Ex 10.3


xG TECHNOLOGY INC.


 


2013 LONG-TERM STOCK INCENTIVE PLAN


 


1. Purpose


 


The xG Technology,
Inc. 2013 Long-Term Stock Incentive Plan is intended to promote the best interests of xG Technology, Inc. and its stockholders
by (i) assisting the Corporation and its Affiliates in the recruitment and retention of persons with ability and initiative, (ii)
providing an incentive to such persons to contribute to the growth and success of the Corporation’s businesses by affording
such persons equity participation in the Corporation and (iii) associating the interests of such persons with those of the Corporation
and its Affiliates and stockholders.


 


2. Definitions


 


As used in this Plan
the following definitions shall apply:


 


A. “Affiliate”
means (i) any Subsidiary, (ii) any Parent, (iii) any corporation, or trade or business (including, without limitation, a partnership,
limited liability company or other entity) which is directly or indirectly controlled fifty percent (50%) or more (whether by ownership
of stock, assets or an equivalent ownership interest or voting interest) by the Corporation or one of its Affiliates, and (iv)
any other entity in which the Corporation or any of its Affiliates has a material equity interest and which is designated as an
“Affiliate” by resolution of the Committee.


 


B. “Award”
means any Option or Stock Award granted hereunder.


 


C. “Board”
means the Board of Directors of the Corporation.


 


D. “Cause”
means: (i) conduct involving a felony criminal offense under U. S. federal or state law or an equivalent violation of the laws
of any other country; (ii) dishonesty, fraud, self dealing or material violations of civil law in the course of fulfilling the
Participant’s employment or other assigned duties on behalf of the Corporation; (iii) breach of any confidentiality, employment,
or other written agreement with the Corporation; or (iv) willful misconduct injurious to the Corporation or any of its Subsidiaries
or Affiliates as shall be determined by the Committee.


 


E. “Change
of Control” means: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary holding
securities of the Company under an employee benefit plan of the Company, becomes the “beneficial owner” (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of (A) the outstanding shares of common stock of the Company or (B) the combined voting power of the
Company’s then-outstanding securities; (ii) the Company is party to a merger or consolidation, or series of related
transactions, which results in the voting securities of the Company outstanding immediately prior thereto failing to continue
to represent (either by remaining outstanding or by being converted into voting securities of the surviving or another
entity) at least fifty (50%) percent of the combined voting power of the voting securities of the Company or such surviving
or other entity outstanding immediately after such merger or consolidation; (iii) the sale or disposition of all or
substantially all of the Company’s assets (or consummation of any transaction, or series of related transactions,
having similar effect); (iv) there occurs a change in the composition of the Board of Directors of the Company within a
two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors; (v) the dissolution or
liquidation of the Company; or (vi) any transaction or series of related transactions that has the substantial effect of
any one or more of the foregoing. For purposes of this paragraph, the Board may exclude any transaction involving MB
Technology Holdings.


 




    	 



    	 



    

 


F. “Code”
means the Internal Revenue Code of 1986, and any amendments thereto.


 


G. “Committee”
means the Board or any Committee of the Board to which the Board has delegated any responsibility for the implementation, interpretation
or administration of this Plan. As of the date of the Plan, the Board has initially delegated responsibility for the administration
of the Plan to the Corporation’s Compensation Committee.


 


H. “Common
Stock” means the common stock, $0.01 par value, of the Corporation.


 


I. “Consultant”
means (i) any person performing consulting or advisory services for the Corporation or any Affiliate, or (ii) a director of an
Affiliate.


 


J. “Corporation”
means xG Technology, Inc., a Delaware corporation.


 


K. “Corporation
Law” means the Delaware General Corporation Law.


 


L. “Deferral
Period” means the period of time during which Deferred Shares are subject to deferral limitations under Section 7.D of
this Plan.


 


M. “Deferred
Shares” means an award pursuant to Section 7.D of this Plan of the right to receive shares of Common Stock at the end
of a specified Deferral Period.


 


N. “Director”
means a member of the Board.


 


O. “Eligible
Person” means an employee of the Corporation or an Affiliate (including a corporation that becomes an Affiliate after
the adoption of this Plan), a Director or a Consultant to the Corporation or an Affiliate (including a corporation that becomes
an Affiliate after the adoption of this Plan).


 


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


 


Q. “Fair Market
Value” means, on any given date, the current fair market value of the shares of Common Stock as determined as follows:


 


(i) If the
Common Stock is traded on a national securities exchange, the closing price for the day of determination as quoted on such market
or exchange, including the NASDAQ Global Market or NASDAQ Capital Market, or the OTC Bulletin Board, whichever is the primary market
or exchange for trading of the Common Stock or if no trading occurs on such date, the last day on which trading occurred, or such
other appropriate date as determined by the Committee in its discretion, as reported in The Wall Street Journal or such
other source as the Committee deems reliable;


 


(ii) If the
Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall
be the mean between the high and the low asked prices for the Common Stock for the day of determination; or


 






    	-2-



    	 



    



 


(iii) In
the absence of an established market for the Common Stock, Fair Market Value shall be determined by the Committee in good faith.


 





R. “Incentive
Stock Option” means an Option (or portion thereof) which meets the criteria of Section 422(b) of the Code.


 


S. “Listing
Date” means the date upon share of Common Stock commence trading on a national securities exchange (exclusive of trading
markets such as the OTC Bulletin Board).


 


T. “Nonqualified
Stock Option” means an Option (or portion thereof) which is not intended or does not for any reason qualify as an Incentive
Stock Option.


 


U. “Option”
means any option to purchase shares of Common Stock granted under this Plan.


 


V. “Parent”
means any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation if each of
the corporations (other than the Corporation) owns stock possessing at least fifty percent (50%) of the total combined voting power
of all classes of stock in one of the other corporations in such chain.


