Exhibit 10.1


 


PRECISION OPTICS CORPORATION, INC.


 


2021 EQUITY INCENTIVE PLAN


 


1.          
Purpose; Eligibility.


 


1.1           
General Purpose. The name of this plan is the Precision Optics Corporation, Inc. 2021 Equity Incentive Plan (the
"Plan"). The purposes of the Plan are to (a) enable Precision Optics Corporation, Inc., a Massachusetts corporation (the
"Company"), and any Affiliate to attract and retain the types of Employees, Consultants and Directors who will contribute
to the Company's long range success; (b) provide incentives that align the interests of Employees, Consultants and Directors with those
of the shareholders of the Company; and (c) promote the success of the Company’s business.


 


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


 


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


 


2.          
Definitions.


 


"Affiliate" means a
corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under common control
with, the Company. Solely with respect to the granting of any Incentive Stock Options, Affiliate means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of
the Code.


 


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


 


"Award" means any right
granted under the Plan, including an Incentive Stock Option, a Non-qualified Stock Option, a Stock Appreciation Right, a Restricted Award,
a Performance Share Award, a Cash Award, or an Other Equity-Based Award.


 


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


 


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


 


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


 


"Cash Award" means an
Award denominated in cash that is granted under Section 10 of the Plan.


 


"Cause" means:


 


With respect to any Employee or Consultant, unless the applicable Award Agreement states otherwise:


 


(a) If the Employee or Consultant is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Cause, the definition contained therein; or


 


 


 






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(b) If no such agreement exists, or if such agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate; (ii) conduct that brings or is reasonably likely to bring the Company or an Affiliate negative publicity or into public disgrace, embarrassment, or disrepute; (iii) gross negligence or willful misconduct with respect to the Company or an Affiliate; (iv) material violation of state or federal securities laws; or (v) material violation of the Company's written policies or codes of conduct, including written policies related to discrimination, harassment, performance of illegal or unethical activities, and ethical misconduct.


 


With respect to any Director, unless the applicable Award Agreement states otherwise, a determination by a majority of the disinterested Board members that the Director has engaged in any of the following:


 


(a) malfeasance in office;


 


(b) gross misconduct or neglect;  


 


(c) false or fraudulent misrepresentation inducing the director's appointment;


 


(d) willful conversion of corporate funds; or


 


(e) repeated failure to participate in Board meetings on a regular basis despite having received proper notice of the meetings in advance.






 


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


 


"Change in Control"


 


 (a) The direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its subsidiaries, taken as a whole, to any Person that is not a subsidiary of the Company;


 


(b) The Incumbent Directors cease for any reason to constitute at least a majority of the Board;  


 


(c) The date which is 10 business days prior to the consummation of a complete liquidation or dissolution of the Company;


 


(d) The acquisition by any Person of Beneficial Ownership of 50% or more (on a fully diluted basis) of either (i) the then outstanding shares of Common Stock of the Company, taking into account as outstanding for this purpose such Common Stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such Common Stock (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this Plan, the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company or any Affiliate, (B) any acquisition by any employee benefit plan sponsored or maintained by the Company or any subsidiary, (C) any acquisition which complies with clauses, (i), (ii) and (iii) of subsection (e) of this definition or (D) in respect of an Award held by a particular Participant, any acquisition by the Participant or any group of persons including the Participant (or any entity controlled by the Participant or any group of persons including the Participant); or


 


 


 






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(e) The consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) more than 50% of the total voting power of (A) the entity resulting from such Business Combination (the "Surviving Company"), or (B) if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of sufficient voting securities eligible to elect a majority of the members of the board of directors (or the analogous governing body) of the Surviving Company (the "Parent Company"), is represented by the Outstanding Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which the Outstanding Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Outstanding Company Voting Securities among the holders thereof immediately prior to the Business Combination; (ii) no Person (other than any employee benefit plan sponsored or maintained by the Surviving Company or the Parent Company) is or becomes the Beneficial Owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect members of the board of directors of the Parent Company (or the analogous governing body) (or, if there is no Parent Company, the Surviving Company); and (iii) at least a majority of the members of the board of directors (or the analogous governing body) of the Parent Company (or, if there is no Parent Company, the Surviving Company) following the consummation of the Business Combination were Board members at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination. 



 


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


 


"Committee" means a
committee of one or more members of the Board appointed by the Board to administer the Plan in accordance with Section 3.3 and Section
3.4.


 


"Common Stock" means
the common stock, $0.01 par value per share, of the Company, or such other securities of the Company as may be designated by the Committee
from time to time in substitution thereof.


