Exhibit 10.1

IMPLANT SCIENCES CORPORATION

2014 STOCK OPTION PLAN

1.

ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

1.1

ESTABLISHMENT. The Implant Sciences Corporation 2014 Stock Option Plan (the
“Plan”) is hereby established effective as of July 2, 2014, by adoption of the
Company’s Board. Awards may be granted under the Plan with or without
stockholder approval, but no Option granted under the Plan shall be an Incentive
Stock Option unless this Plan is approved by the Company’s stockholders within
twelve months after its effective date.

1.2

PURPOSE. The purpose of the Plan is to advance the interests of the Company and
its stockholders by encouraging and facilitating the ownership of the Stock of
the Company by persons performing services for the Company in order to enhance
the ability of the Company to attract, retain and reward such persons and
motivate them to contribute to the growth and profitability of the Company.

1.3

TERM OF PLAN. The Plan shall be effective from the date that the Plan is adopted
by the Board of Directors of the Company and shall continue in effect thereafter
until the earlier of (a) its termination by the Board, or (b) the date on which
all of the shares of Common Stock available for issuance under the Plan have
been issued and all restrictions on such shares under the terms of the Plan and
the agreements evidencing Options granted under the Plan have lapsed, or (c) ten
(10) years from its effective date. All Options shall be granted, if at all,
within ten (10) years from the earlier of the date the Plan is adopted by the
Board or the date the Plan is duly approved by the stockholders of the Company.

2.

DEFINITIONS AND CONSTRUCTION.

2.1

DEFINITIONS. Whenever used herein, the following terms shall have their
respective meanings set forth below:

(a)

“Award” means any award or grant of Options under the Plan.

(b)

“Beneficiary” means the person, persons, trust, or trusts entitled by will or by
the laws of descent, to exercise a Participant’s Option or other rights under
the Plan after the Participant’s death.

(c)

“Board” means the Board of Directors of the Company. If one or more Committees
have been appointed by the Board to administer the Plan, the term “Board” also
means such Committee(s).

(d)

“Change in Control” shall mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, a “Transaction”) wherein the stockholders
of the Company, immediately before a Transaction, do not retain immediately
after a Transaction, in substantially the same proportions as their ownership of
shares of the Company’s voting stock immediately before a Transaction, direct or
indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the outstanding voting securities of the Company or, in
the case of a Transaction involving the sale, exchange or transfer of all or
substantially all of the Company’s assets, the corporation or other business
entity to which the assets of the Company were transferred (the “Transferee”),
as the case may be. For purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest resulting from
ownership of the voting securities of one or more corporations or other business
entities which own the Company or the Transferee, as the case may be, either
directly or through one or more subsidiary corporations or other business
entities. The Board shall have the right to determine whether multiple sales or
exchanges of the voting securities of the Company or multiple Ownership Change
Events are related, and its determination shall be final, binding and
conclusive.

(e)

“Code” means the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.

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(f)

“Committee” means the Compensation Committee or other committee of the Board
duly appointed to administer the Plan and having such powers as shall be
specified by the Board. Unless the powers of the Committee have been
specifically limited, the Committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to amend or terminate
the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law.

(g)

“Company” means Implant Sciences Corporation, a Massachusetts corporation, or
any successor corporation thereto.

(h)

“Consultant” means a person engaged to provide consulting or advisory services
(other than as an Employee or a Director) to the Company.

(i)

“Director” means a member of the Board.

(j)

“Disability” means, except as provided in an applicable Option Agreement, means
“disability,” as such term is defined in Sections 22(e)(3) and 409A(a)(2)(c)(i)
of the Code. Except as may be otherwise required by the Code, the determination
of whether or not a Participant is disabled for purposes of this Plan shall be
made by, and at the sole discretion of, the Committee.

(k)

“Employee” means any person treated as an employee (including an Officer or a
Director who is also treated as an employee) in the records of the Company and,
with respect to any Option granted to such person, who is an employee for
purposes of Section 422 of the Code; provided, however, that neither service as
a Director nor payment of a Director’s fee shall alone be sufficient to
constitute employment for purposes of the Plan. The Company shall determine in
good faith and in the sole exercise of its discretion, whether an individual has
become, or has ceased to be, an Employee and the effective date of such
individual’s employment or termination of employment, as the case may be. For
purposes of an individual’s rights, if any, under the Plan as of the time of the
Company’s determination, all such determinations by the Company shall be final,
binding and conclusive, notwithstanding that the Company or any court of law or
governmental agency subsequently makes a contrary determination.