 


W. “Participant”
means an Eligible Person who (i) is selected by the Committee or an authorized officer of the Corporation to receive an Award and
(ii) is party to an agreement setting forth the terms of the Award, as appropriate.


 


X. “Performance
Agreement” means an agreement described in Section 8 of this Plan.


 


Y. “Performance
Objectives” means the performance objectives established pursuant to this Plan for Participants who have received grants
of Performance Shares or, when so determined by the Committee, Stock Awards. Performance Objectives may be described in terms of
Corporation-wide objectives or objectives that are related to the performance of the individual Participant or the Affiliate, subsidiary,
division, department or function within the Corporation or Affiliate in which the Participant is employed or has responsibility.
Any Performance Objectives applicable to Awards to the extent that such an Award is intended to qualify as “performance-based
compensation” under Section 162(m) of the Code shall be limited to specified levels of or increases in the Corporation’s
or a business unit’s return on equity, earnings per share, total earnings, earnings growth, return on capital, return on
assets, economic value added, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization,
sales growth, gross margin return on investment, increase in the Fair Market Value of the shares, share price (including but not
limited to growth measures and total stockholder return), net operating profit, cash flow (including, but not limited to, operating
cash flow and free cash flow), cash flow return on investments (which equals net cash flow divided by total capital), internal
rate of return, increase in net present value or expense targets. The Awards intended to qualify as “Performance Based Compensation”
under Section 162(m) of the Code shall be pre-established in accordance with applicable regulations under Section 162(m) of the
Code and the determination of attainment of such goals shall be made by the Committee. If the Committee determines that a change
in the business, operations, corporate structure or capital structure of the Corporation (including an event described in Section
9), or the manner in which it conducts is business, or other events or circumstances render the Performance Objectives unsuitable,
the Committee may modify such Performance Objectives or the related minimum acceptable level of achievement, in whole or in part,
as the Committee deems appropriate and equitable; provided, however, that no such modification shall be made to an Award intended
to qualify as performance-based compensation under Section 162(m) of the Code unless the Committee determines that such modification
will not result in loss of such qualification or the Committee determines that loss of such qualification is in the best interests
of the Corporation.


 




    	-3-



    	 



    

 


Z. “Performance
Period” means a period of time established under Section 8 of this Plan within which the Performance Objectives relating
to a Performance Share or Stock Award are to be achieved.


 


AA. “Performance
Share” means a bookkeeping entry that records the equivalent of one share of Common Stock awarded pursuant to Section
8 of this Plan.


 


BB. “Plan”
means this xG Technology, Inc. 2013 Long-term Stock Incentive Plan.


 


CC. “Repricing”
means, other than in connection with an event described in Section 9 of this Plan, (i) lowering the exercise price of an Option
or Stock Appreciation Right after it has been granted or (ii) canceling an Option or Stock Appreciation Right at a time when the
exercise price exceeds the then Fair Market Value of the Common Stock in exchange for another Option or Stock Award.


 


DD. “Restricted
Stock Award” means an award of Common Stock under Section 7.B.


 


EE. “Restricted
Stock Units” means a unit similar to restricted
stock, however, the unit represents a promise that
employees will receive stock in the future. The units do not pay dividends until the stock is vested.


 


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


 


GG. “Stock
Award” means a Stock Bonus Award, Restricted Stock Award, Stock Appreciation Right, Deferred Shares, or Performance Shares.


 


HH. “Stock
Bonus Award” means an award of Common Stock under Section 7.A.


 


II. “Stock
Appreciation Right” means an award of a right of the Participant under Section 7.C to receive a payment in cash or shares
of Common Stock (or a combination thereof) based on the increase in Fair Market Value of the shares of Common Stock covered by
the award between the date of grant of such award and the Fair Market Value of the Common Stock on the date of exercise of such
Stock Appreciation Right.


 


JJ. “Stock
Award Agreement” means an agreement (written or electronic) between the Corporation and a Participant setting forth the
specific terms and conditions of a Stock Award granted to the Participant under Section 7. Each Stock Award Agreement shall be
subject to the terms and conditions of this Plan and shall include such terms and conditions as the Committee shall authorize.


 


KK. “Stock
Option Agreement” means an agreement (written or electronic) between the Corporation and a Participant setting forth
the specific terms and conditions of an Option granted to the Participant. Each Stock Option Agreement shall be subject to the
terms and conditions of this Plan and shall include such terms and conditions as the Committee shall authorize.


 


LL. “Subsidiary”
means any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation if each
of the corporations (other than the last corporation in the unbroken chain) owns stock possessing at least fifty percent (50%)
of the total combined voting power of all classes of stock in one of the other corporations in such chain.


 


MM. “Ten Percent
Owner” means any Eligible Person owning at the time an Option is granted more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation or of a Parent or Subsidiary. An individual shall, in accordance with Section
424(d) of the Code, be considered to own any voting stock owned (directly or indirectly) by or for such Eligible Person’s
brothers, sisters, spouse, ancestors and lineal descendants and any voting stock owned (directly or indirectly) by or for a corporation,
partnership, estate or trust shall be considered as being owned proportionately by or for its stockholders, partners, or beneficiaries.


 




    	-4-



    	 



    

 


NN. “Termination
of Employment” means the end of employment and includes the following:(i) An employee quits, retires, or is dismissed; or
(ii) employment is terminated by an operation of law; or (iii) the board of directors considers a condition of employment to be
substantially altered.