 


"Company" means Precision
Optics Corporation, Inc. a Massachusetts corporation, and any successor thereto.


 


"Consultant" means any
individual or entity which performs bona fide services to the Company or an Affiliate, other than as an Employee or Director, and who
may be offered securities registerable pursuant to a registration statement on Form S-8 under the Securities Act.


 


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


 


"Deferred Stock Units (DSUs)"
has the meaning set forth in Section 8.1(b) hereof.


 


"Director" means a member
of the Board.


 


 


 






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


 


"Disqualifying Disposition"
has the meaning set forth in Section 17.12.


 


"Effective Date" shall
mean the date that the Company's shareholders approve this Plan if such shareholder approval occurs before the first anniversary of the
date the Plan is adopted by the Board.


 


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


 


"Exchange Act" means
the Securities Exchange Act of 1934, as amended.


 


"Fair Market Value"
means, as of any date, the value of the Common Stock as determined below. If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation, the New York Stock Exchange or the Nasdaq Stock Market, the Fair Market Value
shall be the closing price of a share of Common Stock (or if the exchange is closed or no sales were reported the closing price on the
business day immediately preceding such date) as quoted on such exchange or system on the day of determination, as reported on Bloomberg,
Nasdaq, in the Wall Street Journal or other reputable source. If the Common Stock is quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the average of the high bid and the low asked prices for the Common Stock on the
date of determination or, if the securities market on which the Common Stock trades is not open on the day of determination, the last
business day prior to the day of determination. In the absence of an established market for the Common Stock, the Fair Market Value shall
be determined in good faith by the Committee and such determination shall be conclusive and binding on all persons. Notwithstanding the
foregoing, in the event of the exercise of an Option pursuant to a “same day sale” program, the Fair Market Value of the Common
Stock sold under such program shall be the price at which the Common Stock was sold.


 


"Fiscal Year" means
the Company's fiscal year.


 


"Free Standing Rights"
has the meaning set forth in Section 7.


 


"Good Reason" means,
unless the applicable Award Agreement states otherwise:


 


(a) If an Employee or Consultant is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Good Reason, the definition contained therein; or


 


(b) If no such agreement exists or if such agreement
does not define Good Reason, the occurrence of one or more of the following without the Participant's express written consent, which
circumstances are not remedied by the Company within thirty (30) days of its receipt of a written notice from the Participant describing
the applicable circumstances (which notice must be provided by the Participant within ninety (90) days of the Participant's knowledge
of the applicable circumstances): (i) any material, adverse change in the Participant's duties, responsibilities, authority, title, status
or reporting structure; (ii) a material reduction in the Participant's base salary or bonus opportunity; or (iii) a geographical relocation
of the Participant's principal office location by more than fifty (50) miles.


 


 


 






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


 


"Incentive Stock Option"
means an Option that is designated by the Committee as an incentive stock option within the meaning of Section 422 of the Code and that
meets the requirements set out in the Plan.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


"Other Equity-Based Award"
means an Award that is not an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, or Performance Share Award that
is granted under Section 10 and is payable by delivery of Common Stock and/or which is measured by reference to the value of Common Stock.


 


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


 


"Performance Goals"
means, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon business criteria
or other performance measures determined by the Committee in its discretion.


 


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


 


"Performance Share Award"
means any Award granted pursuant to Section 9 hereof.


 


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


 


 


 






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


 


"Person" means a person
as defined in Section 13(d)(3) of the Exchange Act.


 


"Plan" means this Precision
Optics Corporation, Inc. 2021 Equity Incentive Plan, as amended and/or amended and restated from time to time.


 


"Related Rights" has
the meaning set forth in Section 7.


 


"Restricted Award" means
any Award granted pursuant to Section 8.


 


"Restricted Period"
has the meaning set forth in Section 8.


 


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


 


"Securities Act" means
the Securities Act of 1933, as amended.


 


"Stock Appreciation Right"
means the right pursuant to an Award granted under Section 7 to receive, upon exercise, an amount payable in cash or shares equal to the
number of shares subject to the Stock Appreciation Right that is being exercised multiplied by the excess of (a) the Fair Market Value
of a share of Common Stock on the date the Award is exercised, over (b) the exercise price specified in the Stock Appreciation Right Award
Agreement.


 


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


 


"Substitute Award" has
the meaning set forth in Section 4.6.


 


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


 


"Total Share Reserve"
has the meaning set forth in Section 4.1.