(l)

“Fair Market Value” means, as of any date, the value of a share of Stock or
other property as determined by the Board, in its discretion, in good faith
without regard to any restriction other than a restriction which, by its terms,
will never lapse. If the Stock is not trading over a public exchange, the “fair
market value” shall take into account the latest private transaction in which
the Company sold stock to an informed and willing buyer, if any such transaction
exists. If the Stock is listed for trading over a public market, the “fair
market value” of the Stock on a given day shall be the closing price of the
Stock on the American Stock Exchange or the exchange on which the Stock is
listed, and if no trading occurs on such date, or the stock is traded on NASDAQ
then the "fair market value" shall be the mean between the highest and lowest
prices on the nearest trading day before such date.

(m)

“Incentive Stock Option” means an Option intended to be (as set forth in the
Option Agreement), and which qualifies as, an incentive stock option within the
meaning of Section 422(b) of the Code.

(n)

“Nonqualified Stock Option” means an Option not intended to be (as set forth in
the Option Agreement) or which does not qualify as an Incentive Stock Option.

(o)

“Officer” means any person designated by the Board as an officer of the Company.

(p)

“Option” means a right to purchase Stock pursuant to the terms and conditions of
the Plan. An Option may be either an Incentive Stock Option or a Nonqualified
Stock Option.

(q)

“Option Agreement” means a written agreement between the Company and an Optionee
setting forth the terms, conditions and restrictions pertaining to the Option
granted to the Optionee and to any shares of Stock acquired upon the exercise
thereof.

(r)

“Optionee” means a Participant who has been awarded one or more Options.

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(s)

An “Ownership Change Event” shall be deemed to have occurred if any of the
following occurs with respect to the Company: (i) the direct or indirect sale or
exchange in a single or series of related transactions by the stockholders of
the Company of more than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a party; (iii) the sale,
exchange, or transfer of all or substantially all of the assets of the Company;
or (iv) a liquidation or dissolution of the Company.

(t)

“Parent Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

(u)

“Participant” means any Employee, Consultant or Director to whom an Award has
been made under the Plan.

(v)

“Participating Company” means the Company or any Parent Corporation or
Subsidiary Corporation.

(w)

“Section 409A Authority” means Section 409A of the Code and the Treasury
regulations and guidance issued thereunder.

(x)

“Service” means a Participant’s employment or service with the Company, whether
in the capacity of an Employee, a Director or a Consultant. A Participant’s
Service shall not be deemed to have terminated merely because of a change in the
capacity in which the Participant renders Service to the Company or a change in
the Participating Company for which the Participant renders such Service,
provided that there is no interruption or termination of the Participant’s
Service. Furthermore, a Participant’s Service with the Company shall not be
deemed to have terminated if the Participant takes any military leave, sick
leave, or other bona fide leave of absence approved by the Company; provided,
however, that if any such leave exceeds ninety (90) days, on the ninety-first
(91st) day of such leave the Participant’s Service shall be deemed to have
terminated unless the Participant’s right to return to Service with the Company
is guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company or required by law, a leave of absence shall
not be treated as service for purposes of determining vesting under the
Participant’s Option. The Participant’s Service shall be deemed to have
terminated either upon an actual termination of service or upon the corporation
for which the Participant performs services ceasing to be a Participating
Company. Subject to the foregoing, the Company, in its discretion, shall
determine whether the Participant’s Service has terminated and the effective
date of such termination.

(y)

“Stock” means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.2. Such Stock may be unrestricted or, at the sole
discretion of the Board, be made subject to restrictions relating to employment
and transferability.

(z)

“Subsidiary Corporation” means any present or future “subsidiary corporation” of
the Company, as defined in Section 424(f) of the Code.

(aa)

“Ten Percent Owner Optionee” means an Optionee who, at the time an Option is
granted to the Optionee, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company within
the meaning of Section 422(b)(6) of the Code.

(bb)

“Vest” or “Vesting”, with respect to Options, means the date, event, or act
prior to which an Award is not, in whole or in part, exercisable except at the
sole discretion of the Board.

2.2

CONSTRUCTION. Captions and titles contained herein are for convenience only and
shall not affect the meaning or interpretation of any provision of the Plan.
Except when otherwise indicated by the context, the singular shall include the
plural and the plural shall include the singular. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise.

3.

ADMINISTRATION.

3.1

ADMINISTRATION BY THE BOARD. The Plan shall be administered by the Board. All
questions of interpretation of the Plan or of any Option or other right awarded
hereunder shall be determined by the Board, and such determinations shall be
final and binding upon all persons having an interest in the Plan or in such
Option or

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right.