 


3. Administration


 


A. Delegation to
Board Committee. The Board shall be the sole Committee of this Plan unless the Board delegates all or any portion of its authority
to administer this Plan to a Committee. To the extent not prohibited by the charter or bylaws of the Corporation, the Board may
delegate all or a portion of its authority to administer this Plan to a Committee of the Board appointed by the Board and constituted
in compliance with the applicable Corporation Law. The Committee shall consist solely of two (2) or more Directors who are (i)
Non-Employee Directors (within the meaning of Rule 16b-3 under the Exchange Act) for purposes of exercising administrative authority
with respect to Awards granted to Eligible Persons who are subject to Section 16 of the Exchange Act; (ii) to the extent required
by the rules of the market on which the Corporation’s shares are traded or the exchange on which the Corporation’s
shares are listed, “independent” within the meaning of such rules; and (iii) at such times as an Award under this Plan
by the Corporation is subject to Section 162(m) of the Code (to the extent relief from the limitation of Section 162(m) of the
Code is sought with respect to Awards and administration of the Awards by a committee of “outside directors” is required
to receive such relief) “outside directors” within the meaning of Section 162(m) of the Code.


 


B. Delegation to
Officers. The Committee may delegate to one or more officers of the Corporation the authority to grant and administer Awards
to Eligible Persons who are not Directors or executive officers of the Corporation; provided that the Committee shall have fixed
the total number of shares of Common Stock that may be subject to such Awards. No officer holding such a delegation is authorized
to grant Awards to himself or herself. In addition to the Committee, the officer or officers to whom the Committee has delegated
the authority to grant and administer Awards shall have all powers delegated to the Committee with respect to such Awards. Such
delegation shall be subject to the limitations of Section 157(c) (or any successor provision) of the Corporation Law.


 


C. Powers of the
Committee. Subject to the provisions of this Plan, and in the case of a Committee appointed by the Board, the specific duties
delegated to such Committee, the Committee (and the officers to whom the Committee has delegated such authority) shall have the
authority:


 


(i) To construe
and interpret all provisions of this Plan and all Stock Option Agreements, Stock Award Agreements and Performance Agreements under
this Plan.


 


(ii) To determine
the Fair Market Value of Common Stock.


 


(iii) To
select the Eligible Persons to whom Awards are granted from time to time hereunder.


 




    	-5-



    	 



    

 


(iv) To determine
the number of shares of Common Stock covered by an Award; to determine whether an Option shall be an Incentive Stock Option or
Nonqualified Stock Option; and to determine such other terms and conditions, not inconsistent with the terms of this Plan, of each
such Award. Such terms and conditions include, but are not limited to, the exercise price of an Option, purchase price of Common
Stock subject to a Stock Award, the time or times when Options or Stock Awards may be exercised or Common Stock issued thereunder,
the right of the Corporation to repurchase Common Stock issued pursuant to the exercise of an Option or a Stock Award and other
restrictions or limitations (in addition to those contained in this Plan) on the forfeitability or transferability of Options,
Stock Awards or Common Stock issued upon exercise of an Option or pursuant to an Award. Such terms may include conditions which
shall be determined by the Committee and need not be uniform with respect to Participants.


 


(v) To accelerate
the time at which any Option or Stock Award may be exercised, or the time at which a Stock Award or Common Stock issued under this
Plan may become transferable or non-forfeitable.


 


(vi) To determine
whether and under what circumstances an Option or RSU may be settled in cash, shares of Common Stock or other property under Section
6.H instead of Common Stock.


 


(vii) To
waive, amend, cancel, extend, renew, accept the surrender of, modify or accelerate the vesting of or lapse of restrictions on all
or any portion of an outstanding Award. Except as otherwise provided by this Plan, the Stock Option Agreement, Stock Award Agreement
or Performance Agreement or as required to comply with applicable law, regulation or rule, no amendment, cancellation or modification
shall, without a Participant’s consent, adversely affect any rights of the Participant; provided, however, that (x) an amendment
or modification that may cause an Incentive Stock Option to become a Nonqualified Stock Option shall not be treated as adversely
affecting the rights of the Participant and (y) any other amendment or modification of any Stock Option Agreement, Stock Award
Agreement or Performance Agreement that does not, in the opinion of the Committee, adversely affect any rights of any Participant,
shall not require such Participant’s consent. Notwithstanding the foregoing, the restrictions on the Repricing of Options
and Stock Appreciation Rights, as set forth in this Plan, may not be waived.


 


(viii) To
prescribe the form of Stock Option Agreements, and Stock Award Agreements and Performance Agreements; to adopt policies and procedures
for the exercise of Options or Stock Awards, including the satisfaction of withholding obligations; to adopt, amend, and rescind
policies and procedures pertaining to the administration of this Plan; and to make all other determinations necessary or advisable
for the administration of this Plan. The Award’s effectiveness will not be dependent on any signature unless specifically
so provided in the Award Agreement. Awards shall generally be subject to a three year vesting period and no more than 60% of Awards
to executives and directors may have a vesting period of less than three years; provided, however, that vesting may accelerate
in the event of change in control and certain other events as set forth in Section 9 herein, and in the events of death, disability
or retirement, as will be specified in the Award Agreement.


 


(ix) To allow
for deferral of shares vesting under the stock awards.


 


The express grant in
this Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee; provided
that the Committee or any committee of the Board may not exercise any right or power reserved to the Board. Any decision made,
or action taken, by the Committee or in connection with the administration of this Plan shall be final, conclusive and binding
on all persons having an interest in this Plan.


 




    	-6-



    	 



    

 


4. Eligibility


 


A. Eligibility for
Awards. Awards, other than Incentive Stock Options, may be granted to any Eligible Person selected by the Committee. Incentive
Stock Options may be granted only to employees of the Corporation or a Parent or Subsidiary.


 


B. Eligibility of
Consultants. A Consultant shall be an Eligible Person only if the offer or sale of the Corporation’s securities would
be eligible for registration on Form S-8 Registration Statement because of the identity and nature of the service provided by such
person, unless the Corporation determines that an offer or sale of the Corporation’s securities to such person will satisfy
another exemption from the registration under the Securities Act and complies with the securities laws of all other jurisdictions
applicable to such offer or sale.