 


3.          
Administration.


 


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


 


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


 


 


 






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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


 


 






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


 


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


 


3.4           
Committee Composition. Except as otherwise determined by the Board, the Committee shall consist solely of two or
more Non-Employee Directors. The Board shall have discretion to determine whether or not it intends to comply with the exemption requirements
of Rule 16b-3. However, if the Board intends to satisfy such exemption requirements, with respect to any insider subject to Section 16
of the Exchange Act, the Committee shall be a compensation committee of the Board that at all times consists solely of two or more Non-Employee
Directors. Within the scope of such authority, the Board or the Committee may delegate to a committee of one or more members of the Board
who are not Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange
Act. Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under
the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors.


 


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


 


4.          
Shares Subject to the Plan.


 


4.1           
Subject to adjustment in accordance with Section 14, no more than 1,000,000 shares of Common Stock shall be available for the grant
of Awards under the Plan (the "Total Share Reserve").
Any shares of Common Stock granted in connection with Awards shall be counted against this limit as one (1) share of Common Stock for
every one (1) share of Common Stock granted in connection with such Award. During the terms of the Awards, the Company shall keep available
at all times the number of shares of Common Stock required to satisfy such Awards.


 


4.2           
Shares of Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares reacquired by the Company in any manner.


 


 


 






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4.3           
Subject to adjustment in accordance with Section 14, no more than 1,000,000 shares of Common Stock may be issued in the aggregate
pursuant to the exercise of Incentive Stock Options (the "ISO Limit").


 


4.4           
The maximum number of shares of Common Stock subject to Awards granted during a single Fiscal Year to any Director, together with
any cash fees paid to such Director during the Fiscal Year shall not exceed a total value of $1,000,000 (calculating the value of any
Awards based on the grant date fair value for financial reporting purposes).


 


4.5           
Any shares of Common Stock subject to an Award that expires or is canceled, forfeited, or terminated without issuance of the full
number of shares of Common Stock to which the Award related will again be available for issuance under the Plan. Any shares of Common
Stock that again become available for future grants pursuant to this Section 4.5 shall be added back as one (1) share. Notwithstanding
anything to the contrary contained herein: shares subject to an Award under the Plan shall not again be made available for issuance or
delivery under the Plan if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company
to satisfy any tax withholding obligation, or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that were
not issued upon the settlement of the Award.


 


4.6           
Awards may, in the sole discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding
awards previously granted by an entity acquired by the Company or with which the Company combines ("Substitute
Awards"). Substitute Awards shall not be counted against the Total Share Reserve; provided, that, Substitute Awards
issued in connection with the assumption of, or in substitution for, outstanding options intended to qualify as Incentive Stock Options
shall be counted against the ISO limit. Subject to applicable stock exchange requirements, available shares under a shareholder-approved
plan of an entity directly or indirectly acquired by the Company or with which the Company combines (as appropriately adjusted to reflect
such acquisition or transaction) may be used for Awards under the Plan and shall not count toward the Total Share Limit.


 


5.          
Eligibility.


 


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


 


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


 


5.3           
Consultants. A Consultant shall not be eligible for the grant of an Award if, at the time of grant, a Form S-8 registration
statement under the Securities Act (“Form S-8”) is not available to register either the offer or the sale of the Company’s
securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant
is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (1)
that such grant (a) shall be registered in another manner under the Securities Act or (b) does not require registration under the Securities
Act in order to comply with the requirements of the Securities Act, if applicable, and (2) that such grant complies with the securities
laws of all other relevant jurisdictions. Form S-8 generally is available to consultants and advisors only if (a) they are natural persons;
(b) they provide bona fide services to the Company, its parents, or its majority-owned subsidiaries; and (c) the services are not in
connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain
a market for the Company’s securities.


 


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


 


 


 






    	 	9	 



     


    

 


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


 


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


 


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


 


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


 


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


 


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


 


 


 






    	 	10	 



     


    

 


6.7           
Vesting
of Options. Unless the Committee or an Award Agreement provides otherwise, each Option that vests solely based on the continued
service of the Participant shall vest and therefore become exercisable in three equal installments on each of the first, second and third
anniversaries of the Grant Date, subject to the Optionholder's Continuous Service. Each Option that vests based on the achievement of
performance or other criteria shall vest and therefore become exercisable on the third anniversary of the Grant Date, subject to the achievement
of applicable performance goals and the Optionholder's Continuous Service. No Option may be exercised for a fraction of a share of Common
Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any
Award Agreement upon the occurrence of a specified event.