3.2

AUTHORITY OF OFFICERS. Any Officer shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, determination or
election which is the responsibility of, or which is allocated to, the Company
herein, provided the Officer has apparent authority with respect to such matter,
right, obligation, determination or election.

3.3

POWERS OF THE BOARD. In addition to any other powers set forth in the Plan and
subject to the provisions of the Plan, the Board shall have the full and final
power and authority, in its discretion to:

(a)

determine the persons to whom, and the time or times at which Awards shall be
granted, the types of Awards to be granted, and the number of shares of Stock to
be subject to each Award;

(b)

determine the terms, conditions and restrictions applicable to Awards; approve
one or more forms of Option Agreement;

(c)

amend, modify, extend, cancel or renew any Option or waive any restrictions or
conditions applicable to any Option or applicable to any shares of Stock awarded
or acquired upon the exercise thereof; provided, however, that, without limiting
the foregoing, and subject to the limitations of applicable law, if any, the
Board may amend the terms of any one or more Options, without the consent of any
Participant, if necessary to increase the likelihood of exemption from or
compliance with the provisions of Section 409A Authority; and, provided,
further, that neither the Company nor the Board shall have any liability to any
Participant, or to any other party, if an Award (or any portion thereof),
whether prior to or subsequent to any such modification that may be made, (i)
that is intended to be exempt from Section 409A Authority is determined not to
be exempt from Section 409A Authority; or (ii) is intended to comply with
Section 409A Authority is determined not to comply with Section 409A Authority;
and

(d)

correct any defect, supply any omission, or reconcile any inconsistency in the
Plan and take such other actions with respect to the Plan as the Board may deem
advisable to the extent not inconsistent with the provisions of the Plan or
applicable law.

3.4

SECTION 409A. Awards granted under the Plan are intended either to be exempt
from the provisions of Section 409A Authority or to satisfy those provisions,
and the Plan and such Awards shall be construed accordingly.

4.

SHARES SUBJECT TO PLAN.

4.1

MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as provided in Section
4.2, the maximum aggregate number of shares of Stock that may be issued under
the Plan shall be fifteen million (15,000,000) and shall consist of authorized
but unissued or reacquired shares of Stock, treasury shares or any combination
thereof. Subject to adjustment as provided in Section 4.2, the maximum aggregate
number of shares of Stock that may be issued under the Plan through Incentive
Stock Options shall be fifteen million (15,000,000). If an outstanding Option
for any reason expires or is terminated or canceled or if shares of Stock are
acquired upon the exercise or Award of an Option, the shares of Stock allocable
to the unexercised portion of such Option or such repurchased shares of Stock
shall again be available for issuance under the Plan.

4.2

ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares subject
to the Plan and to any outstanding Options, in the exercise price per share of
any outstanding Options; provided, however, that, without the Participant’s
consent, such Participant’s rights shall not be adjusted to the extent, in the
case of an Award subject to Section 409A Authority, such adjustment results in
the grant of a new “stock right” (as such term is defined in Section 409A
Authority.

5.

ELIGIBILITY AND LIMITATIONS.

5.1

PERSONS ELIGIBLE. Awards may be granted only to Employees, Officers, Consultants
and Directors

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of the Participating Company. For purposes of the foregoing sentence,
“Employees,” “Consultants”, and “Directors” shall include prospective Employees,
prospective Consultants and prospective Directors to whom Options may be awarded
in connection with written offers of an employment or other service relationship
with the Company.

5.2

OPTION AWARD RESTRICTIONS. Any person who is not an Employee on the effective
date of the Award of an Option to such person may be awarded only a Nonqualified
Stock Option. An Incentive Stock Option awarded to a prospective Employee upon
the condition that such person become an Employee shall be deemed granted
effective on the date such person commences Service with a Participating
Company.

5.3

FAIR MARKET VALUE LIMITATION. To the extent that Options designated as Incentive
Stock Options (granted under all stock option plans of the Company, including
the Plan) become exercisable by an Optionee for the first time during any
calendar year for Stock having a Fair Market Value greater than One Hundred
Thousand Dollars ($100,000), the portions of such Options which exceed such
amount shall be treated as Nonqualified Stock Options. For purposes of this
Section 5.3, Options designated as Incentive Stock Options shall be taken into
account in the order in which they were awarded, and the Fair Market Value of
Stock shall be determined as of the time the Option with respect to such Stock
was awarded. If the Code is amended to provide for a different limitation from
that set forth in this Section 5.3, such different limitation shall be deemed
incorporated herein effective as of the date and with respect to such Options as
required or permitted by such amendment to the Code. If an Option is treated as
an Incentive Stock Option in part and as a Nonqualified Stock Option in part by
reason of the limitation set forth in this Section 5.3, the Optionee may
designate which portion of such Option the Optionee is exercising. In the
absence of such designation, the Optionee shall be deemed to have exercised the
Incentive Stock Option portion of the Option first. Separate certificates
representing each such portion shall be issued upon the exercise of the Option.

