Document:

Exhibit 10.1

 

TESSCO TECHNOLOGIES INCORPORATED

SECOND AMENDED AND RESTATED 1994 STOCK AND INCENTIVE PLAN

 

	
  SECTION 1.

  	
  PURPOSE

  

 

The purpose of the TESSCO
Technologies Incorporated Second Amended and Restated 1994 Stock and Incentive
Plan (the “Plan”) is to attract and retain outstanding individuals as Key
Employees of TESSCO Technologies Incorporated, a Delaware corporation (the “Company”),
and its Affiliates and to motivate such individuals to achieve the long-term
performance goals of the Company by providing incentives to such individuals in
the form of stock ownership or monetary payments based on the value of the
capital stock of the Company or its financial performance, or both, on the
terms and conditions set forth herein.

 

	
  SECTION 2.

  	
  DEFINITIONS

  

 

As used in the Plan and
unless the context clearly indicates otherwise, the following terms shall have
the respective meanings set forth below:

 

(a)           “Affiliate” shall mean any
entity that is controlled directly or indirectly by the Company.

 

(b)           “Award” shall mean any
Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or
Performance Award granted under the Plan.

 

(c)           “Award Agreement” shall mean
any written agreement, contract or other instrument or document evidencing any
Award granted under the Plan.

 

(d)           “Beneficiary” shall mean the
person designated by the Participant, on a form provided by the Company, to
exercise the Participant’s rights in accordance with Section 7(f) of
the Plan in the event of death or, if no such person is designated, the estate
or personal representative of such Participant.

 

(e)           “Board of Directors” shall
mean the Board of Directors of the Company.

 

(f)            “Code” shall mean the
Internal Revenue Code of 1986, as amended.

 

(g)           “Commission” shall mean the
United States Securities and Exchange Commission or any successor agency.

 

(h)           “Committee” shall mean the
Compensation Committee of the Board of Directors.  The Committee shall be composed of two or
more directors, all of whom shall be “disinterested persons” within the meaning
of Rule 16b-3 and “outside directors” within the meaning of Section 162(m)(4)(C) of
the Code and any regulations issued thereunder.

 

(i)            “Disability” shall mean a
total and permanent disability within the meaning of the Company’s long-term
disability plan, as amended from time to time.

 

(j)            “Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended.

 

 

(k)           “Fair Market Value” shall
mean, with respect to any property (excluding the Shares or other securities),
the fair market value of such property determined by such methods or procedures
as shall be established from time to time by the Committee, and with respect to
any Shares or other securities, the last reported sale price of the Shares or
other securities on any national securities exchange or quotation system
providing such information on the day prior to the date of the determination
or, if not listed on any such exchange or quotation system, the average of the
bid and asked prices of the Shares or other securities as reported by the
National Association of Securities Dealers Automated Quotation System (“NASDAQ”)
as of the day prior to the date of the determination of the fair market value
or, if not listed on NASDAQ, the fair market value of the Shares or other
securities as of the day prior to the date of such determination as determined
in good faith by the Board of Directors or the Committee.

 

(l)            “Incentive Stock Option”
shall mean an Option granted under Section 7(a) of the Plan that is
intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.

 

(m)          “Key Employee” shall mean
any officer or other employee of the Company or of any Affiliate who is
described in Section 6.

 

(n)           “Non-Qualified Option” shall
mean an Option granted under Section 7(a) of the Plan that is not
intended to be an Incentive Stock Option.

 

(o)           “Option” shall mean an
Incentive Stock Option or a Non-Qualified Stock Option.

 

(p)           “Participant” shall mean a
Key Employee or non-employee director who is designated to be granted or has
received an Award under the Plan.

 

(q)           “Performance Award” shall
mean any Award granted under Section 7(d) of the Plan.

 

(r)            “Person” shall mean any
individual, corporation, partnership, limited liability company, association,
joint-stock company, trust, unincorporated organization or government or
political subdivision thereof.

 

(s)           “Released Securities” shall
mean Restricted Stock with respect to which all applicable restrictions have
expired, lapsed or been waived.

 

(t)            “Restricted Stock” shall
mean any Shares granted and issued under Section 7(c) of the Plan.

 

(u)           “Restricted Stock Unit”
shall mean any Award granted under Section 7(c) of the Plan that is
denominated in Shares.

 

(v)           “Restriction Period” shall
mean, with respect to Restricted Stock or Restricted Stock Units, that period
of time determined by the Committee pursuant to Section 7(c).

 

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(w)          “Retirement” shall mean
termination of a Participant’s employment with the Company or any Affiliate at
his or her “normal retirement date” as defined in the Company’s Retirement
Savings Plan or any successor plan.

 

(x)            “Termination” shall mean any
resignation or discharge from employment with the Company or any Affiliate
except in the event of Disability, Retirement or death.

 

(y)           “Rule 16b-3” shall mean
Rule 16b-3 promulgated by the Commission under the Exchange Act or any
successor rule or regulation thereto.

 

(z)           “Shares” shall mean shares
of the Common Stock of the Company and such other securities or property as may
become the subject of Awards or become subject to Awards pursuant to an
adjustment made under Section 8 of the Plan.

 

(aa)         “Stock Appreciation Right”
shall mean any Award granted under Section 7(b) of the Plan.

 

	
  SECTION 3.

  	
  EFFECTIVE DATE;
  STOCKHOLDER APPROVAL; TERMINATION

  

 

(a)           EFFECTIVE DATE AND
STOCKHOLDER APPROVAL.  Subject to the
approval of the Plan by the stockholders of the Company, in accordance with the
provisions of Rule 16b-3, the Plan shall be effective as of April 12,
1994.  The Plan was amended and restated,
and readopted, upon approval of the Stockholders as of July 22, 2004.  The Plan has been amended and restated a
second time following the approval of the Stockholders of certain modifications
to the Plan, and of the Plan in its entirety for purposes of Section 162(m) of
the Code, as of July 24, 2008.