 


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


 


6.9           
Termination of Section 16 Officers. In the event that a sale of the shares of Common Stock received upon exercise of his
or her Option would subject the Optionholder to liability under Section 16(b) of the Exchange Act, then the Option will expire on the
earlier of (1) the fifteenth (15th) calendar
day after the last date upon which such sale would result in liability, or (2) two hundred ten (210) days following the date of termination
of the Optionholder’s employment or other service to the Company (and in no event later than the expiration of the term of the
Option).


 


6.10        
Extension of Termination Date. An Optionholder's Award Agreement may also provide that if the exercise of the Option
following the termination of the Optionholder's Continuous Service for any reason would be prohibited at any time because the issuance
of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federal securities
law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the
expiration of the term of the Option in accordance with Section 6.1 or (b) the expiration of a period after termination of the Participant's
Continuous Service that is three (3) months after the end of the period during which the exercise of the Option would be in violation
of such registration or other securities law requirements.


 


6.11        
Disability of Optionholder. Unless otherwise provided in an Award Agreement, in the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the Optionholder may exercise his or her Option (to the extent
that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending
on the earlier of (a) the date 12 months following such termination or (b) the expiration of the term of the Option as set forth in the
Award Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein or in the
Award Agreement, the Option shall terminate.


 


6.12        
Death of Optionholder. Unless otherwise provided in an Award Agreement, in the event an Optionholder's Continuous
Service terminates as a result of the Optionholder's death, then the Option may be exercised (to the extent the Optionholder was entitled
to exercise such Option as of the date of death) by the Optionholder's estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder's death, but only within the period ending
on the earlier of (a) the date 24 months following the date of death or (b) the expiration of the term of such Option as set forth in
the Award Agreement. If, after the Optionholder's death, the Option is not exercised within the time specified herein or in the Award
Agreement, the Option shall terminate.


 


6.13        
Incentive
Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common
Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under
all plans of the Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceed such limit (according to the
order in which they were granted) shall be treated as Non-qualified Stock Options.


 


 


 






    	 	11	 



     


    

 


6.14        
Early Exercise Generally Not Permitted. The Company’s general policy is not to allow the Optionholder to exercise
the Option as to any part or all of the shares of Common Stock subject to the Option prior to the vesting of the Option. If, however,
an Award Agreement does permit such early exercise, any unvested shares of Common Stock so purchased may be subject to a repurchase option
in favor of the Company or to any other restriction the Committee determines to be appropriate.


 


7.          
Stock
Appreciation Rights. Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement. Each Stock
Appreciation Right so granted shall be subject to the conditions set forth in this Section 7, and to such other conditions not inconsistent
with the Plan as may be reflected in the applicable Award Agreement. Stock Appreciation Rights may be granted alone ("Free Standing
Rights") or in tandem with an Option granted under the Plan ("Related Rights").


 


7.1           
Grant Requirements for Related Rights.  Any Related Right that relates to a Non-qualified Stock Option may be
granted at the same time the Option is granted or at any time thereafter but before the exercise or expiration of the Option. Any Related
Right that relates to an Incentive Stock Option must be granted at the same time the Incentive Stock Option is granted.


 


7.2           
Term.
The term of a Stock Appreciation Right granted under the Plan shall be determined by the Committee; provided, however,
no Stock Appreciation Right shall be exercisable later than the tenth anniversary of the Grant Date.


 


7.3           
Vesting.
 Unless the Committee or the Award Agreement provides otherwise, each Stock Appreciation Right shall vest and therefore become
exercisable in three equal installments on each of the first, second and third anniversaries of the Grant Date, subject to the Participant's
Continuous Service. No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The Committee may, but shall
not be required to, provide for an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence
of a specified event.


 


7.4           
Exercise
and Payment. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive from the Company an amount
equal to the number of shares of Common Stock subject to the Stock Appreciation Right that is being exercised multiplied by the excess
of (i) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (ii) the exercise price specified in
the Stock Appreciation Right or related Option. Payment with respect to the exercise of a Stock Appreciation Right shall be made on the
date of exercise. Payment shall be made in the form of shares of Common Stock (with or without restrictions as to substantial risk of
forfeiture and transferability, as determined by the Committee in its sole discretion), cash or a combination thereof, as determined by
the Committee.


 


7.5           
Exercise
Price The exercise price of a Free Standing Right shall be determined by the Committee, but shall not be less than 100% of
the Fair Market Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right. A Related Right granted simultaneously
with or subsequent to the grant of an Option and in conjunction therewith or in the alternative thereto shall have the same exercise price
as the related Option, shall be transferable only upon the same terms and conditions as the related Option, and shall be exercisable only
to the same extent as the related Option; provided, however, that a Stock Appreciation Right, by its terms, shall be exercisable
only when the Fair Market Value per share of Common Stock subject to the Stock Appreciation Right and related Option exceeds the exercise
price per share thereof and no Stock Appreciation Rights may be granted in tandem with an Option unless the Committee determines that
the requirements of Section 7.1 are satisfied.


