Stock Options. Only Key Employees who are common-law employees of the Company, a Parent or a Subsidiary shall
be eligible for the grant of ISOs. In addition, a Key Employee who is a 10-Percent Shareholder shall not be eligible for the grant
of an ISO unless the requirements set forth in section 422(c)(5) of the Code are satisfied. If and to the extent that any Shares
are issued under a portion of any Option that exceeds the $100,000 limitation of Section 422 of the Code, such Shares shall not
be treated as issued under an ISO notwithstanding any designation otherwise. Certain decisions, amendments, interpretations and
actions by the Committee and certain actions by a Participant may cause an Option to cease to qualify as an ISO pursuant to the
Code and by accepting an Option the Participant agrees in advance to such disqualifying action taken by either the Participant,
the Committee or the Company.
(c)
Restrictions on Shares. Any Shares issued pursuant to an Award shall be subject to such Company policies, rights of repurchase,
rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall apply in addition
to any restrictions that may apply to holders of Shares generally and shall also comply to the extent necessary with applicable
law. In no event shall the Company be required to issue fractional Shares under this Plan.
(d)
Beneficiaries. A Participant may designate one or more beneficiaries with respect to an Award by timely filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before
the Participant’s death. If no beneficiary was designated or if no designated beneficiary survives the Participant, then
after a Participant’s death any vested Award(s) shall be transferred or distributed to the Participant’s estate.
(e)
Performance Conditions. The Committee may, in its discretion, include performance conditions in any Award.
(f)
Stockholder Rights. A Participant, or a transferee of a Participant, shall have no rights as a stockholder (including without
limitation voting rights or dividend or distribution rights) with respect to any Common Stock covered by an Award until such person
becomes entitled to receive such Common Stock, has satisfied any applicable withholding or tax obligations relating to the Award
and the Common Stock has been issued to the Participant. No adjustment shall be made for cash or stock dividends or other rights
for which the record date is prior to the date when such Common Stock is issued, except as expressly provided in Section 11. The
issuance of an Award may be subject to and conditioned upon the Participant’s agreement to become a party to a Stockholders
Agreement and be bound by its terms.
(g)
Buyout of Awards. The Committee may at any time offer to buy out, for a payment in cash or cash equivalents (including
without limitation Shares issued at Fair Market Value that may or may not be issued under this Plan), an Award previously granted
based upon such terms and conditions as the Committee shall establish.
(h)
Termination of Service. Unless the applicable Award Agreement or employment agreement provides otherwise (and in such case,
the Award Agreement or employment agreement shall govern as to the consequences of a termination of Service for such Awards),
the following rules shall govern the vesting, exercisability and term of outstanding Awards held by a Participant in the event
of termination of such Participant’s Service (in all cases subject to the term of the Option or SAR or Other Equity Award
as applicable):
(i)
if the Service of a Participant is terminated for Cause, then all Options, Cash Awards, Other Equity Awards, SARs, unvested portions
of Stock Units and unvested portions of Restricted Stock Grants shall terminate and be forfeited immediately without consideration
as of the Termination Date (except for repayment of any amounts the Participant had paid to the Company to acquire unvested Shares
underlying the forfeited Awards);
(ii)
if the Service of Participant is terminated due to the Participant’s death or Disability, then the vested portion of his/her
then-outstanding Options/SARs/Other Equity Awards may be exercised by such Participant or his or her personal representative within
six months after the Termination Date and all unvested portions of any outstanding Awards shall be forfeited without consideration
as of the Termination Date (except for repayment of any amounts the Participant had paid to the Company to acquire unvested Shares
underlying the forfeited Awards); and
(iii)
if the Service of Participant is terminated for any reason other than for Cause or other than due to death or Disability, then
the vested portion of his/her then-outstanding Options/SARs/Other Equity Awards may be exercised by such Participant within three
months after the Termination Date and all unvested portions of any outstanding Awards shall be forfeited without consideration
as of the Termination Date (except for repayment of any amounts the Participant had paid to the Company to acquire unvested Shares
underlying the forfeited Awards).
(i)
Intentionally Omitted.
(j)
Suspension or Termination of Awards. To the extent provided in an Award Agreement, if at any time (including after a notice
of exercise has been delivered) the Committee (or the Board), reasonably believes that a Participant has committed an act of Cause
(which includes a failure to act), the Committee (or Board) may suspend the Participant’s right to exercise any Option or
SAR (or vesting of Restricted Stock Grants or Stock Units) pending a determination of whether there was in fact an act of Cause.
To the extent provided in an Award Agreement, if the Committee (or the Board) determines a Participant has committed an act of
Cause, neither the Participant nor his or her estate shall be entitled to exercise the outstanding Option or SAR whatsoever and
the Participant’s outstanding Awards shall then terminate without consideration. Any determination by the Committee (or
the Board) with respect to the foregoing shall be final, conclusive and binding on all interested parties.