 

(b)           TERMINATION.  No Award shall be granted under the Plan
after July 22, 2014; PROVIDED, HOWEVER, that any Award theretofore granted
may extend beyond such date unless expressly provided otherwise herein or in
the applicable Award Agreement; PROVIDED FURTHER, to the extent set forth in Section 8
hereof, the authority of the Committee to amend, alter, adjust, suspend,
discontinue or terminate any such Award or to waive any conditions or
restrictions with respect to any such Award, and the authority of the Board of
Directors to amend the Plan, shall extend beyond such date.

 

	
  SECTION 4.

  	
  ADMINISTRATION

  

 

The Plan shall be
administered by the Committee; PROVIDED, HOWEVER, that if at any time the
Committee shall not be in existence, the functions of the Committee as
specified in the Plan shall be exercised by those members of the Board of
Directors who qualify as “disinterested persons” under Rule 16b-3 and as “outside
directors” under Section 162(m)(4)(C) of the Code and any regulations
issued thereunder.

 

Subject to the terms of the
Plan and applicable law, the Committee shall have full power and authority with
respect to the Plan, including, without limitation, the power to:

 

(i)            designate Participants;

 

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(ii)           determine the types of
Awards to be granted to each Participant under the Plan;

 

(iii)          determine the number of
Shares to be covered by (or with respect to which payments, rights or other
matters are to be calculated in connection with) Awards;

 

(iv)          determine the terms and
conditions of any Award;

 

(v)           determine whether, to what
extent, under what circumstances and the method by which Awards may be settled
or exercised in cash, Shares, other securities, other Awards or other property,
or cancelled, forfeited or suspended;

 

(vi)          determine whether, to what
extent and under what circumstances cash, Shares, other securities, other
Awards, other property and other amounts payable with respect to an Award shall
be deferred either automatically or at the election of the holder thereof or of
the Committee;

 

(vii)         interpret and administer the
Plan and any instrument or agreement relating to, and any Award made under, the
Plan (including, without limitation, any Award Agreement);

 

(viii)        establish, amend, suspend
and waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and

 

(ix)           make any other determination
and take any other action that the Committee deems necessary or desirable for
the administration of the Plan.

 

Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan, or any Award, shall be
within the sole discretion of the Committee, may be made at any time, and shall
be final, conclusive and binding upon all Persons, including the Company, any
Affiliate, any Participant, any holder or Beneficiary of any Award, any
stockholder and any employee of the Company or of any Affiliate.

 

	
  SECTION 5.

  	
  GRANTS OF AWARDS; SHARES
  AVAILABLE FOR AWARD

  

 

(a)           The Committee may, from time
to time, grant Awards to one or more Participants; PROVIDED, HOWEVER, that:

 

(i)            subject to any adjustment
pursuant to Section 8, the aggregate number of Shares available with
respect to which Awards may be granted under the Plan shall be 1,908,750;

 

(ii)           to the extent that any
Shares covered by an Award granted under the Plan, or to which any Award
relates, are forfeited (prior to the payment of dividends or the exercise by
the holder of other indicia of ownership of the Shares or other property
issuable or payable with respect to the Award), or if an Award otherwise
terminates, expires or is cancelled prior to the delivery of all of the Shares
or of other consideration issuable or payable pursuant to such Award, then the
number of Shares counted against the number of Shares available under the Plan 

 

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in connection with the grant of such Award,
to the extent of any such forfeiture, termination, expiration or cancellation,
shall again be available for granting of Awards under the Plan;

 

(iii)          Shares which have been
issued, or any other shares of the capital stock of the Company, which a
Participant tenders to the Company in satisfaction of income and payroll tax
withholding obligations or in satisfaction of the exercise price of any Award
shall remain authorized and shall again be available for the purposes of the
Plan; PROVIDED, HOWEVER, that any such previously issued Shares, or such other
shares, shall not be the subject of any grant under the Plan to any officer of
the Company, or other individual, who, at the time of such grant, is subject to
the short-swing trading provisions of Section 16 of the Exchange Act; and

 

(iv)          any Shares ceasing to be
subject to an Award due to the exercise of an Award or expiration of a
Restriction Period shall no longer be available for granting of an Award
hereunder.

 

(b)           For purpose of this Section 5:

 

(i)            if an Award is denominated
in Shares, the number of Shares covered by such Award, or to which such Award
relates, shall be counted on the date of grant of such Award against the number
of Shares available for granting Awards under the Plan; and

 

(ii)           if an Award is not
denominated in Shares, a number of Shares shall be counted on the date of grant
of such Award against the number of Shares available for granting Awards under
the Plan equal to the quotient of the Fair Market Value (calculated as of the
date of grant) of the maximum amount of cash or other consideration payable
pursuant to such Award, divided by the Fair Market Value of one Share on the
date of grant.

 

(c)           Any Shares delivered by the
Company pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares. 
In determining the size of any Award, the Committee may take into
account a Participant’s responsibility level, performance, potential, cash
compensation level, the Fair Market Value of the Shares at the time of the
Award and such other considerations as it deems appropriate.

 

	
  SECTION 6.

  	
  ELIGIBILITY

  

 

Any Key Employee, including
any executive officer or employee-director of the Company or any Affiliate, who
is not a member of the Committee and who, in the opinion of the Committee,
contributes to the continued growth, development and financial success of the
Company or an Affiliate shall be eligible to be designated as a Participant.  In addition, and notwithstanding the
foregoing or any other provision of the Plan, any non-employee director of the
Company shall be eligible to be designated as a Participant and receive Awards
under the Plan, provided that each grant of an Award to a non-employee director
shall be made only upon the concurrence of a majority of the members of the
entire Board of Directors who are disinterested in the grant, and not more than
75,000 shares issuable under the Plan may be issued to each non-employee
director.

 

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  SECTION 7.