 


C. Substitution
Awards. The Committee may make Awards and may grant Options under this Plan by assumption, in substitution or replacement of
performance shares, phantom shares, stock awards, stock options, stock appreciation rights or similar awards granted by another
entity (including an Affiliate) in connection with a merger, consolidation, acquisition of property or stock or similar transaction.
Notwithstanding any provision of this Plan (other than the maximum number of shares of Common Stock that may be issued under this
Plan), the terms of such assumed, substituted, or replaced Awards shall be as the Committee, in its discretion, determines is appropriate.


 


5. Common Stock Subject to Plan


 


A. Share Reserve
and Limitations on Grants. Subject to adjustment as provided in Section 9, the maximum aggregate number of shares of Common
Stock that may be (i) issued under this Plan pursuant to the exercise of Options, (ii) issued pursuant to Stock Awards, (iii) covered
by Stock Appreciation Rights (without regard to whether payment on exercise of the Stock Appreciation Right is made in cash or
shares of Common Stock) and (iv) covered by Performance Shares shall be limited to 15% of the shares of Common Stock outstanding,
which calculation shall be made on the first trading day of a new fiscal year; provided that, in any year no more than 8% of the
Common Stock of the company or derivative securitization with Common Stock underlying 8% of the Common Stock may be issued in any
fiscal year. The number shares of Common Stock subject to the Plan shall be subject to adjustment as provided in Section 9. Subject
to adjustment as provided in Section 9, and notwithstanding any provision hereto to the contrary, shares subject to the Plan shall
include shares forfeited in a prior year as provided herein. For purposes of determining the number of shares of Common Stock available
under this Plan, shares of Common Stock withheld by the Corporation to satisfy applicable tax withholding obligations pursuant
to Section 10 of this Plan shall be deemed issued under this Plan. No single participant may receive more than 25% of the total
shares awarded in any single year.


 


B. Reversion of
Shares. If an Option or Stock Award is terminated, expires or becomes unexercisable, in whole or in part, for any reason, the
unissued or unpurchased shares of Common Stock (or shares subject to an unexercised Stock Appreciation Right) which were subject
thereto shall become available for future grant under this Plan. Shares of Common Stock that have been actually issued under this
Plan shall not be returned to the share reserve for future grants under this Plan; except that shares of Common Stock issued pursuant
to a Stock Award which are forfeited to the Corporation or repurchased by the Corporation at the original purchase price of such
shares, shall be returned to the share reserve for future grant under this Plan.


 




    	-7-



    	 



    

 


C. Source of Shares.
Common Stock issued under this Plan may be shares of authorized and unissued Common Stock or shares of previously issued Common
Stock that have been reacquired by the Corporation.


 


6. Options


 


A. Award. In
accordance with the provisions of Section 4, the Committee will designate each Eligible Person to whom an Option is to be granted
and will specify the number of shares of Common Stock covered by such Option. The Stock Option Agreement shall specify whether
the Option is an Incentive Stock Option or Nonqualified Stock Option, the vesting schedule applicable to such Option and any other
terms of such Option. No Option that is intended to be an Incentive Stock Option shall be invalid for failure to qualify as an
Incentive Stock Option.


 


B. Option Price.
The exercise price per share for Common Stock subject to an Option shall be determined by the Committee, but shall comply with
the following:


 


(i) The exercise
price per share for Common Stock subject to an Incentive Stock Option shall not be less than one hundred percent (100%) of the
Fair Market Value on the date of grant .


 


(ii) The
exercise price per share for Common Stock subject to an Incentive Stock Option granted to a Participant who is deemed to be a Ten
Percent Owner on the date such option is granted, shall not be less than one hundred ten percent (110%) of the Fair Market Value
on the date of grant.


 


C. Maximum Option
Period. The maximum period during which an Option may be exercised shall be ten (10) years from the date such Option was granted.
In the case of an Incentive Stock Option that is granted to a Participant who is or is deemed to be a Ten Percent Owner on the
date of grant, such Option shall not be exercisable after the expiration of five (5) years from the date of grant.


 


D. Maximum Value
of Options which are Incentive Stock Options. To the extent that the aggregate Fair Market Value of the Common Stock with respect
to which Incentive Stock Options granted to any person are exercisable for the first time during any calendar year (under all stock
option plans of the Corporation or any Parent or Subsidiary) exceeds $100,000 (or such other amount provided in Section 422(d)
of the Code), the Options are not Incentive Stock Options. For purposes of this section, the Fair Market Value of the Common Stock
will be determined as of the time the Incentive Stock Option with respect to the Common Stock is granted. This section will be
applied by taking Incentive Stock Options into account in the order in which they are granted.


 


E. Nontransferability.
Options granted under this Plan which are intended to be Incentive Stock Options shall be nontransferable except by will or by
the laws of descent and distribution and during the lifetime of the Participant shall be exercisable by only the Participant to
whom the Incentive Stock Option is granted. Except to the extent transferability of a Nonqualified Stock Option is provided for
in the Stock Option Agreement or is approved by the Committee, during the lifetime of the Participant to whom the Nonqualified
Stock Option is granted, such Option may be exercised only by the Participant. If the Stock Option Agreement so provides or the
Committee so approves, a Nonqualified Stock Option may be transferred by a Participant through a gift or domestic relations order
to the Participant’s family members to the extent in compliance with applicable securities laws and regulations and provided
that such transfer is not a transfer for value (within the meaning of applicable securities laws and regulations). The holder of
a Nonqualified Stock Option transferred pursuant to this section shall be bound by the same terms and conditions that governed
the Option during the period that it was held by the Participant. No right or interest of a Participant in any Option shall be
liable for, or subject to, any lien, obligation, or liability of such Participant.