(k)
Code Section 409A. Notwithstanding anything in the Plan to the contrary, the Plan and Awards granted hereunder are intended
to comply with the requirements of Code Section 409A and shall be interpreted in a manner consistent with such intention. In the
event that any provision of the Plan or an Award Agreement is determined by the Committee to not comply with the applicable requirements
of Code Section 409A or the Treasury Regulations or other guidance issued thereunder, the Committee shall have the authority to
take such actions and to make such changes to the Plan or an Award Agreement as the Committee deems necessary to comply with such
requirements (including without limitation, after the grant date of an Award, increasing the Exercise Price to equal what was
the Fair Market Value on the grant date of the Award). Each payment to a Participant made pursuant to this Plan shall be considered
a separate payment and not one of a series of payments for purposes of Code Section 409A. Notwithstanding the foregoing or anything
elsewhere in the Plan or an Award Agreement to the contrary, if upon a Participant’s Separation From Service he/she is then
a “specified employee” (as defined in Code Section 409A), then solely to the extent necessary to comply with Code
Section 409A and avoid the imposition of taxes under Code Section 409A, the Company shall defer payment of “nonqualified
deferred compensation” subject to Code Section 409A payable as a result of and within six (6) months following such Separation
From Service under this Plan until the earlier of (i) the first (1st) business day of the seventh (7th)
month following the Participant’s Separation From Service, or (ii) ten (10) days after the Company receives written confirmation
of the Participant’s death. Any such delayed payments shall be made without interest. While it is intended that all payments
and benefits provided under this Plan will be exempt from or comply with Code Section 409A, the Company makes no representation
or covenant to ensure that the Awards and payments under this Plan are exempt from or compliant with Code Section 409A. The Company
will have no liability to any Participant or any other party if a payment or benefit under this Plan or any Award is challenged
by any taxing authority or is ultimately determined not to be exempt or compliant. Each Participant further understands and agrees
that each Participant will be entirely responsible for any and all taxes on any benefits payable to the Participant as a result
of this Plan or any Award. In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that
may be imposed on a Participant by Code Section 409A or for any damages for failing to comply with Code Section 409A.
(l)
Electronic Communications. Subject to compliance with applicable law and/or regulations, an Award Agreement or other documentation
or notices relating to the Plan and/or Awards may be communicated to Participants by electronic media.
(m)
Unfunded Plan. Insofar as it provides for Awards, the Plan shall be unfunded. Although bookkeeping accounts may be established
with respect to Participants who are granted Awards under this Plan, any such accounts will be used merely as a bookkeeping convenience.
The Company shall not be required to segregate any assets which may at any time be represented by Awards, nor shall this Plan
be construed as providing for such segregation, nor shall the Company or the Committee be deemed to be a trustee of stock or cash
to be awarded under the Plan.
(n)
Liability of Company Plan. The Company (or members of the Board or Committee) shall not be liable to a Participant or other
persons as to: (i) the non-issuance or sale of Shares as to which the Company has been unable to obtain from any regulatory body
having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any
Shares hereunder; and (ii) any unexpected or adverse tax consequence or any tax consequence expected, but not realized, by any
Participant or other person due to the grant, receipt, exercise or settlement of any Award granted under this Plan.
(o)
Reformation. In the event any provision of this Plan shall be held illegal or invalid for any reason, such provisions will
be reformed by the Board if possible and to the extent needed in order to be held legal and valid. If it is not possible to reform
the illegal or invalid provisions then the illegality or invalidity shall not affect the remaining parts of this Plan, and this
Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
(p)
Successor Provision. Any reference to a statute, rule or regulation, or to a section of a statute, rule or regulation,
is a reference to that statute, rule, regulation, or section as amended from time to time, both before and after the Adoption
Date and including any successor provisions.
(q)
Governing Law. This Plan, and (unless otherwise provided in the Award Agreement) all Awards, shall be construed in accordance
with and governed by the laws of the State of Delaware, but without regard to its conflict of law provisions. The Committee may
provide that any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including
through binding arbitration. Unless otherwise provided in the Award Agreement, recipients of an Award under the Plan are deemed
to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware to resolve any and all issues that
may arise out of or relate to the Plan or any related Award Agreement.
(r)
No Re-Pricing of Options or SARs or Other Equity Awards or Award of Re-Load Options.
Notwithstanding
anything to the contrary, (i) outstanding Options or SARs or Other Equity Awards may not be Re-Priced and (ii) Re-Load Options
may not be awarded, in each case without the approval of Company stockholders. Moreover, any amendment to the Plan or any Award
Agreement that results in the Re-Pricing of an Option or SAR or Other Equity Award issued under the Plan shall not be effective
without prior approval of the stockholders of the Company. For this purpose, repricing includes a reduction in the Exercise Price
of an Option or a SAR or the cancellation of an Option or SAR in exchange for cash, Options or SARs or Other Equity Award with
an Exercise Price less than the Exercise Price of the cancelled Option or SAR, other Awards under the Plan or any other consideration
provided by the Company.
(s)
Other Awards. The Committee may in its discretion issue Other Equity Awards and/or Cash Awards to Key Employees. The terms
and conditions of any such Awards shall be evidenced by an Award Agreement between the Participant and the Company.
(t)
Intentionally Omitted.
(u)
Deferral Elections. The Committee may permit a Participant to elect to defer his or her receipt of the payment of cash
or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise, earn out or vesting of an
Award made under the Plan. If any such election is permitted, the Committee shall establish rules and procedures for such payment
deferrals, including the possible (a) payment or crediting of reasonable interest on such deferred amounts credited in cash, and
(b) the payment or crediting of dividend equivalents in respect of deferrals credited in units of Common Stock. The Company and
the Committee shall not be responsible to any person in the event that the payment deferral does not result in deferral of income
for tax purposes.