6.

TERMS AND CONDITIONS OF OPTIONS.

6.1

AWARD AGREEMENTS. Options shall be evidenced by Option Agreements specifying the
nature and number of shares of Stock covered thereby, and shall exist in such
form as the Board shall from time to time establish. Such Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the terms and conditions herein.

6.2

OPTION VESTING AND EXERCISE PRICE. Each Option Agreement shall include a vesting
schedule describing the date, event, or act upon which an Option shall vest, in
whole or in part, with respect to all or a specified portion of the shares
covered by such Option. Each Option Agreement shall also convey the exercise
price for each Option or the means by which such price shall be established,
with such exercise price or method of establishment being established in the
discretion of the Board; provided, however, that: (a) the exercise price per
share for an Incentive Stock Option shall be not less than the Fair Market Value
of a share of Stock on the effective date of grant of the Option, and (b) no
Option granted to a Ten Percent Owner Optionee shall have an exercise price per
share less than one hundred ten percent (110%) of the Fair Market Value of a
share of Stock on the effective date of grant of the Option.

6.3

EXERCISABILITY AND TERM OF OPTIONS. Options shall be exercisable as shall be
determined by the Board and set forth in the Option Agreement evidencing such
Option; provided, however, that: (a) no Incentive Stock Option shall be
exercisable after the expiration of ten (10) years after the effective date of
grant of such Option, (b) no Incentive Stock Option awarded to a Ten Percent
Owner Optionee shall be exercisable after the expiration of five (5) years after
the effective date of grant of such Option, or (c) no Option awarded to a
prospective Employee, prospective Consultant or prospective Director may become
exercisable prior to the date on which such person commences Service with a
Participating Company.

6.4

PAYMENT OF OPTION EXERCISE PRICE.

(a)

FORMS OF CONSIDERATION AUTHORIZED. Payment of the exercise price for the number
of shares of Stock being purchased pursuant to any Option shall be made in cash,
by check or cash equivalent or by such other consideration as may be approved by
the Board from time to time to the extent permitted by applicable law.

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(b)

LIMITATIONS ON FORMS OF CONSIDERATION.

(i)

CASHLESS EXERCISE. The Company reserves, at any and all times, the right, in the
Board’s sole and absolute discretion, to establish procedures and allow for the
exercise of Options (both at the time of grant and at the time of exercise) by
means of a cashless exercise.

(ii)

PAYMENT BY PROMISSORY NOTE. No promissory note shall be permitted if the
exercise of an Option using a promissory note would be a violation of any law.
Any permitted promissory note shall be on such terms as the Board shall
determine. The Board shall have the authority to permit or require the Optionee
to secure any promissory note used to exercise an Option with the shares of
Stock acquired upon the exercise of the Option or with other collateral
acceptable to the Company.

6.5

TAX WITHHOLDING. Upon the exercise of an Option, the Company shall have the
right, but not the obligation, to deduct from the shares of Stock issuable, or
to accept from the Participant the tender of, a number of whole shares of Stock
having a Fair Market Value, as determined by the Company, equal to all or any
part of the federal, state, local and foreign taxes, if any, required by law to
be withheld by the Company with respect to such Option, or the Stock acquired
upon the exercise thereof. Alternatively or in addition, in its discretion, the
Company shall have the right to require the Participant, through payroll
withholding, cash payment or otherwise, including by means of a cashless
exercise, to make adequate provision for any such tax withholding obligations of
the Company arising in connection with the Option, or the shares acquired upon
the exercise thereof. The Fair Market Value of any shares of Stock withheld or
tendered to satisfy any such tax withholding obligations shall not exceed the
amount determined by the applicable minimum statutory withholding rates. The
Company shall have no obligation to deliver shares of Stock or to release shares
of Stock from an escrow established pursuant to any Agreement entered hereunder
until the Company’s tax withholding obligations have been satisfied by the
Participant.