 




    	-8-



    	 



    

 


F. Vesting.
Options will vest as provided in the Stock Option Agreement.


 


G. Termination.
Options will terminate as provided in the Stock Option Agreement. The Stock Option Agreement shall provide for specific events
of termination. In this regard, if for any reason other than death or permanent and total disability, an Optionee ceases to be
employed by the Corporation or any of its Affiliates (such event being called a “Termination”), Options or Stock Awards
held at the date of Termination (to the extent then exercisable) may be exercised in whole or in part at any time within three
months of the date of such Termination, or such other period of not less than 30 days after the date of such Termination as is
specified in the Option Agreement or Stock Award Agreement or by amendment thereof (but in no event after the Expiration Date);
provided, however, that if such exercise of the Option would result in liability for the Optionee under Section 16(b) of the Exchange
Act, then such three-month period automatically shall be extended until the tenth day following the last date upon which Optionee
has any liability under Section 16(b) (but in no event after the Expiration Date); and further provided that if such Optionee is
a “specified employee” as that term is defined by Section 409A(a)(2)(B)(i) of the Code, no distribution shall occur
until six months after the Optionee’s separation from service. If an Optionee dies or becomes permanently and totally disabled
(within the meaning of Section 22(e)(3) of the Code) while employed by the Company or an Affiliate or within the period that the
Option remains exercisable after Termination, Options then held (to the extent then exercisable) may be exercised, in whole or
in part, by the Optionee, by the Optionee's personal representative or by the person to whom the Option is transferred by devise
or the laws of descent and distribution, at any time within twelve months after the death or twelve months after the permanent
and total disability of the Optionee or any longer period specified in the Option Agreement or Stock Award Agreement or by amendment
thereof (but in no event after the Expiration Date). For purposes of this Section, “employment” includes service as
a Director or as a Consultant. For purposes of this Section, an Optionee's employment shall not be deemed to terminate by reason
of sick leave, military leave or other leave of absence approved by the Administrator, if the period of any such leave does not
exceed 90 days or, if longer, if the Optionee's right to reemployment by the Company or any Affiliate is guaranteed either contractually
or by statute.


 


H. Exercise.
Subject to the provisions of this Plan and the applicable Stock Option Agreement, an Option may be exercised to the extent vested
in whole at any time or in part from time to time at such times and in compliance with such requirements as the Committee shall
determine. A partial exercise of an Option shall not affect the right to exercise the Option from time to time in accordance with
this Plan and the applicable Stock Option Agreement with respect to the remaining shares subject to the Option. An Option may not
be exercised with respect to fractional shares of Common Stock.


 


I. Payment.
Unless otherwise provided by the Stock Option Agreement, payment of the exercise price for an Option shall be made in cash or a
cash equivalent acceptable to the Committee or if the Common Stock is traded on an established securities market, by payment of
the exercise price by a broker-dealer or by the Option holder with cash advanced by the broker-dealer if the exercise notice is
accompanied by the Option holder’s written irrevocable instructions to deliver the Common Stock acquired upon exercise of
the Option to the broker-dealer or by delivery of the Common Stock to the broker-dealer with an irrevocable commitment by the broker-dealer
to forward the exercise price to the Corporation. With the consent of the Committee, payment of all or a part of the exercise price
of an Option may also be made (i) by surrender to the Corporation (or delivery to the Corporation of a properly executed form of
attestation of ownership) of shares of Common Stock that have been held for such period prior to the date of exercise as is necessary
to avoid adverse accounting treatment to the Corporation, or (ii) any other method acceptable to the Committee, including without
limitation, the withholding of shares receivable upon settlement of the option in payment of the exercise price. If Common Stock
is used to pay all or part of the exercise price, the sum of the cash or cash equivalent and the Fair Market Value (determined
as of the date of exercise) of the shares surrendered must not be less than the Option price of the shares for which the Option
is being exercised.


 




    	-9-



    	 



    

 


J. Stockholder Rights.
No Participant shall have any rights as a stockholder with respect to shares subject to an Option until the date of exercise of
such Option and the certificate for shares of Common Stock to be received on exercise of such Option has been issued by the Corporation.


 


K. Disposition and
Stock Certificate Legends for Incentive Stock Option Shares. A Participant shall notify the Corporation of any sale or other
disposition of Common Stock acquired pursuant to an Incentive Stock Option if such sale or disposition occurs (i) within two years
of the grant of an Option or (ii) within one year of the issuance of the Common Stock to the Participant. Such notice shall be
in writing and directed to the Chief Financial Officer of the Corporation or is his/her absence, the Chief Executive Officer. The
Corporation may require that certificates evidencing shares of Common Stock purchased upon the exercise of Incentive Stock Option
issued under this Plan be endorsed with a legend in substantially the following form:


 


THE SHARES EVIDENCED BY THIS CERTIFICATE
MAY NOT BE SOLD OR TRANSFERRED PRIOR TO ___, 20___, IN THE ABSENCE OF A WRITTEN STATEMENT FROM THE CORPORATION TO THE EFFECT THAT
THE CORPORATION IS AWARE OF THE FACTS OF SUCH SALE OR TRANSFER.


 


The blank contained
in this legend shall be filled in with the date that is the later of (i) one year and one day after the date of the exercise of
such Incentive Stock Option or (ii) two years and one day after the grant of such Incentive Stock Option.


 


K. No Repricing.
In no event shall the Committee permit a Repricing of any Option without the approval of the stockholders of the Corporation.


 


L. Right of Repurchase.
The Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to repurchase all or
any part of the vested shares exercised pursuant to the Option; provided, however, that (i) such repurchase right shall be exercisable
only within (A) the ninety (90) day period following the termination of employment or the relationship as a Director or Consultant
(or in the case of a post-termination exercise of the Option, the ninety (90) period following such exercise), or (B) such longer
period as may be agreed to by the Company and the Optionee, (ii) such repurchase right shall be exercisable for less than all of
the vested shares only with the Optionee’s consent, and (iii) such right shall be exercisable only for cash or cancellation
of purchase money indebtedness for the shares at a repurchase price equal to the stock’s Fair Market Value at the time of
such termination. Notwithstanding the foregoing, shares received on exercise of an Option by an officer, director or Consultant
may be subject to additional or greater restrictions specified in the Option Agreement.