(v)
Payment of Non-Employee Director Cash Fees with Equity Awards. If the Board affirmatively decides to authorize such a process,
each Non-Employee Director may elect to receive a Restricted Stock Grant (or Stock Units or Other Equity Awards) issued under
the Plan in lieu of payment of all or a portion of his or her annual cash retainer and/or any other cash fees including without
limitation meeting fees, committee service fees and participation fees. Any such elections made by a Non-Employee Director shall
be effected no later than the time permitted by applicable law and in accordance with the Company’s insider trading policies
and/or other policies. The aggregate grant date fair market value of any Restricted Stock Grants or Stock Units or Other Equity
Awards issued pursuant to this Section 4(v) is intended to be equivalent to the value of the foregone cash fees. Any cash fees
not elected to be received as a Restricted Stock Grant or Stock Units or Other Equity Awards shall be payable in cash in accordance
with the Company’s standard payment procedures. The Board in its discretion shall determine the terms, conditions and procedures
for implementing this Section 4(v) and may also modify or terminate its operation at any time.
SECTION
5. SHARES SUBJECT TO PLAN AND SHARE LIMITS.
Basic
Limitations. The Common Stock issuable under the Plan shall be authorized but unissued Shares or treasury Shares. Subject
to adjustment as provided in Section 11, the maximum aggregate number of Shares that may be issued:
(A)
under the Plan shall not exceed 2,000,000 post-split Shares (the “Share Limit”); and
(B)
pursuant to the exercise of ISOs granted under this Plan shall not exceed 200,000 Shares (the “ISO Limit”).
Share
Accounting. This Section 5(b) describes the Share accounting process for Awards issued under the Plan with respect to the
Share Limit and ISO Limit.
(i)
There shall be counted against the numerical limitations in Section 5(a) the gross number of Shares subject to issuance upon
exercise or used for determining payment or settlement of Awards. The below clauses (ii), (iii), (iv), (v) and (vi) of this Section
5(b) seek to clarify the intent of the foregoing sentence. The Shares issued (or settled) under an Award will be counted against
the Share Limit (and ISO Limit if the Award is an ISO) at the time(s) of exercise or settlement of the Award. For avoidance of
doubt, Shares that are withheld as payment for the Award’s Exercise Price or applicable withholding taxes shall be counted
against the Share Limit (and ISO Limit if the Award is an ISO).
(ii)
For avoidance of doubt, each Share issued (or settled or exercised) under any Award shall be counted against the Share Limit as
one Share.
(iii)
For avoidance of doubt, whether or not a SAR is settled with any Shares, the gross number of Shares subject to the exercise and
which are used for determining the benefit payable under such SAR shall be counted against the Share Limit, regardless of the
number of Shares actually used to settle the SAR upon such exercise.
(iv)
For avoidance of doubt, to the extent an Option is exercised via a Cashless Exercise or Net Exercise or is not otherwise fully
settled with Shares, then the gross number of Shares subject to the exercise and which are used for determining the benefit payable
under such Option shall be counted against the Share Limit (and shall also count against the ISO Limit if the Option being exercised
is an ISO), regardless of the number of Shares actually issued to the Participant upon such exercise.
(v)
If any portion of an Award is forfeited, terminated without consideration, or expires unexercised, (collectively, “Forfeited
Shares”), the gross number of such Forfeited Shares shall again be available for Awards under the Plan and shall not be
counted against the Share Limit or ISO Limit.
(v)
For avoidance of doubt, if any Awards are settled or paid in cash in lieu of stock and/or are exchanged for other Awards (collectively,
“Settled Shares”), the gross number of such Settled Shares shall be counted against the Share Limit (and ISO Limit
if the Award is an ISO).
Substitute
Awards. Any Substitute Awards including without limitation any Shares that are delivered and any Awards that are granted by,
or become obligations of, the Company, as a result of the assumption by the Company of, or in substitution for, outstanding awards
previously granted by another entity (as provided below) shall not be counted toward the Share Limit or ISO Limit. Substitute
Awards shall not count toward the Share Limit, nor shall Shares subject to a Substitute Award again be available for Awards under
the Plan as provided in Section 5(b) above. Additionally, in the event that a company acquired by the Company or any Parent or
any Subsidiary or any Affiliate or with which the Company or any Parent or any Subsidiary or any Affiliate combines has shares
available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination,
the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the
consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for
Awards under the Plan and shall not count toward the Share Limit; provided that Awards using such available shares shall not be
made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or
combination, and shall only be made to individuals who were not Employees or Board members prior to such acquisition or combination.
Dividend
Equivalents. Any dividend equivalents distributed under the Plan in the form of Shares shall be counted against the Share
Limit (with each Share that is distributed counting as one Share against the Share Limit). Dividend equivalents will not be paid
(or accrue) on unexercised Options or unexercised SARs.
SECTION
6. TERMS AND CONDITIONS OF OPTIONS.
(a)
Stock Option Agreement. Each Award of an Option under the Plan shall be evidenced by a Stock Option Agreement between the
Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to
any other terms and conditions that are not inconsistent with the Plan (including without limitation any performance conditions).
The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. The Stock Option Agreement
shall also specify whether the Option is an ISO and if not specified then the Option shall be an NSO.
(b)
Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall
provide for the adjustment of such number in accordance with Section 11.
(c)
Exercise Price. An Option’s Exercise Price shall be established by the Committee and set forth in a Stock Option
Agreement. Except with respect to (i) outstanding stock options being assumed or (ii) Options being granted in exchange for cancellation
of options granted by another issuer as provided under Section 6(e) or (iii) an NSO granted with a per share Exercise Price that
is less than the per Share Fair Market Value on the date of Award and further provided that the Committee expressly acknowledges
in its granting resolutions its awareness that such Option may be subject to the requirements of Code Section 409A, the Exercise
Price of an Option shall not be less than 100% of the Fair Market Value (110% for 10-Percent Shareholders in the case of ISOs)
of a Share on the date of Award.