  	
  AWARDS

  

 

(a)           OPTIONS.  The Committee is hereby authorized to grant
Options to Participants in the form of either Non-Qualified Stock Options or
Incentive Stock Options with the terms and conditions set forth in this Section 7
and with such additional terms and conditions, in either case not inconsistent
with the provisions of the Plan, as the Committee shall determine.

 

(i)            LIMITATIONS ON INCENTIVE
STOCK OPTIONS.

 

(A)          In the event the Committee
grants Incentive Stock Options, the aggregate Fair Market Value (determined at
the time the Options are granted) of the Shares underlying any such Options,
together with the shares underlying any incentive stock options (as defined in Section 422
of the Code) under any other plans of the Company or any Affiliate, which shall
be first exercisable by any one Participant shall not, during any calendar
year, exceed $100,000, or such other limitation as may be provided in the Code.

 

(B)           The grant of Options
hereunder shall be subject to guidelines adopted by the Committee with respect
to the timing and size of such Options. 
In addition, the Committee may in its discretion provide that an Option
may not be exercised in whole or in part for any period or periods specified by
the Committee.  The right of a
participant to exercise an Option shall be cancelled if and to the extent that
Shares covered by such Option are used to calculate amounts received upon
exercise of a related Stock Appreciation Right.

 

(C)           The terms of any Incentive
Stock Option granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor provision thereto,
and any regulations promulgated thereunder.

 

(ii)           EXERCISE PRICE.  The exercise price per Share purchasable under
an Option shall be determined by the Committee; PROVIDED, HOWEVER, that such
exercise price shall not be less than the Fair Market Value of a Share on the
date of grant of the Option.

 

(iii)          OPTION TERM.  The term of each Option shall be fixed by the
Committee; PROVIDED, HOWEVER, that in no event shall the term of any Incentive
Stock Option exceed a period of ten years from the date of its grant.

 

(iv)          EXERCISABILITY AND METHOD OF
EXERCISE.  Except for such limitations as
may be set forth herein, an Option shall become exercisable in such manner and
within such period or periods and in such installments or otherwise as shall be
determined by the Committee and set forth in the Award Agreement evidencing the
Option.  The Committee also shall
determine the method or methods by which, and the form or forms in which,
payment of the exercise price with respect to any Option may be made or deemed
to have been made.

 

(b)           STOCK APPRECIATION
RIGHTS.  The Committee is hereby
authorized to grant Stock Appreciation Rights to Participants.  Subject to the terms of the Plan and any
applicable Award Agreement, a Stock Appreciation Right granted under the Plan
shall confer on the holder thereof a right to receive, upon exercise thereof,
the excess of (i) the Fair Market Value of one Share on the date of
exercise, over (ii) the grant price of the right as specified by the
Committee, which shall not be less than the Fair Market Value of one Share on
the date of 

 

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grant of the Stock Appreciation Right.
Subject to the terms of the Plan and any applicable Award Agreement, the grant
price, term, methods of exercise, methods of settlement and any other terms and
conditions of any Stock Appreciation Right shall be as determined by the
Committee.  The Committee may impose such
conditions or restrictions on the exercise of any Stock Appreciation Right as
it may deem appropriate, including, without limitation, restricting the time of
exercise of the Stock Appreciation Right to specified periods as may be
necessary to satisfy the requirements of Rule 16b-3.

 

(c)           RESTRICTED STOCK AND
RESTRICTED STOCK UNITS.

 

(i)            ISSUANCE.  The Committee is hereby authorized to grant
Awards of Restricted Stock and Restricted Stock Units to Participants, such
Awards, including the total number of Shares to which they pertain, to be
evidenced by an Award Agreement.

 

(ii)           RESTRICTIONS.  Shares of Restricted Stock and Restricted
Stock Units shall be issued in the name of the Participant without payment of
consideration, and shall be subject to such restrictions as the Committee may
impose (including, without limitation, a Restriction Period, any limitation on
the right to vote a Share of Restricted Stock or the right to receive any
dividend or other right or property), which restrictions may lapse separately
or in combination at such time or times, in such installments or otherwise, as
the Committee may deem appropriate. 
Different Restricted Stock or Restricted Stock Unit Awards may have
different Restriction Periods.

 

(iii)          REGISTRATION.  Any Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates.  In the
event any stock certificate is issued to evidence Shares of Restricted Stock
granted under the Plan, such certificate shall be registered in the name of the
Participant and shall bear an appropriate legend (as determined by the
Committee) referring to the terms, conditions and restrictions applicable to
such Restricted Stock.  Upon completion
of the applicable Restriction Period, the related restriction or restrictions
upon the Award shall expire and new certificates representing the Award shall
be issued without the applicable restrictive legend described herein.  Such Shares shall be delivered in accordance
with the terms and conditions of such Participant’s Award Agreement.

 

(d)           PERFORMANCE AWARDS.  The Committee is hereby authorized to grant
Performance Awards to Participants. Subject to the terms of the Plan and any
applicable Award Agreement, a Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii) shall
confer on the holder thereof rights valued as determined by the Committee and
payable to, or exercisable by, the holder of the Performance Award, in whole or
in part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. 
Subject to the terms of the Plan, the Committee shall establish
performance goals to be achieved during any performance period, the length of
any performance period, the amount of any Performance Award granted, and the
amount of any payment or transfer to be made pursuant to any Performance Award.

 

7

 

(e)           CODE SECTION 162(M) REQUIREMENTS.  The Committee in its sole discretion shall
determine whether Awards made pursuant to the Plan shall be designed to meet
the requirements of performance-based compensation within the meaning of Section 162(m) of
the Code and any regulations issued thereunder. 
The performance goals among which the Committee may select for purposes
of satisfying the performance-based compensation conditions under Section 162(m) of
the Code include earnings per share, revenues, Share price, market performance,
profitability and/or other criteria related to the Company’s overall
performance or the performance of a particular business unit, corporate staff,
or in some cases, individual performance.