 


M. Right of First
Refusal. The Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to exercise
a right of first refusal following receipt of notice from the Optionee of the intent to transfer all or any part of the shares
exercised pursuant to the Option. Such right of first refusal shall be exercised by the Company no more than thirty (30) days following
receipt of notice of the Optionee’s intent to transfer shares and must be exercised as to all the shares the Optionee intends
to transfer unless the Optionee consents to exercise for less than all the shares offered. The purchase of the shares following
exercise shall be completed within thirty (30) days of the Company’s receipt of notice of the Optionee’s intent to
transfer shares, or such longer period of time as has been offered by the person to whom the Optionee intends to transfer the shares,
or as may be agreed to by the Company and the Optionee. Except as expressly provided in this Subsection (j), such right of first
refusal shall otherwise comply with the provisions of the Bylaws of the Company.


 




    	-10-



    	 



    

 


7. Stock Awards


 


A. Stock Bonus Awards.
Each Stock Award Agreement for a Stock Bonus Award shall be in such form and shall contain such terms and conditions (including
provisions relating to consideration, vesting, reacquisition of shares following termination, and transferability of shares) as
the Committee shall deem appropriate. The terms and conditions of Stock Award Agreements for Stock Bonus Awards may change from
time to time, and the terms and conditions of separate Stock Bonus Awards need not be identical.


 


B. Restricted Stock
Awards. Each Stock Award Agreement for a Restricted Stock Award shall be in such form and shall contain such terms and conditions
(including provisions relating to purchase price, consideration, vesting, reacquisition of shares following termination, and transferability
of shares) as the Committee shall deem appropriate. The terms and conditions of the Stock Award Agreements for Restricted Stock
Awards may change from time to time, and the terms and conditions of separate Restricted Stock Awards need not be identical. Vesting
of any grant of Restricted Stock Awards may be further conditioned upon the attainment of Performance Objectives established by
the Committee in accordance with the applicable provisions of Section 8 of this Plan regarding Performance Shares.


 


C. Stock Appreciation
Rights. Each Stock Award Agreement for Stock Appreciation Rights shall be in such form and shall contain such terms and conditions
(including provisions relating to vesting, reacquisition of shares following termination, and transferability of shares) as the
Committee shall deem appropriate. The terms and conditions of Stock Appreciation Rights may change from time to time, and the terms
and conditions of separate Stock Appreciation Rights need not be identical. No Stock Appreciation Right shall be exercisable after
the expiration of seven (7) years from the date such Stock Appreciation Right is granted. The base price per share for each share
of Common Stock covered by an Award of Stock Appreciation Rights shall not be less than one hundred percent (100%) of the Fair
Market Value of a share of Common Stock on the date of grant. In no event shall the Committee permit a Repricing of any Stock Appreciation
Right without the approval of the stockholders of the Corporation.


 


D. Deferred Shares.
The Committee may authorize grants of Deferred Shares to Participants upon such terms and conditions as the Committee may determine
in accordance with the following provisions:


 


(i) Each
grant shall constitute the agreement by the Corporation to issue or transfer shares of Common Stock to the Participant in the future
in consideration of the performance of services, subject to the fulfillment during the Deferral Period of such conditions as the
Committee may specify.


 


(ii) Each
grant may be made without additional consideration from the Participant or in consideration of a payment by the Participant that
is less than the Fair Market Value on the date of grant.


 


(iii) Each
grant shall provide that the Deferred Shares covered thereby shall be subject to a Deferral Period, which shall be fixed by the
Committee on the date of grant, and any grant or sale may provide for the earlier termination of such period in the event of a
change in control of the Corporation or other similar transaction or event.


 


(iv) During
the Deferral Period, the Participant shall not have any right to transfer any rights under the subject Award, shall not have any
rights of ownership in the Deferred Shares and shall not have any right to vote such shares, but the Committee may on or after
the date of grant, authorize the payment of dividend or other distribution equivalents on such shares in cash or additional shares
on a current, deferred or contingent basis.


 




    	-11-



    	 



    

 


(v) Any grant
of the vesting thereof may be further conditioned upon the attainment of Performance Objectives established by the Committee in
accordance with the applicable provisions of Section 8 of this Plan regarding Performance Shares.


 


(vi) Each
grant shall be evidenced by an agreement delivered to and accepted by the Participant and containing such terms and provisions
as the Committee may determine consistent with this Plan.


 


8. Performance Shares


 


A. The Committee may
authorize grants of Performance Shares, which shall become payable to the Participant upon the achievement of specified Performance
Objectives, upon such terms and conditions as the Committee may determine in accordance with the following provisions:


 


(i) Each
grant shall specify the number of Performance Shares to which it pertains, which may be subject to adjustment to reflect changes
in compensation or other factors.


 


(ii) The
Performance Period with respect to each Performance Share shall commence on the date established by the Committee and may be subject
to earlier termination in the event of a change in control of the Corporation or similar transaction or event.


 


(iii) Each
grant shall specify the Performance Objectives that are to be achieved by the Participant.


 


(iv) Each
grant may specify in respect of the specified Performance Objectives a minimum acceptable level of achievement below which no payment
will be made and may set forth a formula for determining the amount of any payment to be made if performance is at or above such
minimum acceptable level but falls short of the maximum achievement of the specified Performance Objectives.


 


(v) Each
grant shall specify the time and manner of payment of Performance Shares that shall have been earned, and any grant may specify
that any such amount may be paid by the Corporation in cash, shares of Common Stock or any combination thereof and may either grant
to the Participant or reserve to the Committee the right to elect among those alternatives.


 


(vi) Any
grant of Performance Shares may specify that the amount payable with respect thereto may not exceed a maximum specified by the
Committee on the date of grant.