(d)
Exercisability and Term. Each Stock Option Agreement shall specify the date when all or any installment of the Option is
to become vested and/or exercisable. The Stock Option Agreement shall also specify the term of the Option; provided, however that
the term of an Option shall in no event exceed ten (10) years from the date of Award. An ISO that is granted to a 10-Percent Shareholder
shall have a maximum term of five (5) years. No Option can be exercised after the expiration date specified in the applicable
Stock Option Agreement. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s
death, Disability or retirement or other events. A Stock Option Agreement may permit an Optionee to exercise an Option before
it is vested (an “early exercise”), subject to the Company’s right of repurchase at the original Exercise Price
of any Shares acquired under the unvested portion of the Option which right of repurchase shall lapse at the same rate the Option
would have vested had there been no early exercise. In no event shall the Company be required to issue fractional Shares upon
the exercise of an Option and the Committee may specify a minimum number of Shares that must be purchased in any one Option exercise.
(e)
Modifications or Assumption of Options. Within the limitations of the Plan, the Committee may modify, extend or assume
outstanding Options or may accept the cancellation of outstanding stock options (whether granted by the Company or by another
issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise
Price. No modification of an Option shall, without the consent of the Optionee, impair his or her rights or increase his or her
obligations under such Option.
(f)
Assignment or Transfer of Options. Except as otherwise provided in the applicable Stock Option Agreement and then only
to the extent permitted by applicable law, no Option shall be transferable by the Optionee other than by will or by the laws of
descent and distribution. Except as otherwise provided in the applicable Stock Option Agreement, an Option may be exercised during
the lifetime of the Optionee only by Optionee or by the guardian or legal representative of the Optionee. Except as otherwise
provided in the applicable Stock Option Agreement, no Option or interest therein may be subject to a short position nor may any
Option or interest therein be gifted, transferred, assigned, alienated, pledged, hypothecated, attached, sold, or encumbered by
the Optionee during his/her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
SECTION
7. PAYMENT FOR OPTION SHARES.
(a)
General Rule. The entire Exercise Price of Shares issued upon exercise of Options shall be payable in cash (or check) at
the time when such Shares are purchased by the Optionee, except as follows and if so provided for in an applicable Stock Option
Agreement:
(i)
In the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable
Stock Option Agreement. The Stock Option Agreement may specify that payment may be made in any form(s) described in this Section
7.
(ii)
In the case of an NSO granted under the Plan, the Committee may in its discretion, at any time accept payment in any form(s) described
in this Section 7.
(b)
Surrender of Stock. To the extent that the Committee makes this Section 7(b) applicable to an Option in a Stock Option
Agreement, payment for all or any part of the Exercise Price may be made with Shares which have already been owned by the Optionee
for such duration as shall be specified by the Committee. Such Shares shall be valued at their Fair Market Value on the date when
the new Shares are purchased under the Plan.
(c)
Cashless Exercise. To the extent that the Committee makes this Section 7(c) applicable to an Option in a Stock Option Agreement,
payment for all or a part of the Exercise Price may be made through Cashless Exercise.
(d)
Net Exercise. To the extent that the Committee makes this Section 7(d) applicable to an Option in a Stock Option Agreement,
payment for all or a part of the Exercise Price may be made through Net Exercise.
(e)
Other Forms of Payment. To the extent that the Committee makes this Section 7(e) applicable to an Option in a Stock Option
Agreement, payment may be made in any other form that is consistent with applicable laws, regulations and rules and approved by
the Committee.
SECTION
8. TERMS AND CONDITIONS OF STOCK APPRECIATION
RIGHTS.
(a)
SAR Agreement. Each Award of a SAR under the Plan shall be evidenced by a SAR Agreement between the Participant and the
Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent
with the Plan (including without limitation any performance conditions). A SAR Agreement may provide for a maximum limit on the
amount of any payout notwithstanding the Fair Market Value on the date of exercise of the SAR. The provisions of the various SAR
Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Participant’s
other compensation.
(b)
Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR pertains and is subject to adjustment
of such number in accordance with Section 11.
(c)
Exercise Price. Each SAR Agreement shall specify the Exercise Price. A SAR Agreement may specify an Exercise Price that
varies in accordance with a predetermined formula while the SAR is outstanding. Except with respect to outstanding stock appreciation
rights being assumed or SARs being granted in exchange for cancellation of stock appreciation rights granted by another issuer
as provided under Section 8(f), the Exercise Price of a SAR shall not be less than 100% of the Fair Market Value on the date of
Award.
(d)
Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become
exercisable. The SAR Agreement shall also specify the term of the SAR which shall not exceed ten (10) years from the date of Award.
No SAR can be exercised after the expiration date specified in the applicable SAR Agreement. A SAR Agreement may provide for accelerated
exercisability in the event of the Participant’s death, or Disability or other events. SARs may be awarded in combination
with Options or other Awards, and such an Award may provide that the SARs will not be exercisable unless the related Options or
other Awards are forfeited. A SAR may be included in an ISO only at the time of Award but may be included in an NSO at the time
of Award or at any subsequent time, but not later than six (6) months before the expiration of such NSO. A SAR granted under the
Plan may provide that it will be exercisable only in the event of a Change in Control.
(e)
Exercise of SARs. If, on the date when a SAR expires, the Exercise Price under such SAR is less than the Fair Market Value
on such date but any portion of such SAR has not been exercised or surrendered, then such SAR may automatically be deemed to be
exercised as of such date with respect to such portion to the extent so provided in the applicable SAR agreement. Upon exercise
of a SAR, the Participant (or any person having the right to exercise the SAR after Participant’s death) shall receive from
the Company (i) Shares, (ii) cash or (iii) any combination of Shares and cash, as the Committee shall determine. The amount of
cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by
which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price of the Shares.