 


7.6           
Reduction
in the Underlying Option Shares Upon any exercise of a Related Right, the number of shares of Common Stock for which any related
Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right has been exercised. The number
of shares of Common Stock for which a Related Right shall be exercisable shall be reduced upon any exercise of any related Option by the
number of shares of Common Stock for which such Option has been exercised.


 


8.          
Restricted
Awards A Restricted Award is an Award of actual shares of Common Stock ("Restricted Stock") or hypothetical
Common Stock units ("Restricted Stock Units") having a value equal to the Fair Market Value of an identical number of
shares of Common Stock, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred or otherwise
disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose
for such period (the "Restricted Period") as the Committee shall determine. Each Restricted Award granted under the Plan
shall be evidenced by an Award Agreement. Each Restricted Award so granted shall be subject to the conditions set forth in this Section
8, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.


 


 


 






    	 	12	 



     


    

 


8.1           
Restricted
Stock and Restricted Stock Units


 


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


 


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


 


8.2           
Restrictions.


 


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


 


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


 


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


 


 


 






    	 	13	 



     


    

 


8.3           
Restricted
Period.


 


Unless the Committee or the Award Agreement
provides otherwise, each Restricted Award that vests solely based on the continued service of the Participant shall vest in three equal
installments on each of the first, second and third anniversaries of the Grant Date, subject to the Participant's Continuous Service.
Each Restricted Award that vests based on the achievement of performance or other criteria shall vest on the third anniversary of the
Grant Date, subject to the achievement of applicable performance goals and the Participant's Continuous Service.


 


No Restricted Award may be granted or settled
for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting in
the terms of any Award Agreement upon the occurrence of a specified event.


 


8.4           
Delivery
of Restricted Stock and Settlement of Restricted Stock Units. Upon the expiration of the Restricted Period with respect to
any shares of Restricted Stock, the restrictions set forth in Section 8.2 and the applicable Award Agreement shall be of no further force
or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such
expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the stock certificate evidencing
the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired (to the
nearest full share) and any cash dividends or stock dividends credited to the Participant's account with respect to such Restricted Stock
and the interest thereon, if any.


 


Upon the expiration of the Restricted
Period with respect to any outstanding Restricted Stock Units, or at the expiration of the deferral period with respect to any outstanding
Deferred Stock Units, the Company shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock
for each such outstanding vested Restricted Stock Unit or Deferred Stock Unit ("Vested Unit") and cash equal to any Dividend
Equivalents credited with respect to each such Vested Unit in accordance with Section 8.1(b) hereof and the interest thereon or, at the
discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents and the interest
thereon, if any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole
discretion, elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for Vested Units. If
a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the Fair Market Value
of the Common Stock as of the date on which the Restricted Period lapsed in the case of Restricted Stock Units, or the delivery date in
the case of Deferred Stock Units, with respect to each Vested Unit.


 


8.5           
Stock
Restrictions. Each certificate representing Restricted Stock awarded under the Plan shall bear a legend in such form as the
Company deems appropriate.


 


8.6           
Termination of Participant’s Continuous Service. In the event a Participant’s Continuous Service terminates,
the Company shall automatically reacquire without cost any or all of the shares of Common Stock held by the Participant that have not
vested as of the date of termination under the terms of the Award Agreement. The unvested portion of any Restricted Stock Unit shall
expire immediately upon the termination of a Participant’s Continuous Service.


 


8.7           
Consideration.
A Restricted Award may be awarded in consideration for past services actually rendered to the Company or an Affiliate for its benefit;
provided, however, that in the case of a Restricted Award to be made to a new Employee or Consultant who has not performed prior services
for the Company, the Company shall require par value to be paid to ensure compliance with the General Corporation Law of the State of
Delaware.


 


9.          
Performance
Share Awards.
Each Performance Share Award granted under the Plan shall be evidenced by an Award Agreement. Each Performance Share Award so granted
shall be subject to the conditions set forth in this Section 9, and to such other conditions not inconsistent with the Plan as may be
reflected in the applicable Award Agreement. The Committee shall have the discretion to determine: (i) the number of shares of Common
Stock or stock-denominated units subject to a Performance Share Award granted to any Participant; (ii) the Performance Period applicable
to any Award; (iii) the conditions that must be satisfied for a Participant to earn an Award; and (iv) the other terms, conditions and
restrictions of the Award.