6.6

STOCK RESTRICTIONS. Shares issued under the Plan shall be subject such
conditions and restrictions as determined by the Board in its discretion at the
time an Award is made. The Company shall have the right, at the time of the
Award, to place restrictions on Awards including upon shares issued upon the
exercise of an Option.

6.7

EFFECT OF TERMINATION OF SERVICE.

(a)

OPTIONS. Subject to earlier termination of the Option as otherwise provided
herein, and unless otherwise provided by the Board in an Award and set forth in
the Agreement related thereto, an Option shall be exercisable after a
Participant’s termination of Service only during the applicable time period
determined in accordance with the following provisions of this Section 6.7(a)
and thereafter shall terminate:

 

(i)

DISABILITY. If the Participant’s Service terminates because of the Disability of
the Participant, an Option, to the extent unexercised and exercisable on the
date on which the Participant’s Service terminated, may be exercised by the
Participant (or the Participant’s guardian or legal representative) at any time
prior to the expiration of twelve (12) months after the date on which the
Participant’s Service terminated, but in any event no later than the date of
expiration of the Option’s term as set forth in the Agreement evidencing such
Option (the “Expiration Date”).

(ii)

DEATH. If the Participant’s Service terminates because of the death of the
Participant, an Option, to the extent unexercised and exercisable on the date on
which the Participant’s Service terminated, may be exercised by the
Participant’s legal representative or other person who acquired the right to
exercise the Option or Right by reason of the Participant’s death at any time
prior to the Expiration Date. The Participant’s Service shall be deemed to have
terminated on account of death if the Participant dies within three (3) months
after the Participant’s termination of Service.

(iii)

RETIREMENT OF DIRECTORS IN GOOD STANDING. If the Participant is a Director, and
such Director’s Service terminates because of the retirement of such Director,
and provided that such Director is at that time in good standing as determined
by the Board, an Option, to the extent unexercised and exercisable on the date
on which the Director’s Service terminated for such reason may be exercised by
the Director (or the Director’s guardian or legal representative) at any time
prior to the Expiration Date.

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(iv)

OTHER TERMINATION OF SERVICE. If the Participant’s Service terminates for any
reason, except Disability or death, an Option, to the extent unexercised and
exercisable by the Participant on the date on which the Participant’s Service
terminated, may be exercised by the Participant at any time prior to the
expiration of three (3) months after the date on which the Participant’s Service
terminated, but in no event any later than the Expiration Date.

(b)

RESERVATION OF RIGHTS. The grant of Awards under the Plan shall in no way affect
the right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.

6.8

TRANSFERABILITY OF OPTIONS. During the lifetime of the Participant, an Option
shall be exercisable only by the Participant or by the Participant’s guardian or
legal representative. No Option shall be assignable or transferable by the
Participant, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Board, in its sole
discretion, and as set forth in the Option Agreement evidencing such Option, a
Nonqualified Stock Option shall be assignable or transferable.

7.

CHANGE IN CONTROL.

In the event of a Change in Control, the surviving, continuing, successor, or
purchasing corporation or other business entity or parent thereof, as the case
may be (the “Acquiring Corporation”), may, without the consent of any
Participant, either assume the Company’s rights and obligations under
outstanding Options or substitute for such outstanding Options substantially
equivalent options for, or in relation to, the Acquiring Corporation’s stock.

8.

TERMINATION OR AMENDMENT OF PLAN.

The Plan shall terminate ten (10) years from its effective date. The Board may
terminate or amend the Plan at any time. No termination or amendment of the Plan
shall affect any then outstanding Award unless expressly provided by the Board.

9.

MISCELLANEOUS PROVISIONS.

9.1

NO RIGHTS OF STOCKHOLDER. Prior to the date on which an Option is exercised,
neither the Participant, nor a Beneficiary or any other successor in interest
will be, or will have any of the rights and privileges of, a stockholder with
respect to any Stock issuable upon the exercise of such Option.

9.2

NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained herein shall be deemed to
give any person any right to employment by the Company or by a Participating
Company, or to interfere with the right of the Company or a Participating
Company to discharge any person at any time without regard to the effect that
such discharge will have upon such person’s rights or potential rights, if any,
under the Plan. The provisions of the Plan are in addition to, and not a
limitation on, any rights a Participant may have against the Company or a
Participating Company by reason of any employment or other agreement with the
Company or a Participating Company.

9.3

SEVERABILITY. If any provision of this Plan is held to be illegal or invalid for
any reason, the remaining provisions are to remain in full force and effect and
are to be construed and enforced in accordance with the purposes of the Plan as
if the illegal or invalid provision or provisions did not exist.