(f)
Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding
SARs or may accept the cancellation of outstanding SARs (including stock appreciation rights granted by another issuer) in return
for the grant of new SARs for the same or a different number of Shares and at the same or a different Exercise Price. No modification
of a SAR shall, without the consent of the Participant, impair his or her rights or increase his or her obligations under such
SAR.
(g)
Assignment or Transfer of SARs. Except as otherwise provided in the applicable SAR Agreement and then only to the extent
permitted by applicable law, no SAR shall be transferable by the Participant other than by will or by the laws of descent and
distribution. Except as otherwise provided in the applicable SAR Agreement, a SAR may be exercised during the lifetime of the
Participant only by the Participant or by the guardian or legal representative of the Participant. No SAR or interest therein
may be transferred, assigned, alienated, pledged, hypothecated, attached, sold, or encumbered by the Participant during his or
her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process.
SECTION
9. TERMS AND CONDITIONS FOR RESTRICTED
STOCK GRANTS.
(a)
Restricted Stock Grant Agreement. Each Restricted Stock Grant awarded under the Plan shall be evidenced by a Restricted
Stock Grant Agreement between the Participant and the Company. Each Restricted Stock Grant shall be subject to all applicable
terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan
(including without limitation any performance conditions). The provisions of the Restricted Stock Grant Agreements entered into
under the Plan need not be identical.
(b) Number
of Shares and Payment. Each Restricted Stock Grant Agreement shall specify the number of Shares to which the Restricted
Stock Grant pertains and is subject to adjustment of such number in accordance with Section 11. Restricted Stock Grants may
be issued with or without cash consideration under the Plan.
(c)
Vesting Conditions. Each Restricted Stock Grant may or may not be subject to vesting. Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Restricted Stock Grant Agreement. A Restricted Stock Grant
Agreement may provide for accelerated vesting in the event of the Participant’s death, or Disability or other events.
(d)
Voting and Dividend Rights. The holder of a Restricted Stock Grant (irrespective of whether the Shares subject to the Restricted
Stock Grant are vested or unvested) awarded under the Plan shall have the same voting, dividend and other rights as other holders
of Common Stock. However, any dividends received on Shares that are unvested (whether such dividends are in the form of cash or
Shares) may be subject to the same vesting conditions and restrictions as the Restricted Stock Grant with respect to which the
dividends were paid. Such additional Shares issued as dividends that are subject to the Restricted Stock Grant shall not reduce
the number of Shares available for issuance under Section 5.
(e)
Modification or Assumption of Restricted Stock Grants. Within the limitations of the Plan, the Committee may modify or
assume outstanding Restricted Stock Grants or may accept the cancellation of outstanding Restricted Stock Grants (including stock
granted by another issuer) in return for the grant of new Restricted Stock Grants for the same or a different number of Shares.
No modification of a Restricted Stock Grant shall, without the consent of the Participant, impair his or her rights or increase
his or her obligations under such Restricted Stock Grant.
(f)
Assignment or Transfer of Restricted Stock Grants. Except as provided in Section 14, or in a Restricted Stock Grant Agreement,
or as required by applicable law, a Restricted Stock Grant awarded under the Plan shall not be anticipated, assigned, attached,
garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily, involuntarily or by operation
of law. Any act in violation of this Section 9(f) shall be void. However, this Section 9(f) shall not preclude a Participant from
designating a beneficiary pursuant to Section 4(d) nor shall it preclude a transfer of Restricted Stock Grant Awards by will or
pursuant to Section 4(d).
SECTION
10. TERMS AND CONDITIONS FOR STOCK UNITS.
(a)
Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the
Participant and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan (including without limitation any performance conditions). The provisions of the
various Stock Unit Agreements entered into under the Plan need not be identical. Stock Units may be granted in consideration of
a reduction in the Participant’s other compensation.
(b)
Number of Shares and Payment. Each Stock Unit Agreement shall specify the number of Shares to which the Stock Unit Award
pertains and is subject to adjustment of such number in accordance with Section 11. To the extent that an Award is granted in
the form of Stock Units, no cash consideration shall be required of the Award recipients.
(c)
Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Stock Unit Agreement. A Stock Unit Agreement may provide for
accelerated vesting in the event of the Participant’s death, or Disability or other events.
(d)
Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture,
any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents.
Such right entitles the holder to be credited with an amount equal to all cash or Common Stock dividends paid on one Share while
the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents
may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to vesting of the Stock Units, any
dividend equivalents accrued on such unvested Stock Units may be subject to the same vesting conditions and restrictions as the
Stock Units to which they attach.
(e)
Modification or Assumption of Stock Units. Within the limitations of the Plan, the Committee may modify or assume outstanding
Stock Units or may accept the cancellation of outstanding Stock Units (including stock units granted by another issuer) in return
for the grant of new Stock Units for the same or a different number of Shares. No modification of a Stock Unit shall, without
the consent of the Participant, impair his or her rights or increase his or her obligations under such Stock Unit.
(f)
Assignment or Transfer of Stock Units. Except as provided in Section 14, or in a Stock Unit Agreement, or as required by
applicable law, Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to
any creditor’s process, whether voluntarily, involuntarily or by operation of law. Any act in violation of this Section
10(f) shall be void. However, this Section 10(f) shall not preclude a Participant from designating a beneficiary pursuant to Section
4(d) nor shall it preclude a transfer of Stock Units pursuant to Section 4(d).