 


 


 






    	 	14	 



     


    

 


9.1           
Earning
Performance Share Awards. The number of Performance Shares earned by a Participant will depend on the extent to which the performance
goals established by the Committee are attained within the applicable Performance Period, as determined by the Committee. The Committee
shall have discretion to reduce or waive any performance goals or other vesting provisions for such grant.


 


9.2           
Value
of Performance Shares. Each Performance Share Award will have an initial value equal to the Fair Market Value of a share of
Common Stock on the date of grant.


 


9.3           
Consideration.
A Performance Share Award may be awarded in consideration for past services actually rendered to the Company or an Affiliate for its benefit;
provided, however, that in the case of a Performance Share Award to be made to a new Employee or Consultant who has not performed
prior services for the Company, the Company shall require par value to be paid to ensure compliance with the General Corporation Law of
the State of Delaware.


 


9.4           
Form and
Timing of Payment. Payment of earned Performance Share Awards will be made as soon as practicable after the expiration of the
applicable performance period. The Committee may pay earned Performance Share Awards in the form of (a) cash, (b) shares of Common Stock
(which have an aggregate Fair Market Value equal to the value of the earned Performance Share Awards at the close of the applicable performance
period), or (c) a combination thereof.


 


9.5           
Dividends.
Shares of Common Stock shall be issued at the time of grant of a Performance Share Award, and such issued shares shall have the same rights
to receive dividends as all other outstanding shares of Common Stock. Prior to vesting, dividends will accumulate and shall be paid to
the Participant only to the extent that the vesting conditions are subsequently satisfied and the Performance Share Award vests.


 


9.6           
Cancellation.
On the date set forth in the Award Agreement, all unearned or unvested Performance Share Awards will be forfeited to the Company.


 


10.       
Other Equity-Based Awards and Cash Awards. The Committee may grant Other
Equity-Based Awards, either alone or in tandem with other Awards, in such amounts and subject to such conditions as the Committee shall
determine in its sole discretion. Each Equity-Based Award shall be evidenced by an Award Agreement and shall be subject to such conditions,
not inconsistent with the Plan, as may be reflected in the applicable Award Agreement. The Committee may grant Cash Awards in such amounts
and subject to such Performance Goals, other vesting conditions, and such other terms as the Committee determines in its discretion. Cash
Awards shall be evidenced in such form as the Committee may determine.


 


11.       
Securities
Law Compliance. Each Award Agreement shall provide that no shares of Common Stock shall be purchased or sold thereunder unless
and until (a) any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction
of the Company and its counsel and (b) if required to do so by the Company, the Participant has executed and delivered to the Company
a letter of investment intent in such form and containing such provisions as the Committee may require. The Company shall use reasonable
efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required
to grant Awards and to issue and sell shares of Common Stock upon exercise of the Awards; provided, however, that this undertaking
shall not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant
to any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until such authority is obtained.


 


12.       
Use of Proceeds from Stock. Proceeds from the sale of Common Stock pursuant
to Awards, or upon exercise thereof, shall constitute general funds of the Company.


 


13.       
Miscellaneous.


 


 


 






    	 	15	 



     


    

 


13.1        
Acceleration
of Exercisability and Vesting. The Committee shall have the power to accelerate the time at which an Award may first be exercised
or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award
stating the time at which it may first be exercised or the time during which it will vest.


 


13.2        
Shareholder Rights. Except as provided in the Plan or an Award Agreement, no Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until
such Participant has satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date
is prior to the date such Common Stock certificate is issued, except as provided in Section 14 hereof.


 


13.3        
No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award granted pursuant thereto
shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the
Award was granted or shall affect the right of the Company or an Affiliate to terminate (a) the employment of an Employee with or without
notice and with or without Cause or (b) the service of a Director pursuant to the By-laws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.


 


13.4        
Transfer; Approved Leave of Absence. For purposes of the Plan, no termination of employment by an Employee shall
be deemed to result from either (a) a transfer of employment to the Company from an Affiliate or from the Company to an Affiliate, or
from one Affiliate to another, or (b) an approved leave of absence for military service or sickness, or for any other purpose approved
by the Company, if the Employee's right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant
to which the leave of absence was granted or if the Committee otherwise so provides in writing, in either case, except to the extent inconsistent
with Section 409A of the Code if the applicable Award is subject thereto.