 

(f)            TERMINATION, RETIREMENT,
DISABILITY AND DEATH.  In the event a
Participant ceases employment with the Company or any Affiliate prior to
exercise of the Participant’s Option or Stock Appreciation Right, prior to the
lapse of any Restriction Period or prior to the achievement of any performance
goals or lapse of any performance period, such Award shall be subject to the
following provisions:

 

(i)            TERMINATION.  If the Termination is at the Company’s
request for gross misconduct by the Participant, the Participant’s Award shall
be forfeited immediately.  If the
Termination is at the Participant’s request, or at the Company’s request for
reasons other than gross misconduct, the Award shall be forfeited immediately
unless the Committee in its discretion decides that an option or Stock
Appreciation Right shall be exercisable and the extent to which it shall be
exercisable, or decides to remove any restrictions applicable to Restricted
Stock, Restricted Stock Units or Performance Awards, except that such
discretion shall not be exercised to the extent that an Award is designed to
meet the requirements of performance-based compensation within the meaning of Section 162(m) of
the Code and any regulations thereunder.

 

(ii)           RETIREMENT.  In the event of Retirement, Options and Stock
Appreciation Rights must be exercised within 12 months (or such lesser period
as the Code may require) of the Participant’s “normal retirement date” as
defined in the Company’s Retirement Savings Plan or any successor plan, any
restriction applicable to a Restricted Stock Award shall be removed pro rata,
in accordance with the portion of the Restriction Period which has expired upon
such Retirement, and any restriction applicable to any Performance Award may be
removed in the discretion of the Committee, except that such discretion shall
not be exercised to the extent that an Award is designed to meet the
requirements of performance-based compensation within the meaning of Section 162(m) of
the Code and any regulations thereunder.

 

(iii)          DISABILITY.  Upon a Participant’s Disability, the
Participant’s Options and Stock Appreciation Rights shall be exercisable, any
restriction applicable under a Restricted Stock Award shall be removed on a pro
rata basis in accordance with the portion of the Restriction Period expired as
of the date of Disability, as such date is determined under the Company’s
long-term disability plan, as amended from time to time, and any restriction
applicable under a Performance Award may be removed in the discretion of the
Committee.

 

(iv)          DEATH.  If the Participant shall die while in the
employment of the Company or any Affiliate or within the period of time after
Retirement during which the Participant would have been entitled to exercise
his Options and Stock Appreciation Rights, the Participant’s Beneficiary shall
have the right to exercise such Options and Stock Appreciation

 

8

 

Rights within 12 months from the date of the
Participant’s death to the extent the Participant was entitled to exercise the
same immediately prior to the Participant’s death.  Any restriction applicable under a deceased
Participant’s Restricted Stock Award shall be removed on a pro rata basis in
accordance with the portion of the Restricted Period which had expired as of
the date of death, and any restriction applicable under a deceased Participant’s
Performance Award may be removed in the discretion of the Committee.

 

(g)           ELECTION TO RECOGNIZE
INCOME.  If a Participant makes an
election in a timely manner pursuant to Section 83(b) of the Code to
recognize income for tax purposes when an Award is first made, the Participant
shall notify the Company within 10 days of the making of such election.

 

(h)           GENERAL.

 

(i)            AWARD AGREEMENTS.  Each Award granted under the Plan shall be
evidenced by an Award Agreement in such form as shall have been approved by the
Committee.

 

(ii)           AWARDS MAY BE GRANTED
SEPARATELY OR TOGETHER.  Awards may be
granted either alone or in addition to, in tandem with, or in substitution for
any other Award or any award granted under any other plan of the Company or any
Affiliate. Awards granted in addition to or in tandem with other Awards, or in
addition to or in tandem with awards granted under any other plan of the
Company or any Affiliate, may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.

 

(iii)          FORMS OF PAYMENT UNDER
AWARDS.  Subject to the terms of the Plan
and of any applicable Award Agreement, payments or transfers to be made by the
Company or any Affiliate upon the grant, exercise or payment of an Award may be
made in such form or forms as the Committee shall determine, including, without
limitation, cash, Shares, other securities, other Awards or other property, or
any combination thereof, and may be made in a single payment or transfer, in
installments or on a deferred basis, in each case in accordance with rules and
procedures established by the Committee. Such rules and procedures may
include, without limitation, provisions for the payment or crediting of
interest in installments or deferred payments.

 

(iv)          LIMITS ON TRANSFER OF
AWARDS.  No Award (other than Released
Securities), and no right under any such Award, shall be assignable, alienable,
saleable or transferable by a Participant otherwise than by will or by the laws
of descent and distribution (or, in the case of an Award of Restricted Stock,
to the Company); PROVIDED, HOWEVER, that, if so determined by the Committee, a
Participant may, in the manner established by the Committee, designate a
Beneficiary to exercise the rights of the Participant, and to receive any
property distributable with respect to any Award upon the death of the
Participant.  Each Award, and each right
under any Award, shall be exercisable, during the Participant’s lifetime, only
by the Participant or, if permissible under applicable law, by the Participant’s
guardian or legal representative.  No Award
(other than Released Securities), and no right under any such Award, may be
pledged, alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate.

 

9

 

(v)           TERM OF AWARDS.  Except as otherwise provided herein, the term
of each Award shall be for such period as may be determined by the Committee.

 

(vi)          SHARE CERTIFICATES AND REPRESENTATION
BY PARTICIPANTS.  All certificates for
Shares or other securities delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Commission, any stock exchange or
other market upon which such Shares or other securities are then listed or
traded, and any applicable federal or state securities laws, and the Committee
may cause a legend or legends to be inscribed upon any such certificate(s) to
make appropriate reference to such restrictions.  The Committee may require each Participant or
other Person who acquires Shares or other securities under the Plan to
represent to the Company in writing that such Participant or other Person is
acquiring the Shares or other securities without a view to the distribution
thereof.

 

(vii)         ANNUAL AWARD LIMIT.  Notwithstanding any other provision of this
Plan to the contrary, no Participant shall receive in any one calendar year
Awards for more than 225,000 Shares (or the cash equivalent of such Shares).