(g)
Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares
or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be
larger or smaller than the number included in the original Award. Methods of converting Stock Units into cash may include (without
limitation) a method based on the average Fair Market Value of Shares over a series of trading days. Except as otherwise provided
in a Stock Unit Agreement or a timely completed deferral election, vested Stock Units shall be settled within thirty (30) days
after vesting. The distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied
or have lapsed, or it may be deferred, in accordance with applicable law, to a later specified date. The amount of a deferred
distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the
number of such Stock Units shall be subject to adjustment pursuant to Section 11.
(h)
Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company.
Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable
Stock Unit Agreement.
SECTION
11. ADJUSTMENTS.
(a)
Adjustments. In the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a
declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares,
a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a
stock split, a reverse stock split, a reclassification or other distribution of the Shares without the receipt of consideration
by the Company, of or on the Common Stock, a recapitalization, a combination, a spin-off or a similar occurrence, the Committee
shall make equitable and proportionate adjustments to:
(i)
the Share Limit and ISO Limit specified in Section 5(a);
(ii)
the number and kind of securities available for Awards (and which can be issued as ISOs) under Section 5;
(iii)
the number and kind of securities covered by each outstanding Award;
(iv)
the Exercise Price under each outstanding Option and SAR and Other Equity Award; and
(v)
the number and kind of outstanding securities issued under the Plan.
(b)
Participant Rights. Except as provided in this Section 11, a Participant shall have no rights by reason of any issue by
the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of
any class. If by reason of an adjustment pursuant to this Section 11, a Participant’s Award covers additional or different
shares of stock or securities, then such additional or different shares and the Award in respect thereof shall be subject to all
of the terms, conditions and restrictions which were applicable to the Award and the Shares subject to the Award prior to such
adjustment.
(c)
Fractional Shares. Any adjustment of Shares pursuant to this Section 11 shall be rounded down to the nearest whole number
of Shares. Under no circumstances shall the Company be required to authorize or issue fractional shares. To the extent permitted
by applicable law, no consideration shall be provided as a result of any fractional shares not being issued or authorized.
SECTION
12. EFFECT OF A CHANGE IN CONTROL.
(a)
Merger or Reorganization. In the event that there is a Change in Control and/or the Company is a party to a merger or acquisition
or reorganization or Change in Control Event or similar transaction, outstanding Awards shall be subject to the merger agreement
or other applicable transaction agreement. Such agreement may provide, without limitation, that subject to the consummation of
the applicable transaction, for the assumption (or substitution) of outstanding Awards by the surviving corporation or its parent,
for their continuation by the Company (if the Company is a surviving corporation), for accelerated vesting or for their cancellation
with or without consideration, or for the mandatory exercise or conversion of Awards into Shares and/or cash whether by Net Exercise
or otherwise, in all cases without the consent of the Participant.
(b)
Acceleration of Vesting. In the event that a Change in Control occurs and there is no assumption, substitution or continuation
of Awards pursuant to Section 12(a), the Committee in its discretion may provide that some or all Awards shall vest and become
exercisable in connection with such Change in Control. For avoidance of doubt, “substitution” includes, without limitation,
an Award being replaced by a cash award that provides an equivalent intrinsic value (wherein intrinsic value equals the difference
between the market value of a share and any exercise price). The Committee may also in its discretion include in an Award Agreement
a requirement that, under certain circumstances, acceleration of vesting (or compensation payable) with respect to such Award
shall be reduced (or eliminated) to the extent that such reduction (or elimination) would, after taking into account any other
payments in the nature of compensation to which the Participant would have a right to receive from the Company and any other person
contingent upon the occurrence of a Change in Control, prevent the occurrence of a “parachute payment” as defined
under Code Section 280G.
SECTION
13. LIMITATIONS ON RIGHTS.
(a)
Retention Rights. Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right
to remain in Service as an Employee, Consultant, or Non-Employee Director of the Company, a Parent, a Subsidiary or an Affiliate
or to receive any future Awards under the Plan. The Company and its Parents and Subsidiaries and Affiliates reserve the right
to terminate the Service of any person at any time, and for any reason, subject to applicable laws, the Company’s Bylaws
and Charter and a written employment agreement (if any).
(b)
Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation of the Company to issue Shares
or other securities under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory
body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Shares or other securities
pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Shares or other securities,
to their registration, qualification or listing or to an exemption from registration, qualification or listing.
(c)
Dissolution. To the extent not previously exercised or settled, all Options, SARs, Stock Units, Cash Awards, Other Equity
Awards and unvested Restricted Stock Grants shall terminate immediately prior to the dissolution or liquidation of the Company
and shall be forfeited to the Company without consideration (except for repayment of any amounts a Participant had paid to the
Company to acquire unvested Shares underlying the forfeited Awards).
(d)
Clawback Policy. The Company may (i) cause the cancellation of any Award, (ii) require reimbursement of any Award by a
Participant and (iii) effect any other right of recoupment of equity or other compensation provided under this Plan or otherwise
in accordance with Company policies and/or applicable law (each, a “Clawback Policy”). In addition, a Participant
may be required to repay to the Company certain previously paid compensation, whether provided under this Plan or an Award Agreement
or otherwise, in accordance with the Clawback Policy. By accepting an Award, a Participant is also agreeing to be bound by the
Company’s Clawback Policy which may be amended from time to time by the Company in its discretion (including without limitation
to comply with applicable laws or stock exchange requirements) and is further agreeing that all of the Participant’s Awards
may be unilaterally amended by the Company to the extent needed to comply with the Clawback Policy.
SECTION
14. WITHHOLDING TAXES.
(a)
General. A Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with his or her Award. The Company shall not be required to issue any Shares or make any
cash payment under the Plan until such obligations are satisfied and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the Participant.