 


(vii) Any
grant of Performance Shares may provide for the payment to the Participant of dividend or other distribution equivalents thereon
in cash or additional shares of Common Stock on a current, deferred or contingent basis.


 


(viii) If
provided in the terms of the grant and subject to the requirements of Section 162(m) of the Code (in the case of Awards intended
to qualify for exception therefrom), the Committee may adjust Performance Objectives and the related minimum acceptable level of
achievement if, in the sole judgment of the Committee, events or transactions have occurred after the date of grant that are unrelated
to the performance of the Participant and result in distortion of the Performance Objectives or the related minimum acceptable
level of achievement.


 




    	-12-



    	 



    

 


(ix) Each
grant shall be evidenced by an agreement that shall be delivered to and accepted by the Participant, which shall state that the
Performance Shares are subject to all of the terms and conditions of this Plan and such other terms and provisions as the Committee
may determine consistent with this Plan.


 


9. Changes in Capital Structure


 


A. No Limitations
of Rights. The existence of outstanding Awards shall not affect in any way the right or power of the Corporation or its stockholders
to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Corporation’s capital
structure or its business, or any merger or consolidation of the Corporation, or any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Corporation,
or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar
character or otherwise.


 


B. Changes in Capitalization.
If the Corporation shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of the Common Stock outstanding, without receiving consideration
therefore in money, services or property, then (i) the number, class, and per share price of shares of Common Stock subject to
outstanding Options and other Awards hereunder and (ii) the number and class of shares then reserved for issuance under this Plan
and the maximum number of shares for which Awards may be granted to a Participant during a specified time period shall be appropriately
and proportionately adjusted. The conversion of convertible securities of the Corporation shall not be treated as effected “without
receiving consideration.” The Committee shall make such adjustments, and its determinations shall be final, binding and conclusive.


 


C. Merger, Consolidation
or Asset Sale. If the Corporation is merged or consolidated with another entity or sells or otherwise disposes of substantially
all of its assets to another company while Options or Stock Awards remain outstanding under this Plan, unless provisions are made
in connection with such transaction for the continuance of this Plan and/or the assumption or substitution of such Options or Stock
Awards with new options or stock awards covering the stock of the successor company, or parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices, then all outstanding Options and Stock Awards which have not been continued,
assumed or for which a substituted award has not been granted shall, whether or not vested or then exercisable, unless otherwise
specified in the Stock Option Agreement or Stock Award Agreement, vest immediately pursuant to the provisions of Section 409A of
the Code and the related Treasury Regulations.


 


D. Limitation on
Adjustment. Except as previously expressly provided, neither the issuance by the Corporation of shares of stock of any class,
or securities convertible into shares of stock of any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Corporation
convertible into such shares or other securities, nor the increase or decrease of the number of authorized shares of stock, nor
the addition or deletion of classes of stock, shall affect, and no adjustment by reason thereof shall be made with respect to,
the number, class or price of shares of Common Stock then subject to outstanding Options or Stock Awards.


 




    	-13-



    	 



    

 


E. Change of Control.
In connection with any actual or potential Change in Control, the Board will take all such actions hereunder as it may determine
to be necessary or appropriate to treat Participants equitably hereunder, including without limitation the modification or waiver
of applicable Performance Measures, Award Periods or Long-term Incentive Compensation Awards, notwithstanding the terms of any
initial Long-term Incentive Compensation Award, and whether to establish or fund a trust or other arrangement intended to secure
the payment of such Awards.


 


F. Immediate Vesting
of Stock Options upon Change of Control. Notwithstanding anything to the contrary contained in the Long Term Incentive Plan
of xG Technology, Inc., as of the Effective Date, Participants shall be entitled to exercise his/her stock options, upon a change
in control, as follows; any and all unvested Stock Options held by the Participant shall become 100%
vested and exercisable, so long as Participant is i) currently employed at the time of exercise, ii) not employed and termination
of employment did not occur within one year of Change of Control, or, iii) not employed, and Participant was not offered a job
position after Change of Control with responsibilities and duties similar to the job position Participant held prior to Change
of Control.


  


10. Withholding of Taxes


 


The Corporation or
an Affiliate shall have the right, before any certificate for any Common Stock is delivered, to deduct or withhold from any payment
owed to a Participant any amount that is necessary in order to satisfy any withholding requirement that the Corporation or Affiliate
in good faith believes is imposed upon it in connection with U.S. federal, state, or local taxes, including transfer taxes, as
a result of the issuance of, or lapse of restrictions on, such Common Stock, or otherwise require such Participant to make provision
for payment of any such withholding amount. Subject to such conditions as may be established by the Committee, the Committee may
permit a Participant to (i) have Common Stock otherwise issuable under an Option or Stock Award withheld to the extent necessary
to comply with minimum statutory withholding rate requirements, (ii) tender back to the Corporation shares of Common Stock received
pursuant to an Option or Stock Award to the extent necessary to comply with minimum statutory withholding rate requirements for
supplemental income, (iii) deliver to the Corporation previously acquired Common Stock, (iv) have funds withheld from payments
of wages, salary or other cash compensation due the Participant, (v) pay the Corporation or its Affiliate in cash, in order to
satisfy part or all of the obligations for any taxes required to be withheld or otherwise deducted and paid by the Corporation
or its Affiliate with respect to the Option or Stock Award; or (vi) establish a 10b5-1 trading plan for withheld stock designed
to facilitate the sale of stock in connection with the vesting of such shares, the proceeds of which shall be utilized to make
all applicable withholding payments in a manner to be coordinated by the Corporation’s Chief Financial Officer.