 

(viii)        SECTION 409A
COMPLIANCE.  The Committee shall design
and interpret all Awards under this Plan in a manner that causes such Awards to
be exempt from, or compliant with, the deferred compensation requirements of Section 409A
of the Code.  Thus, to the extent that an
Award is subject to Section 409A, the amount payable upon exercise or
vesting of such Award shall only be payable, as determined by the Committee in
the Award Agreement, in the designated form upon the Participant’s separation
from service, disability or death, at a specified time (or pursuant to a fixed
schedule), upon a change in ownership or effective control of the Company or in
the ownership of a substantial portion of the assets of the Company, or upon
the occurrence of an unforeseeable emergency (each such event as described in Section 409A
and the regulations thereunder).  Any
right to receive a series of installment payments under an Award shall be
treated for purposes of Section 409A as a right to receive a series of
separate payments.  If an Award that is
subject to Section 409A is payable upon the separation from service of a
specified employee (as defined in Section 409A) of the Company, any
payments due under the Award during the six-month period following the
specified employee’s separation from service shall be accumulated and paid out
to the specified employee during the seventh month following separation from
service (with or without interest as determined by the Committee).

 

	
  SECTION 8.

  	
  AMENDMENT AND TERMINATION;
  ADJUSTMENTS; CORRECTIONS

  

 

(a)           AMENDMENTS TO THE PLAN.  The Board of Directors may amend, alter,
suspend, discontinue or terminate the Plan; PROVIDED, HOWEVER, that no
amendment, alteration, suspension, discontinuation or termination of the Plan
shall in any manner (except as otherwise provided in this Section 8)
adversely affect any Award granted and then outstanding under the Plan, without
the consent of the respective Participant; PROVIDED FURTHER, HOWEVER, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the stockholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that would:

 

10

 

(i)            increase the total number of
Shares available for Awards under the Plan, except as provided in Section 8(c)
hereof;

 

(ii)           materially increase the
benefits accruing to Participants under the Plan; or

 

(iii)          materially modify the
requirements as to eligibility for participation in the Plan.

 

(b)           AMENDMENTS TO AWARDS.  The Committee may, in whole or in part, waive
any conditions or other restrictions with respect to, and may amend, alter,
suspend, discontinue or terminate, any Award granted under the Plan,
prospectively or retroactively, but no such action shall impair the rights of
any Participant without the Participant’s consent, except as provided in Section 8(c) and
(d) hereof.

 

(c)           CERTAIN ADJUSTMENTS OF
AWARDS.

 

(i)            In the event the Company or
any Affiliate shall assume outstanding employee awards or the right or
obligation to make future such awards in connection with the acquisition of
another business or business entity, the Committee may make such adjustments in
the terms of Awards, not inconsistent with the terms of the Plan, as it shall
deem appropriate in order to achieve reasonable comparability or other
equitable relationship between the assumed awards and the Awards granted under
the Plan, as so adjusted.

 

(ii)           In the event that the
Committee shall determine that any dividend or other distribution (whether in
the form of cash, Shares, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of
Shares or other securities of the Company, issuance of warrants or other rights
to purchase Shares or other securities of the Company, or other similar
corporate transaction, change in applicable laws, regulations or financial
accounting principles or other event affects the Shares, such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee may, in such manner as it may
deem equitable, adjust any or all of:  (A) the
number and type of Shares (or other securities or property) which thereafter
may be made the subject of Awards under the Plan; (B) the number and type
of Shares (or other securities or property) subject to outstanding Awards; and (C) the
grant, purchase or exercise price with respect to any Award, or, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
Award; PROVIDED, HOWEVER, in each case, that with respect to Awards of
Incentive Stock Options, no such adjustment shall be authorized to the extent
that such authority would cause the Plan to violate Section 422(b)(1) of
the Code or any successor provision thereto; PROVIDED FURTHER, HOWEVER, that
the number of Shares subject to any Award denominated in Shares shall always by
a whole number.

 

(iii)          Anything herein to the
contrary notwithstanding, except in connection with a corporate transaction
involving the Company (including, without limitation, any stock dividend, stock
split, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, or exchange of shares) the
terms of outstanding 

 

11

 

awards may not be amended to reduce the
exercise price of outstanding options or SARs or cancel outstanding options or
SARs in exchange for cash, other awards or options or SARs with an exercise
price that is lower than the exercise price of the original options or SARs
without first obtaining stockholder approval of such repricing.

 

(d)           CORRECTION OF DEFECTS,
OMISSIONS AND INCONSISTENCIES.  The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
any Award or Award Agreement in the manner and to the extent it shall deem
desirable to carry the Plan into effect.

 

	
  SECTION 9.

  	
  GENERAL PROVISIONS

  

 

(a)           NO RIGHTS TO AWARDS.  No Key Employee, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Key Employees, Participants or
holders or Beneficiaries of Awards under the Plan.  The terms and conditions of Awards need not
be the same with respect to each Participant.

 

(b)           WITHHOLDING.  No later than the date as of which an amount
first becomes includible in the gross income of a Participant for federal
income tax purposes with respect to any Award under the Plan, the Participant
shall pay to the Company, or make arrangements satisfactory to the Company
regarding the payment of, any federal, state, local or foreign taxes of any
kind required by law to be withheld with respect to such amount.  Unless otherwise determined by the Committee,
withholding obligations arising with respect to Awards under the Plan may be
settled with Shares (other than Restricted Stock), including Shares that are
part of, or are received upon exercise of, the Award that gives rise to the
withholding requirement.  The obligations
of the Company under the Plan shall be conditioned on such payment or
arrangements, and the Company and any Affiliate shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise due
to the Participant.  The Committee may
establish such procedures as it deems appropriate for the settling of
withholding obligations with Shares, including, without limitation, the
establishment of such procedures as may be necessary to satisfy the
requirements of Rule 16b-3.