(b)
Share Withholding. The Committee in its discretion may permit or require a Participant to satisfy all or part of his or
her withholding tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to
him or her or by surrendering all or a portion of any Shares that he or she previously acquired (or by stock attestation). Such
Shares shall be valued based on the value of the actual trade or, if there is none, the Fair Market Value as of the previous day.
Any payment of taxes by assigning Shares to the Company may be subject to restrictions, including, but not limited to, any restrictions
required by rules of the SEC. The Committee may also, in its discretion, permit or require a Participant to satisfy withholding
tax obligations related to an Award through a sale of Shares underlying the Award or, in the case of Options, through Net Exercise
or Cashless Exercise. The number of Shares that are withheld from an Award pursuant to this section may also be limited by the
Committee, to the extent necessary, to avoid liability-classification of the Award (or other adverse accounting treatment) under
applicable financial accounting rules including without limitation by requiring that no amount may be withheld which is in excess
of the applicable maximum statutory withholding rates. The Committee, in its discretion, may permit other forms of payment of
applicable tax withholding.
SECTION
15. DURATION AND AMENDMENTS.
(a)
Term of the Plan. The Plan, as set forth herein, is effective on the Adoption Date. The Plan shall terminate on the day
before the tenth (10th) anniversary of the Adoption Date and may be terminated on any earlier date pursuant to this
Section 15. This Plan will not in any way affect outstanding awards that were issued under any other Company equity compensation
plans.
(b)
Right to Amend or Terminate the Plan. The Board may amend or terminate the Plan at any time and for any reason. No Awards
shall be granted under the Plan after the Plan’s termination. An amendment of the Plan shall be subject to the approval
of the Company’s stockholders only to the extent required by applicable laws, regulations or rules. In addition, no such
amendment or termination (or amendment of an executed Award Agreement) shall be made which would materially impair the rights
of any Participant, without such Participant’s written consent, under any then-outstanding Award. In the event of any conflict
in terms between the Plan and any Award Agreement, the terms of the Plan shall prevail and govern.
SECTION
16. EXECUTION.
To
record the adoption of the Plan by the Board, the Company has caused its duly authorized Officer to execute this Plan on behalf
of the Company.
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VERUS
INTERNATIONAL, INC.
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By:
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Name:
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Anshu
Bhatnagar
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Title:
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Chief
Executive Officer
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APPENDIX
C
VERUS
INTERNATIONAL, INC.
RESTATED
CERTIFICATE OF INCORPORATION
ARTICLE
I: NAME
The
name of the corporation is Verus International, Inc.
ARTICLE
II: AGENT FOR SERVICE OF PROCESS
The
address of the corporation’s registered office in the State of Delaware is 1013 Centre Road Ste. 403-B in the City of Wilmington,
County of New Castle 19805. The name of the registered agent of the corporation at that address is VCORP Services, LLC.
ARTICLE
III: PURPOSE
The
purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the “DGCL”).
ARTICLE
IV: NUMBER OF SHARES
4.1.
Authorized Shares and Classes. The total number of shares of all classes of stock that the corporation has authority
to issue is 7,625,000,000 shares of capital stock, 7,500,000,000 of which are authorized as Common Stock(the “Common
Stock”) par value $0.001 per share, and 125,000,000 are authorized as preferred stock of which (i) 120,000,000
are authorized as Series A Preferred Stock, par value $0.001 per share, and (ii) 1,000,000 are authorized as Series C Preferred
Stock, par value $0.001 per share (the “Preferred Stock”).
The
preferred stock may be divided into, and may be issued from time to time in one or more series. The Board of Directors of the
Corporation (the “Board”) is authorized from time to time to establish and designate any such series of preferred
stock, to fix and determine the variations in the relative rights, preferences, privileges and restrictions as between and among
such series and any other class of capital stock of the Corporation and any series thereof, and to fix or alter the number of
shares comprising any such series and the designation thereof. The authority of the Board from time to time with respect to each
such series shall include, but not be limited to, determination of the following: (i) the designation of the series; (ii) the
number of shares of the series and (except where otherwise provided in the creation of the series) any subsequent increase or
decrease therein; (iii) the dividends, if any, for shares of the series and the rates, conditions, times and relative preferences
thereof; (iv) the redemption rights, if any, and price or prices for shares of the series; (v) the terms and amounts of any sinking
fund provided for the purchase or redemption of the series; (vi) the relative rights of shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation; (vii) whether the shares of
the series shall be convertible into shares of any other class or series of shares of the Corporation, and, if so, the specification
of such other class or series, the conversion prices or rate or rates, any adjustments thereof, the date or dates as of which
such shares shall be convertible and all other terms and conditions upon which such conversion may be made; (viii) the voting
rights, if any, of the holders of such series; and (ix) such other designations, powers, preference and relative, participating,
optional or other special rights and qualifications, limitations or restrictions thereof.
4.2
Reverse Stock Split. Upon the filing and effectiveness (the “Effective Time”) pursuant
to the Delaware General Corporation Law of this Certificate of Amendment to the Certificate of Incorporation of the Corporation,
each five hundred (500) shares of Common Stock issued and outstanding immediately prior to the Effective Time shall, automatically
and without any action on the part of the respective holders thereof, be combined and converted into one (1) share of Common Stock
(the “Reverse Stock Split”). In addition, the Reverse Stock Split will not affect any stockholder’s proportionate
voting power (subject to the treatment of fractional shares). Stockholders who otherwise would be entitled to receive fractional
shares of Common Stock shall be entitled to receive cash (without interest or deduction) from the Corporation’s transfer
agent in lieu of such fractional share interests upon the submission of a transmission letter by a stockholder holding the shares
in book-entry form and, where shares are held in certificated form, upon the surrender of the stockholder’s Old Certificates,
in an amount equal to the product obtained by multiplying (a) the closing price per share of the Common Stock as reported on the
OTC Markets as of the date of the Effective Time, by (b) the fraction of one share owned by the stockholder. Each certificate
that immediately prior to the Effective Time represented shares of Common Stock (“Old Certificates”), shall
thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate
shall have been combined, subject to the elimination of fractional share interests as described above.”