 


13.5        
Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject to the discretion
of the Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition
of Common Stock under an Award by any of the following means (in addition to the Company's right to withhold from any compensation paid
to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to withhold
shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition
of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the maximum
amount of tax required to be withheld by law; (c) delivering to the Company previously owned and unencumbered shares of Common Stock of
the Company; (d) withholding cash from an Award settled in cash; (e) withholding payment from any amounts otherwise payable to the Participant,
including proceeds from the sale of shares of Common Stock issued pursuant to a Stock Award; or (f) by such other method as may be set
forth in the Award Agreement.


 


14.       
Adjustments Upon Changes in Stock. In the event of changes in the outstanding
Common Stock or in the capital structure of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock
split, an extraordinary corporate transaction such as any recapitalization, reorganization, merger, consolidation, combination, exchange,
or other relevant change in capitalization occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements,
the exercise price of Options and Stock Appreciation Rights, the Performance Goals to which Performance Share Awards and Cash Awards are
subject, the maximum number of shares of Common Stock subject to all Awards stated in Section 4 will be equitably adjusted or substituted,
as to the number, price or kind of a share of Common Stock or other consideration subject to such Awards to the extent necessary to preserve
the economic intent of such Award. In the case of adjustments made pursuant to this Section 14, unless the Committee specifically determines
that such adjustment is in the best interests of the Company or its Affiliates, the Committee shall, in the case of Incentive Stock Options,
ensure that any adjustments under this Section 14 will not constitute a modification, extension or renewal of the Incentive Stock Options
within the meaning of Section 424(h)(3) of the Code and in the case of Non-qualified Stock Options, ensure that any adjustments under
this Section 14 will not constitute a modification of such Non-qualified Stock Options within the meaning of Section 409A of the Code.
Any adjustments made under this Section 14 shall be made in a manner which does not adversely affect the exemption provided pursuant to
Rule 16b-3 under the Exchange Act. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment
shall be conclusive and binding for all purposes.


 


 


 






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15.       
Effect of Change in Control.


 


15.1        
Unless otherwise provided in an Award Agreement, notwithstanding any provision of the Plan to the contrary:


 


(a)            
In the event of a Participant's termination of Continuous Service without Cause or for Good Reason during the 12-month period following
a Change in Control, notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, all outstanding Options
and Stock Appreciation Rights shall become immediately exercisable with respect to 100% of the shares subject to such Options or Stock
Appreciation Rights, and/or the Restricted Period shall expire immediately with respect to 100% of the outstanding shares of Restricted
Stock or Restricted Stock Units as of the date of the Participant's termination of Continuous Service.


 


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


 


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


 


15.2        
In addition, in the event of a Change in Control, the Committee may in its discretion and upon at least 10 days' advance notice
to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof, the
value of such Awards based upon the price per share of Common Stock received or to be received by other shareholders of the Company in
the event. In the case of any Option or Stock Appreciation Right with an exercise price (or SAR Exercise Price in the case of a Stock
Appreciation Right) that equals or exceeds the price paid for a share of Common Stock in connection with the Change in Control, the Committee
may cancel the Option or Stock Appreciation Right without the payment of consideration therefor.


 


15.3        
The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially
all of the assets and business of the Company and its Affiliates, taken as a whole.


 


16.       
Amendment of the Plan and Awards.


 


16.1        
Amendment of Plan. The Board at any time, and from time to time, may amend or terminate the Plan. However, except
as provided in Section 14 relating to adjustments upon changes in Common Stock and Section 16.3, no amendment shall be effective unless
approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy any Applicable Laws. At the time
of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent on shareholder approval.


 


16.2        
Shareholder Approval. The Board may, in its sole discretion, submit any other amendment to the Plan for shareholder
approval.


 


16.3        
Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board
deems necessary or advisable to provide eligible Employees, Consultants and Directors with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified
deferred compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith.


 


16.4        
No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any
amendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.


 


 


 






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16.5        
Amendment of Awards. The Committee at any time, and from time to time, may amend the terms of any one or more Awards;
provided, however, that the Committee may not affect any amendment which would otherwise constitute an impairment of the rights
under any Award unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.


 


17.       
General Provisions.


 


17.1        
Forfeiture Events. The Committee may specify in an Award Agreement that the Participant's rights, payments and benefits
with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events,
in addition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation,
confidentiality, or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to the Participant,
a termination of the Participant's Continuous Service for Cause, or other conduct by the Participant that is detrimental to the business
or reputation of the Company and/or its Affiliates.