 

(c)           ACCELERATION.  Except as otherwise provided hereunder, the
Committee may, in its discretion, accelerate the time at which an outstanding
Award granted hereunder may be exercised. 
With respect to Restricted Stock, in the event of a public tender offer
for all or any portion of the Shares of the Company, or in the event that any
proposal to merge or consolidate the Company with another entity is submitted
to the stockholders of the Company for a vote, the Committee, in its sole
discretion, may shorten or eliminate the Restriction Period consistent with the
best interests of the Company.

 

(d)           NO RIGHT TO EMPLOYMENT.  The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company
or any Affiliate.  Further, the Company
or any Affiliate may at any time dismiss a Participant from employment, free
from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement.

 

12

 

(e)           UNFUNDED STATUS OF THE
PLAN.  Unless otherwise determined by the
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. 
The Plan shall not establish any fiduciary relationship between the
Company and any Participant or other Person. 
To the extent any Person holds any right by virtue of the grant of an
Award under the Plan, such right (unless otherwise determined by the Committee)
shall be no greater than the right of an unsecured general creditor of the
Company.

 

(f)            GOVERNMENT AND OTHER
REGULATIONS.  The obligation of the
Company to make payment of Awards in Shares or otherwise shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
government agencies as may be required. 
If Shares awarded hereunder may in certain circumstances be exempt from
registration under the Securities Act of 1933, the Company may restrict its transfer
in such manner as it deems advisable to ensure such exempt status.

 

(g)           INDEMNIFICATION.  The Company shall indemnify and hold harmless
each individual who is or at any time serves as a member of the Committee
against and from:

 

(i)            any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by such individual in
connection with or resulting from any claim, action, suit or proceeding to
which such individual may be a party or in which such individual may be
involved by reason of any action or failure to act under the Plan; and

 

(ii)           any and all amounts paid by
such individual in satisfaction of judgment in any such action, suit or
proceeding relating to the Plan.

 

Each individual covered by
this indemnification shall give the Company an opportunity, at its own expense,
to handle and defend the same before such individual undertakes to handle and
defend it on such individual’s own behalf. 
In addition, such individuals shall also be entitled to any other rights
of indemnification which such individuals may have under the certificates of
incorporation or by-laws of the Company or any Affiliate, as a matter of law,
or otherwise, or of any power that the Company or any Affiliate may have to
indemnify such individual or hold such individual harmless.

 

(h)           GOVERNING LAW.  The validity, construction and effect of the
Plan, and any rules and regulations relating to the Plan, shall be
determined in accordance with the laws of the State of Delaware and applicable
federal law.

 

(i)            SEVERABILITY.  If any provision of the Plan, any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Award Agreement or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or, if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan, the Award Agreement or the Award, such
provision shall be stricken as to such jurisdiction, Person or Award, and the
remainder of the Plan, such Award Agreement and such Award shall remain in full
force and effect.

 

13

 

(j)            NO FRACTIONAL SHARES.  No fractional Shares shall be issued or
delivered pursuant to the Plan, any Award Agreement or any Award, and the
Committee shall determine whether cash, other securities or other property shall
be paid or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.

 

(k)           HEADINGS.  Headings are given to the sections and
subsections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of the Plan or any
provision thereof.

 

 

Date:  July 24,
2008

 

14ex10_1.htm

    
      
        

      

    

    POSITRON
CORPORATION

    

    2008
STOCK INCENTIVE PLAN

    

    
      	
              1. 

            	
              Purpose

            

    

     

    The
purpose of this 2008 Stock Incentive Plan (the “Plan”) of Positron Corporation,
a Texas corporation (the “Company”), is to advance the interests of the
Company’s stockholders by enhancing the Company’s ability to attract, retain and
motivate persons who are expected to make important contributions to the Company
and by providing such persons with equity ownership opportunities and
performance-based incentives that are intended to better align their interests
with those of the Company’s stockholders.  Except where the context
otherwise requires, the term “Company” shall include any of the Company’s
present or future parent or subsidiary corporations as defined in Sections
424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the “Code”) and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a controlling interest, as determined by the Board of
Directors of the Company (the “Board”).

    

    
      	
              2. 

            	
              Eligibility

            

    

    

    All of
the Company’s employees, officers and directors (including persons who have
entered into an agreement with the Company under which they will be employed by
the Company in the future), as well as all of the Company’s consultants and
advisors that are natural persons, are eligible to be granted options,
unrestricted stock awards and restricted stock awards (each, an “Award”) under
the Plan.  Each person who has been granted an Award under the Plan shall
be deemed a “Participant”.

    

    
      	
              3. 

            	
              Administration
      and Delegation

            

    

    

    (a)           Administration
by Board of Directors.  The Plan will be administered by the
Board.  The Board shall have authority to grant Awards and to adopt,
amend and repeal such administrative rules, guidelines and practices relating to
the Plan as it shall deem advisable.  The Board may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or any
Award in the manner and to the extent it shall deem expedient to carry the Plan
into effect and it shall be the sole and final judge of such
expediency.  All decisions by the Board shall be made in the Board’s
sole discretion and shall be final and binding on all persons having or claiming
any interest in the Plan or in any Award.  No director or person
acting pursuant to the authority delegated by the Board shall be liable for any
action or determination relating to or under the Plan made in good
faith.

    

    (b)           Appointment
of Committees.  To the extent permitted by applicable law, the Board
may delegate any or all of its powers under the Plan to one or more committees
or subcommittees of the Board (a “Committee”).  All references in the
Plan to the “Board” shall mean the Board or a Committee of the Board or the
officers referred to in Section 3(c) to the extent that the Board’s powers or
authority under the Plan have been delegated to such Committee or
officers.