ARTICLE
V: ELECTION OF DIRECTORS
Unless
and except to the extent that the bylaws of the Corporation (the “Bylaws”) shall so require, the election of directors
of the Corporation need not be by written ballot.
ARTICLE
VI: LIMITATION OF LIABILITY
To
the fullest extent permitted under the Delaware General Corporation Law, as amended from time to time, no director of the Corporation
shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.
Any amendment, repeal or modification of the foregoing provision shall not adversely affect any right or protection of a director
of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, repeal or modification.
6.1
Forum Selection. With the exception of actions to enforce a duty or liability arising from Sections 27
of the Exchange Act, which may be brought in either state or federal court pursuant to Section 22 of the Exchange Act, any or
all other internal corporate claims shall be brought solely and exclusively in any or all of the courts in the State of Delaware,
and no provision of this certificate of incorporation or the bylaws may prohibit bringing such claims in the courts of Delaware.
“Internal corporate claims” means claims, including claims in the right of the corporation, excepting those brought
pursuant to Section 27 of the Exchange Act: (i) that are based upon a violation of a duty by a current or former director or officer
or stockholder in such capacity, or (ii) as to which this title confers jurisdiction upon the Delaware Court of Chancery.
The adoption of Section 115 does not apply
to all suits brought to enforce any duty or liability created by the Exchange Act, or the rules or regulations thereunder. All
suits arising under the Exchange Act are subject to the exclusive jurisdiction of the federal courts pursuant to Section 27 of
the Exchange Act (15 U.S. Code § 78aa - Jurisdiction of offenses and suits), which provides that Federal courts have the
sole authority to adjudicate all suits in equity and actions at law brought to enforce any liability or duty under that subchapter,
including suits arising from the Exchange Act, or the rules and regulations thereunder. All such suits must only be filed in the
federal courts, and are not subject to the Company’s adoption of Section 115 of the Delaware General Corporation Law.
All suits brought to enforce any duty or
liability created by the Securities Act, or the rules and regulations thereunder, are subject to the concurrent jurisdiction of
federal and state courts pursuant to Section 22 of the Securities Act (15 U.S. Code § 77v - Jurisdiction of offenses and
suits), which provides that the courts of the United States, concurrent with any State or territorial courts, shall have jurisdiction
of all suits in equity and actions at law brought to enforce any liability or duty created under that subchapter, including the
Securities Act and the rules and regulations promulgated by the Commission in respect thereto. Therefore, any suits arising under
the Securities Act may be filed in either a state court, federal court or the court of any U.S. Territory. Insofar as federal,
state and territorial courts have concurrent jurisdiction over claims to enforce a duty or liability under the Securities Act,
it is uncertain that the Company’s adoption of Section 115 of the Delaware General Corporation Law would preclude claims
filed in a state or territorial court other than in Delaware.
ARTICLE
VII: INDEMNIFICATION
7.1
Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted
by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is
made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or
she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation,
is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust, enterprise or nonprofit entity (an “Other Entity”), including service with respect to employee
benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such
Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section 7.3, the Corporation shall be
required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only
if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized by the Board.
7.2
Prepayment of Expenses. The Corporation shall pay the expenses (including attorneys’ fees) incurred
by a Covered Person in defending any Proceeding in advance of its final disposition, provided, however, that, to the extent required
by applicable law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt
of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person
is not entitled to be indemnified under this Article 7 or otherwise.
7.3
Claims. If a claim for indemnification or advancement of expenses under this Article 7 is not paid in full within
30 days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file
suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense
of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not
entitled to the requested indemnification or advancement of expenses under applicable law.
7.4
Non-Exclusivity of Rights. The rights conferred on any Covered Person by this Article 7 shall not be
exclusive of any other rights that such Covered Person may have or hereafter acquire under any statute, provision of this Certificate
of Incorporation, the Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
7.5
Other Sources. The Corporation’s obligation, if any, to indemnify or to advance expenses to any
Covered Person who was or is serving at its request as a director, officer, employee or agent of an Other Entity shall be reduced
by any amount such Covered Person may collect as indemnification or advancement of expenses from such Other Entity.
7.6
Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article 7 shall not
adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to
the time of such repeal or modification.
7.7
Other Indemnification and Prepayment of Expenses. This Article 7 shall not limit the right of the Corporation,
to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to persons other than Covered
Persons when and as authorized by appropriate corporate action.
ARTICLE
VIII
AMENDMENT
In
furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board is expressly authorized
to make, alter and repeal the Bylaws, subject to the power of the stockholders of the Corporation to alter or repeal any Bylaw
whether adopted by them or otherwise.
ARTICLE
IX
CERTIFICATE
OF AMENDMENTS
The
Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal any provision contained in
this Amended and Restated Certificate of Incorporation, and other provisions authorized by the laws of the State of Delaware at
the time in force may be added or inserted, in the manner now or hereafter prescribed by applicable law; and all rights, preferences
and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to
this Amended and Restated Certificate of Incorporation in its present form or as hereafter amended are granted subject to the
rights reserved in this article.