 


17.2        
Clawback. Notwithstanding any other provisions in this Plan, the Company may cancel any Award, require reimbursement
of any Award by a Participant, and effect any other right of recoupment of equity or other compensation provided under the Plan in accordance
with any Company policies that may be adopted and/or modified from time to time ("Clawback Policy"). In addition, a Participant
may be required to repay to the Company previously paid compensation, whether provided pursuant to the Plan or an Award Agreement, in
accordance with the Clawback Policy. By accepting an Award, the Participant is agreeing to be bound by the Clawback Policy, as in effect
or as may be adopted and/or modified from time to time by the Company in its discretion (including, without limitation, to comply with
applicable law or stock exchange listing requirements).


 


17.3        
Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.


 


17.4        
Sub-Plans. The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying securities,
tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain such limitations
and other terms and conditions as the Committee determines are necessary or desirable. All sub-plans shall be deemed a part of the Plan,
but each sub-plan shall apply only to the Participants in the jurisdiction for which the sub-plan was designed.


 


17.5        
Deferral of Awards. The Committee may establish one or more programs under the Plan to permit selected Participants
the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event
that absent the election would entitle the Participant to payment or receipt of shares of Common Stock or other consideration under an
Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual
of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules
and procedures that the Committee deems advisable for the administration of any such deferral program.


 


17.6        
Unfunded Plan. The Plan shall be unfunded. Neither the Company, the Board nor the Committee shall be required to
establish any special or separate fund or to segregate any assets to assure the performance of its obligations under the Plan.


 


17.7        
Recapitalizations. Each Award Agreement shall contain provisions required to reflect the provisions of Section 14.


 


17.8        
Delivery. Upon exercise of a right granted under this Plan, the Company shall issue Common Stock or pay any amounts
due within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have,
for purposes of this Plan, 30 days shall be considered a reasonable period of time.


 


 


 






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17.9        
No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The
Committee shall determine whether cash, additional Awards or other securities or property shall be issued or paid in lieu of fractional
shares of Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.


 


17.10    
Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent
with this Plan, including, without limitation, restrictions upon the exercise of Awards, as the Committee may deem advisable.


 


17.11    
Section 409A. The Plan is intended to comply with Section 409A of the Code to the extent subject thereto, and, accordingly,
to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Any payments described
in the Plan that are due within the "short-term deferral period" as defined in Section 409A of the Code shall not be treated
as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent
required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits
that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following the Participant's termination
of Continuous Service shall instead be paid on the first payroll date after the six-month anniversary of the Participant's separation
from service (or the Participant's death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have
any obligation to take any action to prevent the assessment of any additional tax or penalty on any Participant under Section 409A of
the Code and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.


 


17.12    
Disqualifying Dispositions. Any Participant who shall make a "disposition" (as defined in Section 424 of
the Code) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the
Grant Date of such Incentive Stock Option or within one year after the issuance of the shares of Common Stock acquired upon exercise of
such Incentive Stock Option (a "Disqualifying Disposition") shall be required to immediately advise the Company in writing
as to the occurrence of the sale and the price realized upon the sale of such shares of Common Stock.


 


17.13    
Section 16. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies,
the applicable requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to
the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing
liability under Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent
expressed in this Section 17.13, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such
conflict.


 


17.14    
Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries
by whom any right under the Plan is to be exercised in case of such Participant's death. Each designation will revoke all prior designations
by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when filed by the Participant
in writing with the Company during the Participant's lifetime.


 


17.15    
Expenses. The costs of administering the Plan shall be paid by the Company.


 


17.16    
Severability. If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable,
whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality
or unenforceability and the remaining provisions shall not be affected thereby.


 


17.17    
Plan Headings. The headings in the Plan are for purposes of convenience only and are not intended to define or limit
the construction of the provisions hereof.


 


17.18    
Non-Uniform Treatment. The Committee's determinations under the Plan need not be uniform and may be made by it selectively
among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee
shall be entitled to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective
Award Agreements.


 


 


 






    	 	19	 



     


    

 


18.       
Effective Date of Plan. The Plan shall become effective as of the date
that the Plan has been approved by the Board.


 


19.       
Termination or Suspension of the Plan. The Plan shall terminate automatically
on the tenth anniversary of the date that the Plan is approved by the shareholders of the Company. No Award shall be granted pursuant
to the Plan after such date, but Awards theretofore granted may extend beyond that date. The Board may suspend or terminate the Plan at
any earlier date pursuant to Section 16.1 hereof. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.


 


20.       
Choice of Law. The law of the State of Massachusetts shall govern all
questions concerning the construction, validity and interpretation of this Plan, without regard to such state's conflict of law rules.


 


As adopted by the Board of Directors of Precision
Optics Corporation, Inc. on May 10, 2021.


 


As approved by the shareholders of Precision Optics
Corporation, Inc. on [DATE].


 


 


 


 


 


 


 


 


 






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