    

    (c)           Delegation
to Officers.  To the extent permitted by applicable law, the Board may
delegate to one or more officers of the Company the power to grant Awards to
employees of the Company and to exercise such other powers under the Plan as the
Board may determine, provided that the Board shall fix the terms of the Awards
to be granted by such officers (including the exercise price of such Awards,
which may include a formula by which the exercise price will be determined) and
the maximum number of shares subject to Awards that the officers may grant;
provided further, however, that no officer shall be authorized to grant Awards
to any “executive officer” of the Company (as defined by Rule 3b-7 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any
“officer” of the Company (as defined by Rule 16a-1 under the Exchange
Act).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              4. 

            	
              Stock
      Available for Awards

            

    

    

    Number of
Shares. Subject to adjustment under Section 9, Awards may be made under the Plan
for up to 6,000,000 shares of common stock, $0.01 par value per share, of the
Company (the “Common Stock”).  If any Award expires or is terminated,
surrendered or canceled without having been fully exercised or is forfeited in
whole or in part (including as the result of shares of Common Stock subject to
such Award being repurchased by the Company at the original issuance price
pursuant to a contractual repurchase right) or results in any Common Stock not
being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan in proportion to the number of
shares by which the total shares authorized for issuance was originally reduced
at the time of grant or issuance pursuant to Section 4(c) of the Plan,
subject, however, in the case of Incentive Stock Options (as hereinafter
defined), to any limitations under the Code. Shares issued under the Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares.

    

    
      	
              5. 

            	
              Stock
      Options

            

    

    

    (a)           General.  The
Board may grant options to purchase Common Stock (each, an “Option”) and
determine the number of shares of Common Stock to be covered by each Option, the
exercise price of each Option and the conditions and limitations applicable to
the exercise of each Option, including conditions relating to applicable federal
or state securities laws, as it considers necessary or advisable.  An
Option which is not intended to be an Incentive Stock Option (as hereinafter
defined) shall be designated a “Nonstatutory Stock Option”.

    

    (b)           Incentive
Stock Options.  An Option that the Board intends to be an “incentive
stock option” as defined in Section 422 of the Code (an “Incentive Stock
Option”) shall only be granted to employees of Positron Corporation, any of
Positron Corporation’s present or future parent or subsidiary corporations as
defined in Sections 424(e) or (f) of the Code, and any other entities the
employees of which are eligible to receive Incentive Stock Options under the
Code, and shall be subject to and shall be construed consistently with the
requirements of Section 422 of the Code.  The Company shall have no
liability to a Participant, or any other party, if an Option (or any part
thereof) that is intended to be an Incentive Stock Option is not an Incentive
Stock Option.

    

    (c)           Exercise
Price.  The Board shall establish the exercise price at the time each
Option is granted and specify it in the applicable option agreement; provided,
however, that the exercise price shall be not less than 100% of the fair market
value as determined by (or in a manner approved by) the Board at the time the
Option is granted.

    

    (d)           Duration
of Options.  Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement; provided, however, that no Option will be granted for a term
in excess of 10 years.

    

    (e)           Exercise
of Option.  Options may be exercised by delivery to the Company of a
written notice of exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board together with payment
in full as specified in Section 5(f) for the number of shares for which the
Option is exercised.

    

    (f)         
  Payment Upon Exercise.  Common Stock purchased upon the
exercise of an Option granted under the Plan shall be paid for as
follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (1)           in
cash or by check, payable to the order of the Company;

    

    (2)           except
as the Board may otherwise provide in an option agreement, by (i) delivery of an
irrevocable and unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price and any
required tax withholding or (ii) delivery by the Participant to the Company of a
copy of irrevocable and unconditional instructions to a creditworthy broker to
promptly pay to the Company the exercise price and any required tax
withholding;

    

    (3)           when
the Common Stock is registered under the Exchange Act, by delivery of shares of
Common Stock owned by the Participant valued at their fair market value as
determined by (or in a manner approved by) the Board, provided (i) such method
of payment is then permitted under applicable law, (ii) such Common Stock, if
acquired directly from the Company, was owned by the Participant at least six
months prior to such delivery and (iii) such Common Stock is not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements;
or

    

    (4)           any
combination of the above permitted forms of payment.

    

    (g)           Substitute
Options.  In connection with a merger or consolidation of an entity
with the Company or the acquisition by the Company of property or stock of an
entity, the Board may grant Options in substitution for any options or other
stock or stock-based awards granted by such entity or an affiliate thereof prior
to such merger, consolidation or acquisition.  Substitute Options may
be granted on such terms as the Board deems appropriate in the circumstances,
notwithstanding any limitations on Options contained in the other sections of
this Section 5 or in Section 2.

    

    
      	
              6. 

            	
              Unrestricted
      Stock.

            

    

     

    A
Participant may be awarded (or sold at a discount) shares of Common Stock which
are not subject to restrictions, in consideration for past services rendered
thereby to the Company or an Affiliate or for other valid
consideration.

    

    
      	
              7. 

            	
              Restricted
      Stock.

            

    

    

    (a)           Grants.
The Board may grant Awards entitling recipients to acquire shares of Common
Stock, subject to the right of the Company to repurchase all or part of such
shares at their issue price or other stated or formula price (or to require
forfeiture of such shares if issued at no cost) from the recipient in the event
that conditions specified by the Board in the applicable Award are not satisfied
prior to the end of the applicable restriction period or periods established by
the Board for such Award (each, a “Restricted Stock Award”).

    

    (b)           Terms
and Conditions.  The Board shall determine the terms and conditions of
a Restricted Stock Award, including the conditions for repurchase (or
forfeiture) and the issue price, if any.

    

    (c)           Limitation
on Vesting.   Restricted Stock Awards shall not vest earlier than
the first anniversary of the date of grant.  Notwithstanding any other
provision of this Plan, the Board may, in its discretion, either at the time a
Restricted Stock Award is made or at any time thereafter, waive its right to
repurchase shares of Common Stock (or waive the forfeiture thereof) or remove or
modify any part or all of the restrictions applicable to the Restricted Stock
Award, provided that the Board may only exercise such rights in extraordinary
circumstances which shall include, without limitation, death or disability of
the Participant; a merger, consolidation, sale, reorganization,
recapitalization, or change in control of the Company; or any other nonrecurring
significant event affecting the Company, a Participant or the Plan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (d)           Stock
Certificates.  Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its
designee).  At the expiration of the applicable restriction periods,
the Company (or such designee) shall deliver the certificates no longer subject
to such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant’s death (the “Designated Beneficiary”).  In the absence of an
effective designation by a Participant, “Designated Beneficiary” shall mean the
Participant’s estate.