 


11. Compliance with Law and Approval
of Regulatory Bodies


 


A. General Requirements.
No Option or Stock Award shall be exercisable, no Common Stock shall be issued, no certificates for shares of Common Stock shall
be delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and
regulations (including, without limitation, withholding tax requirements), any listing agreement to which the Corporation is a
party, and the rules of all domestic stock exchanges or quotation systems on which the Corporation’s shares may be listed.
The Corporation shall have the right to rely on an opinion of its counsel as to such compliance. Any share certificate issued to
evidence Common Stock when a Stock Award is granted or for which an Option or Stock Award is exercised may bear such legends and
statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations. No Option or Stock
Award shall be exercisable, no Stock Award shall be granted, no Common Stock shall be issued, no certificate for shares shall be
delivered, and no payment shall be made under this Plan until the Corporation has obtained such consent or approval as the Committee
may deem advisable from regulatory bodies having jurisdiction over such matters.


 




    	-14-



    	 



    

 


B. Participant Representations.
The Committee may require that a Participant, as a condition to receipt or exercise of a particular award, execute and deliver
to the Corporation a written statement, in form satisfactory to the Committee, in which the Participant represents and warrants
that the shares are being acquired for such person’s own account, for investment only and not with a view to the resale or
distribution thereof. The Participant shall, at the request of the Committee, be required to represent and warrant in writing that
any subsequent resale or distribution of shares of Common Stock by the Participant shall be made only pursuant to either (i) a
registration statement on an appropriate form under the Securities Act of 1933, which registration statement has become effective
and is current with regard to the shares being sold, or (ii) a specific exemption from the registration requirements of the Securities
Act of 1933, but in claiming such exemption the Participant shall, prior to any offer of sale or sale of such shares, obtain a
prior favorable written opinion of counsel, in form and substance satisfactory to counsel for the Corporation, as to the application
of such exemption thereto.


 


12. General Provisions


 


A. Effect on Employment
and Service. Neither the adoption of this Plan, its operation, nor any documents describing or referring to this Plan (or any
part thereof) shall (i) confer upon any individual any right to continue in the employ or service of the Corporation or an Affiliate,
(ii) in any way affect any right and power of the Corporation or an Affiliate to change an individual’s duties or terminate
the employment or service of any individual at any time with or without assigning a reason therefor or (iii) except to the extent
the Committee grants an Option or Stock Award to such individual, confer on any individual the right to participate in the benefits
of this Plan.


 


B. Use of Proceeds.
The proceeds received by the Corporation from the sale of Common Stock pursuant to this Plan shall be used for general corporate
purposes.


 


C. Unfunded Plan.
This Plan, insofar as it provides for grants, shall be unfunded, and the Corporation shall not be required to segregate any assets
that may at any time be represented by grants under this Plan. Any liability of the Corporation to any person with respect to any
grant under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such
obligation of the Corporation shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Corporation.


 


D. Rules of Construction.
Headings are given to the Sections of this Plan solely as a convenience to facilitate reference. The reference to any statute,
regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law.


 


E. Choice of Law.
This Plan and all Stock Option Agreements and Stock Award Agreements entered into under this Plan shall be interpreted under the
Corporation Law excluding (to the greatest extent permissible by law) any rule of law that would cause the application of the laws
of any jurisdiction other than the Corporation Law.


 


F. Fractional Shares.
The Corporation shall not be required to issue fractional shares pursuant to this Plan. The Committee may provide for elimination
of fractional shares or the settlement of such fraction shares in cash.


 


G. Foreign Employees.
In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special
terms for Awards to Participants who are foreign nationals, or who are employed by the Corporation or any Affiliate outside of
the United States, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or
custom. Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of, this Plan
as it may consider necessary or appropriate for such purposes without thereby affecting the terms of this Plan, as then in effect,
unless this Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of the Corporation.


 




    	-15-



    	 



    

 


13. Amendment and Termination


 


The Board may amend
or terminate this Plan from time to time; provided, however, stockholder approval shall be required for any amendment that (i)
increases the aggregate number of shares of Common Stock that may be issued under this Plan, except as contemplated by Section
5.A or Section 9.B; (ii) changes the class of employees eligible to receive Incentive Stock Options; (iii) modifies the restrictions
on Repricings set forth in this Plan; or (iv) is required by the terms of any applicable law, regulation or rule, including the
rules of any market on which the Corporation shares are traded or exchange on which the Corporation shares are listed. Except as
specifically permitted by this Plan, Stock Option Agreement or Stock Award Agreement or as required to comply with applicable law,
regulation or rule, no amendment shall, without a Participant’s consent, adversely affect any rights of such Participant
under any Option or Stock Award outstanding at the time such amendment is made; provided, however, that an amendment that may cause
an Incentive Stock Option to become a Nonqualified Stock Option shall not be treated as adversely affecting the rights of the Participant.
Any amendment requiring stockholder approval shall be approved by the stockholders of the Corporation within twelve (12) months
of the date such amendment is adopted by the Board.


 


14. Effective Date of Plan; Duration
of Plan


 


A. This Plan shall
be effective upon adoption by the Board, subject to approval within twelve (12) months by the stockholders of the Corporation.
In the event that the stockholders of the Corporation shall not approve this Plan within such twelve (12) month period, this Plan
shall terminate. Unless and until the Plan has been approved by the stockholders of the Corporation, no Option or Stock Award may
be exercised, and no shares of Common Stock may be issued under the Plan. In the event that the stockholders of the Corporation
shall not approve the Plan within such twelve (12) month period, the Plan and any previously granted Options or Stock Awards shall
terminate.


 


B. Unless previously
terminated, this Plan will terminate ten (10) years after the earlier of (i) the date this Plan is adopted by the Board, or (ii)
the date this Plan is approved by the stockholders, except that Awards that are granted under this Plan prior to its termination
will continue to be administered under the terms of this Plan until the Awards terminate or are exercised.


 


IN WITNESS WHEREOF,
the Corporation has caused this Plan to be executed by a duly authorized officer as of the date of adoption of this Plan by the
Board of Directors.


 


xG TECHNOLOGY, INC.


 


	By:	 	 


 




    	-16-