    

    
      	
              8. 

            	
              Other
      Stock-Based Awards.

            

    

    

    Other
Awards of shares of Common Stock, and other Awards that are valued in whole or
in part by reference to, or are otherwise based on, shares of Common Stock or
other property, may be granted hereunder to Participants (“Other Stock Unit
Awards”), including without limitation Awards entitling recipients to receive
shares of Common Stock to be delivered in the future.  Such Other
Stock Unit Awards shall also be available as a form of payment in the settlement
of other Awards granted under the Plan or as payment in lieu of compensation to
which a Participant is otherwise entitled.  Other Stock Unit Awards
may be paid in shares of Common Stock or cash, as the Board shall
determine.  Subject to the provisions of the Plan, the Board shall
determine the conditions of each Other Stock Unit Awards, including any purchase
price applicable thereto.  At the time any Award is granted, the Board
may provide that, at the time Common Stock would otherwise be delivered pursuant
to the Award, the Participant will instead receive an instrument evidencing the
Participant’s right to future delivery of the Common Stock.

    

    
      	
              9. 

            	
              Adjustments
      for Changes in Common Stock and Certain Other
  Events.

            

    

    

    Changes
in Capitalization. In the event of any stock split, reverse stock split, stock
dividend, recapitalization, combination of shares, reclassification of shares,
spin-off or other similar change in capitalization or event, or any distribution
to holders of Common Stock other than an ordinary cash dividend, (i) the number
and class of securities available under this Plan, (ii) the number and class of
securities and exercise price per share subject to each outstanding Option and
(iii) the repurchase price per share subject to each outstanding Restricted
Stock Award.

    

    

    
      	
              10. 

            	
              General
      Provisions Applicable to Awards

            

    

    

    (a)           Transferability
of Awards.  Except as the Board may otherwise determine or provide in
an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and distribution or,
other than in the case of an Option intended to be an Incentive Stock Option,
pursuant to a qualified domestic relations order, and, during the life of the
Participant, shall be exercisable only by the Participant.  References
to a Participant, to the extent relevant in the context, shall include
references to authorized transferees.  Notwithstanding the foregoing,
a Participant may transfer any Award by means of a gift to a family member (as
such term is defined in General Instruction A to Form S-8, as may be amended
from time to time) of such Participant, provided that prior written notice of
such gift is provided to the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b)           Documentation.  Each
Award shall be evidenced in such form (written, electronic or otherwise) as the
Board shall determine.  Each Award may contain terms and conditions in
addition to those set forth in the Plan.

    

    (c)           Board
Discretion.  Except as otherwise provided by the Plan, each Award may
be made alone or in addition or in relation to any other Award.  The terms
of each Award need not be identical, and the Board need not treat Participants
uniformly.

    

    (d)           Termination
of Status.  The Board shall determine the effect on an Award of the
disability, death, retirement, authorized leave of absence or other change in
the employment or other status of a Participant and the extent to which, and the
period during which, the Participant, or the Participant’s legal representative,
conservator, guardian or Designated Beneficiary, may exercise rights under the
Award.

    

    (e)           Conditions
on Delivery of Stock.  The Company will not be obligated to deliver
any shares of Common Stock pursuant to the Plan or to remove restrictions from
shares previously delivered under the Plan until (i) all conditions of the Award
have been met or removed to the satisfaction of the Company, (ii) in the opinion
of the Company’s counsel, all other legal matters in connection with the
issuance and delivery of such shares have been satisfied, including any
applicable securities laws and any applicable stock exchange or stock market
rules and regulations, and (iii) the Participant has executed and delivered
to the Company such representations or agreements as the Company may consider
appropriate to satisfy the requirements of any applicable laws, rules or
regulations.

    

    (f)          
 Deferrals.  The Board may permit Participants to defer receipt
of any Common Stock issuable upon exercise of an Option or upon the lapse of any
restriction applicable to any Restricted Stock Award, subject to such
rules and procedures as it may establish.

    

    
      	
              11. 

            	
              Miscellaneous

            

    

    

    (a)           No
Right To Employment or Other Status.  No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company.  The Company expressly reserves the
right at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as expressly
provided in the applicable Award.

    

    (b)           No
Rights As Stockholder.  Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such
shares.  Notwithstanding the foregoing, in the event the Company
effects a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to such Option are adjusted
as of the date of the distribution of the dividend (rather than as of the record
date for such dividend), then an optionee who exercises an Option between the
record date and the distribution date for such stock dividend shall be entitled
to receive, on the distribution date, the stock dividend with respect to the
shares of Common Stock acquired upon such Option exercise, notwithstanding the
fact that such shares were not outstanding as of the close of business on the
record date for such stock dividend.

    

    (c)           Effective
Date and Term of Plan.  The Plan shall become effective on the date on
which it is adopted by the Board, but no Award may be granted unless and until
the Plan has been approved by the Company’s stockholders.  No Awards
shall be granted under the Plan after the date 10 years from the date on which
the Plan was adopted by the Board, provided that Awards granted prior to that
date may extend beyond such date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (d)           Amendment
of Plan.  The Board may amend, suspend or terminate the Plan or any
portion thereof at any time; provided that, to the extent determined by the
Board, no amendment requiring stockholder approval under any applicable legal,
regulatory or listing requirement shall become effective until such stockholder
approval is obtained.  No Award shall be made that is conditioned upon
stockholder approval of any amendment to the Plan.

    

    (f)           Governing
Law.  The provisions of the Plan and all Awards made hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Texas, without regard to any applicable conflicts of law.

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